Shivalik Bimetal Controls Ltd (SBCL) Q4 FY23 Earnings Concall Transcript

Shivalik Bimetal Controls Ltd (NSE:SBCL) Q4 FY23 Earnings Concall dated May. 19, 2023.

Corporate Participants:

S.S. Sandhu — Chairman

Rajeev Ranjan — Chief Financial Officer

Kanav Anand — Head – Sales & Marketing

Analysts:

Sahil Sharma — SS Capital — Analyst

Pratik Jain — Solidarity Advisors Pvt Limited — Analyst

Abhishek Agarwal — Naredi Investments — Analyst

Devesh Shrimali — DS Investments and Securities — Analyst

Vikram Sharma — Niveshaay Investment Advisory — Analyst

Aman Vij — Astute Investment Management Private Limited — Analyst

Anand Chaudhary — — Analyst

Vaibhav Badjatya — Honesty and Integrity Investment — Analyst

Neha Sharma — Individual Investor — Analyst

Akhilesh Kumar — ILA Investments — Analyst

Keshav Kumar — RakSan Investors — Analyst

Sabyasachi Mukerji — Bajaj Finserv — Analyst

Prateek Chaudhary — Saamarthya Capital — Analyst

Sriram — Individual Investor — Analyst

Presentation:

Operator

Ladies and gentlemen, good day and welcome to Shivalik Bimetal Controls Limited Q4 and FY23 Results Conference Call. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. [Operator Instructions]. Please note that this conference is being recorded.

With this, I now hand the conference over to the Senior Management of Shivalik. Thank you, and over to you.

S.S. Sandhu — Chairman

This is S.S. Sandhu, Chairman, Shivalik Bimetal Controls Limited. A very good evening, ladies and gentlemen. It’s a pleasure to welcome you all to Shivalik Bimetal Controls Limited’s earnings call for the Q4 financial year ’23. I would like to thank you all for joining us on this conference call here today, and hope you all are keeping safe and healthy. We have with us today the management team represented by, Mr. Rajeev Ranjan, CFO; Mr. Kanav Anand, the Executive Director, Sales and Marketing; Mr. Sumer Ghumman, Managing Director of Shivalik Engineered Products Private Limited.

Over the past years, Shivalik has made significant strides in the evolving landscape of technological applications. We have continuously re-engineered our product to meet market trends and customer needs, delivering tailored solutions to leading OEMs. Our commitment to manufacturing excellence ensures consistent quality and reliability which positions us as a valued partner across various industries. And, we are very much confident that the Company is going to maintain the same in the future.

We will now start with the opening remarks by Mr. Rajeev Ranjan, our CFO. With that, over to you, Rajeev.

Rajeev Ranjan — Chief Financial Officer

Thank you very much, sir. Good evening everyone and warm welcome to all the participants. We have uploaded our financial results and investor presentation for quarter-four FY’23 on the stock exchanges and our Company’s website. We hope everybody had an opportunity to go through it — the same. I will start with the financial and operational performance for quarter-four financial year ’23.

Before that, I would like to remind you that the entire conversation today is governed by the Safe-Harbor disclaimer, which is mentioned on the conference call invitation letter as well as the results presentation shared on our website, after which we will open the floor for question-and-answers.

Shivalik is a global leader in next-generation thermostatic bimetal/trimetal strips, electrical contacts and shunt resistors. And we have witnessed solid growth across each product segments. Our total income for Q4 FY23 increased by 23.30% compared to Q4 FY 2022 reaching to INR110.13 crores.

Similarly, our total income for FY23 rose by 29.70% to INR420.23 crore, reflecting a strong revenue generation. This accomplishment underscores the growing global demand for electrical and battery management system using these components. Our EBITDA also surged with an impressive 39.44% growth in Q4 FY’23 and 41.94% growth for FY23, compared to the same period last year, indicating a significant improvement in operating leverage.

We would like to emphasize that, cash to EBITDA conversion in FY23 is more than 60%. Shivalik also demonstrated robust growth in profit-after-tax for Q4 FY23 and financial year ’23. Our PAT for Q4 FY23 amounted to INR18.89 crore, up by 40.97% compared to Q4 FY 2022. The PAT for FY23 also saw remarkable growth increasing by 39.60% to INR72.62 crores, demonstrating our ability to translate operational improvement into bottom-line results. We are pleased to report that our PAT margin for Q4 FY23 rose by 215 basis points, reaching 17.15%. For FY23, the PAT margin increased by 122 basis points to 17.28%, reflecting our continued focus on profitability.

Our sales value of Shunt Resistors for FY23 grew by 23.25% year on year to reach INR210.89 crore and the sales value for Bimetals grew by 36.93% year on year to reach INR209.34 crore. In quarter four FY23, thermostatic bimetal/trimetal strips comprised 52% of the total revenue, while shunt resistors accounted for 48% of overall revenues.

Financial ratios are the most common and wide spread tool to examine the financial position. Our Company has healthy return-on-equity ratio, that is 33%, and return on capital employed 36%. The earning per share also stands INR12.61 in the current financial year ’23 with an increase of 39.65% as compared to previous financial year 2022.

Moving forward, our strategy will be to continue strengthen our core products and expand our customer base by onboarding new customers and increasing share of business with the existing customers. We will be targeting this through in-house research and development, implementing technological upgrades and broadening [Phonetic] strategic partnership.

It is important to emphasize that Shivalik Bimetal Controls Limited remains dedicated to understanding customer needs and integrating advanced technology into its products for quality and sustainability purposes.

With this, I would like to now open up the floor for questions. Thank you.

Questions and Answers:

Operator

Thank you very much. We will now begin the question-and-answer session. [Operator Instructions]. The first question is from the line of Sahil Sharma from SS Capital. Please go ahead.

Sahil Sharma — SS Capital — Analyst

[Technical Issues].

Operator

Sahil, sorry to interrupt you, but your audio is not clear.

Sahil Sharma — SS Capital — Analyst

Is it clear now? [Technical Issues]

Operator

Sorry, Sahil, but your voice is still breaking. I’ll request you to join the queue again. The next question is from the line of Pratik Jain from Solidarity Investment Managers. Please go ahead.

Pratik Jain — Solidarity Advisors Pvt Limited — Analyst

Yeah. Hi. Am I audible?

Operator

Yes.

Pratik Jain — Solidarity Advisors Pvt Limited — Analyst

Yeah. Hi, sir. Good afternoon. So, I had two, three questions. Sir, first question is, within this shunt, we supply to BMS, right? So can you just give me some unique numbers here, like how many shunts goes to this BMS and what’s the value per shunt?

Rajeev Ranjan — Chief Financial Officer

See, it depends on the technology and the site.

S.S. Sandhu — Chairman

And the design.

Rajeev Ranjan — Chief Financial Officer

Yeah.

Pratik Jain — Solidarity Advisors Pvt Limited — Analyst

So average, I mean, average, can you just quantify the number of shunts that goes into the BMS?

S.S. Sandhu — Chairman

It would basically be anything between one to commercial — two in a commercial vehicle and one in a passenger vehicle. When you’re specifically talking about the BMS. As I’m talking about right now, only about the BMS.

Pratik Jain — Solidarity Advisors Pvt Limited — Analyst

Okay.

S.S. Sandhu — Chairman

But when you talk about the shunts, [Speech Overlap] when you’re talking about the shunts, there are various ECUs and various applications within the EV, where there are different type of shunt and resistors is used. But specifically to BMS, there is one part per car on the passenger vehicle and two on a — and one car could have multiple BMS.

Pratik Jain — Solidarity Advisors Pvt Limited — Analyst

Sorry, I didn’t get you. One for four-wheeler, and for two-wheelers?

Rajeev Ranjan — Chief Financial Officer

Yeah. So I understood correctly, you were asking about how many shunts are being used like in BMS. So, in one vehicle, one BMS is being used. So each BMS may have four at least shunt. But we cannot define exactly. It depends on the design and the size, and the model. So, the BMS manufactured basically design all these things, and accordingly they are putting those shunts on it.

Pratik Jain — Solidarity Advisors Pvt Limited — Analyst

And the value also differs across the specifications? Am I correct?

Rajeev Ranjan — Chief Financial Officer

Yes, correct.

S.S. Sandhu — Chairman

That’s correct.

Pratik Jain — Solidarity Advisors Pvt Limited — Analyst

Okay. And sir, for the solar, how many shunts goes into it?

Rajeev Ranjan — Chief Financial Officer

Can you repeat that question please?

Pratik Jain — Solidarity Advisors Pvt Limited — Analyst

Yeah. So we have that — we have shunts usage in the solar, right?

Rajeev Ranjan — Chief Financial Officer

Again it is — Solar is one of the applications where it goes into. Again, the question is it’s an energy storage into solar inverters. So it’s basically an inverter for solar applications, UPS and an inverter, where they might be three, two depending on the type of inverter, whether it is an industrial one, whether it is a residential one. So it’s not something which is a standardized…[Speech Overlap]

Operator

Sorry to interrupt you. Sir, your voice is not coming clear.

Rajeev Ranjan — Chief Financial Officer

Can you hear me?

Operator

Yes sir, much better. Thank you.

Rajeev Ranjan — Chief Financial Officer

Yeah. So basically again for solar applications, we are again talking about energy storage applications such as an inverter or a UPS application for a solar inverter, or and again the number of resistors or shunts that go into each of these inverters or UPS will depend upon the design and also the end application. An industrial one will have more resistors, whereas a residential one will have lesser number of resistors.

So it will again vary from application to application.

Pratik Jain — Solidarity Advisors Pvt Limited — Analyst

Okay, okay. And sir, my next question is, if I just look at your FY’22 gross block, it’s around INR130 crores. And assuming if we do INR100 crores capex more till FY26, my gross block turns to around let’s say INR230 crores. And if I assume the peak revenue of INR1,500 crores or INR1,600 crores by FY26, just peak revenue, my gross block shunts [Phonetic] comes around 7.0 or 7.5-something. So you know sir, this kind of high gross block shunts are difficult to get into in auto ancillary companies. So can you just help me understand how we are able to get such high gross block shunts?

Rajeev Ranjan — Chief Financial Officer

See, the reason is, not only we are expertise in product engineering, we have in-house expertise in machine manufacturing also. So, the gross block you’re just looking at, may have a different number, once anybody new will start such type of business. But in our business, this is our know-how or technological mode through which we are able to manufacture such machineries in-house and assemble those machineries in a very cheaper cost.

So, that’s why the asset turnover, I can say is higher in our case.

Pratik Jain — Solidarity Advisors Pvt Limited — Analyst

Okay. And can you just give some guidance like, by when can we reach this peak revenue? FY26, FY27, any ballpark year where you can reach?

Rajeev Ranjan — Chief Financial Officer

So, even if you go through our presentation, there we have mentioned that it is at the horizon of at least six to seven years down the line.

Pratik Jain — Solidarity Advisors Pvt Limited — Analyst

Yeah, okay. And sir, just last question if I can squeeze-out. Bimetal is a segment historically if I just see from 2016 to let’s say 2023, as of today, the growth has been around, let’s say, 12%, 13% on a CAGR basis. So, can you just help me understand what growth opportunity do we see in this segment given that we are doing capex even in this Bimetal segment? So just wanted to understand this opportunity here.

Rajeev Ranjan — Chief Financial Officer

I’d like to request Mr. Kanav Anand to address this question.

Kanav Anand — Head – Sales & Marketing

Yeah. Hi. Can you hear me?

Pratik Jain — Solidarity Advisors Pvt Limited — Analyst

Yeah.

Kanav Anand — Head – Sales & Marketing

Okay. So basically if you see that Shivalik has — if you go through the presentation also you will see that we are talking about electrification and we’re talking about this drive all around the world, which is pushing towards newer, cleaner technologies and electrification wave, which is increasing and growing the demand for cleaner applications and product lines, which include MCBs, MCCBs, and the demand for these products is increasing locally, as well as internationally.

And to let you know that your company is expanding its operations and its presence in global markets. And we’re seeing a lot of this expansion and growth coming for us from different parts of the world.

Pratik Jain — Solidarity Advisors Pvt Limited — Analyst

So historically, what we had seen growth right now [Indecipherable] because the demand scenario has changed is what you want to say?

Kanav Anand — Head – Sales & Marketing

Yes. That’s correct.

Pratik Jain — Solidarity Advisors Pvt Limited — Analyst

Okay, got it. Thanks a lot.

Operator

Thank you. I request all the participants, please restrict to three questions per participant. Next question is from the line of Abhishek Agarwal from Naredi Investments. Please go ahead.

Abhishek Agarwal — Naredi Investments — Analyst

Good evening, sir. Thanks for giving me the opportunity. Sir, my first question. Did you sell [Phonetic] product-wise the margin, how much EBITDA margin comes from Shunt resistors and Bimetal and Electrical Contacts?

Rajeev Ranjan — Chief Financial Officer

Yeah. See, we have three-product segments. So, for Shivalik Bimetal, that thermostatic bimetal and the shunt resistors have the similar kind of margin. There is only somehow product mix will give us a little bit more in component form rather in parts. As far as the contact is concerned, it has compared to the bimetal or shunt a lesser margin due to their high raw-material cost or consumption.

Abhishek Agarwal — Naredi Investments — Analyst

Sir, can you give me EBITDA margin range?

Rajeev Ranjan — Chief Financial Officer

Yes. So in thermostatic bimetal and the shunt resistors, the EBITDA margin is in the range of 20% to 25%, and similarly for electrical contacts, it is in the range of 9% to 11%.

Abhishek Agarwal — Naredi Investments — Analyst

Okay. And sir, what is the current capacity utilization in FY23?

Rajeev Ranjan — Chief Financial Officer

So, we are in the extension mode for the last three years which will be capitalized. And we haven’t started capitalizing those things since ’23, ’24 and will take another year to — for fully equipped. So, at this moment, if you include the capacity after expansion, we are about at 35% of the capacity utilization in both the products.

Abhishek Agarwal — Naredi Investments — Analyst

Okay, sir. And last question how much amount is standalone in R&D FY23 and what percent is on — for this target to be spent on research and development?

Rajeev Ranjan — Chief Financial Officer

Yeah. See, it is a very significant for our business and keeping in view the importance of research and development, this year, your company has increased the R&D expenditure about 1.39% of the revenue, which is good. And we will continuously keep deploying our — or keep strengthening our R&D department.

Abhishek Agarwal — Naredi Investments — Analyst

Okay, sir. Thank you so much.

Operator

Thank you. Next question is from the line of Sahil Sharma from SS Capital. Please go ahead.

Sahil Sharma — SS Capital — Analyst

Hi, sir. Can you hear me?

Operator

Yes.

Sahil Sharma — SS Capital — Analyst

So sir, what I wanted to understand is that, if we look at our Electron Beam welding machines, and the shunt that we mix with them, so what are the kind of customization and configuration that we have to do which make it difficult for other companies to get into the space or start keeping similar kinds of shunts?

Rajeev Ranjan — Chief Financial Officer

You see, making electron beam welded machine is a very special-purpose machine. And there is — there is not more than one or two manufacturers across the world. Since we have the largest capacity of machines in the world, so we have now 23 years of experience in electron beam welding. We do the repair and maintenances, we have been making all the new machines in-house by buying the key components from the global manufacturers, which are also one or two. So, that is — and they are very expensive, something which we make for a INR100, you go and buy from the market will cost you, INR500.

Sahil Sharma — SS Capital — Analyst

Right sir. Sir, my second question is that if you look at our thermostatic parts segment versus the shunt resistors segment, the thermostatic part segment seems a little more slow growing, compared to shunts which are having the critical application in Battery Management Systems. So despite that, if you look at our revenue base, the thermostatic bimetal part has been growing faster. So, what is the reason for that, that your shunts have been growing slower than thermostatic bimetal?

Rajeev Ranjan — Chief Financial Officer

See, thermostatic bimetal is an established products for the last — for many decades. And they used to be a domestic supplied in the initial years of business. And we started supplying across the globe for the last two decades, I can say. And now what is happening, we are getting more opportunity from the overseas customers in thermostatic bimetal. And this is where we are expanding our market share. That’s why you are seeing that the growth in thermostatic bimetal is more than the shunt resistors this quarter and for the year.

S.S. Sandhu — Chairman

And just one more thing to add there, as what Rajeev just added — said right now. The interesting part is that when it comes to shunt resistors and the opportunity going forward is a lot more coming in. And we just had the tip of the iceberg.

Sahil Sharma — SS Capital — Analyst

Thanks sir. Last question from my side. Our fundamental core competence is in metals joining. So given that we do this, thermostatic bimetal through metal bonding, and we do electron beam welding for shunts, are there any such other products which are in R&D stage that can become large contribution in the years to come?

Rajeev Ranjan — Chief Financial Officer

See, it’s a continuous process. And we had been doing since beginning, that’s why time-to-time we are having new product line. So it’s a continuous process, and as and when it evolves on the floor then accordingly, we will come up with the news for the market.

Sahil Sharma — SS Capital — Analyst

Thank you so much, sir. All the best.

Rajeev Ranjan — Chief Financial Officer

Thank you.

Operator

Thank you. Next question is from the line of Devesh Shrimali from DS Investments and Securities. Please go ahead.

Devesh Shrimali — DS Investments and Securities — Analyst

Yeah. Hi. Congratulations for good numbers. My question is more around the export parts of the shunt. In the past, we have been predominantly supplying to one tier-one supplier in US. So, just wanted to get your view point in terms of how shunt will scale, as you said, it’s the tip of iceberg, right, and US is a big market. So do we have a contract with this tier-one supplier which we need to sort of, relook [Phonetic] at or can we supply to other suppliers in the US market?

Rajeev Ranjan — Chief Financial Officer

Hi, Devesh. First of all, if you look at the numbers, this year, you will see that there is a larger spread of customer base that we have on the shunt side, as compared to the previous years. And to be very honest, we have lot of opportunities and we are working on various opportunities and developing various opportunities for the future, for various applications in the industry. And when it comes to — when it comes to the contracts with the tier-one, we don’t have any limitations to reach to any specific or specific application or specific market. So we are open to explore all possible opportunities that are available or that will become available in the market.

Devesh Shrimali — DS Investments and Securities — Analyst

Great. That’s quite helpful. And if we were to look at next five, six years journey, when do you see the real step-up for exponential angle kicking-in the shunt, sir? Because, the electric vehicles would themselves would sort of have that path, both the vehicle and the charging infrastructure, so when do you see that sort of the step-up coming in the shunt angle in the coming years?

Rajeev Ranjan — Chief Financial Officer

See, there are so many factors into it. The global announcement, the preparation of the automotive industry, the demand, [Speech Overlap] the government policies across the globe. So, in this moment, it is very hard to explain when it will be at the peak level, but we are expecting down the line, three, four years, that it would be somehow at a very sustainable level.

Devesh Shrimali — DS Investments and Securities — Analyst

Got it. And the last piece, if we look at couple of years down the line, and if our electric contact were to sort of go up in the mix, do you see margins getting little diluted or do you think the other component will keep up the pace, so overall margins we have should be either equal or slightly higher?

Rajeev Ranjan — Chief Financial Officer

See, it’s a volume-based business, contact business is a volume-based. And somehow, it complements our thermostatic business also. So as the — the business will pick-up in the coming years will definitely add-up the value addition to Shivalik.

S.S. Sandhu — Chairman

No, we also — for contacts and contact assemblies, we are slowly working more and more towards going into more value-added components that require a lot more work and the entry barrier is also much stronger. So, we’re moving actively, moving more and more towards those components. And that brings the material consumption down and as a result improve gross margin.

Devesh Shrimali — DS Investments and Securities — Analyst

All right. That answers my question. Thanks a lot a wish you success [Phonetic].

Operator

Thank you. Next question is from the line of Vikram Sharma from Niveshaay Investment Advisory. Please go ahead.

Vikram Sharma — Niveshaay Investment Advisory — Analyst

Hi, sir. Sir, we have recently completed our capex. But if I look at standalone number, our revenue is flat from last three quarters. So when we can expect revenue growth from our new capex revenue in next one or two quarters?

Rajeev Ranjan — Chief Financial Officer

See, it’s a continuous capex deployment in the previous two years, and we have started getting production from those capex in the last two, three quarters, and it will continue in the coming quarters also. So, there is a combination of market demand with the capacity utilization. So you will see the fruits in the coming quarters.

Vikram Sharma — Niveshaay Investment Advisory — Analyst

And sir, what will remain [Phonetic] this higher demand in US for thermostatic bimetals, like in this year, there was 155% growth in a single year. So is there any one-time CAGR, one time [Indecipherable] this year?

Rajeev Ranjan — Chief Financial Officer

No, actually the Company has been working on establishing its base in the Americas for last couple of years. And all the efforts that we have put in, in the last couple of years has started reaping fruits now. And, as you know that our product lines are such critical components that these approval then and testing and lab testings take time. Finally the effort is taking shape.

And of course, North America, South America, US is basically one of the largest markets for our kind of products. And our penetration in this market is now reaping fruits and benefits, and which is now showing on our balance sheets and our numbers as well.

Vikram Sharma — Niveshaay Investment Advisory — Analyst

So what kind of growth we can expect in next one, two years in thermostatic bimetal in US market?

Rajeev Ranjan — Chief Financial Officer

See, I would not be able to give you any numbers, because it’s difficult to give you numbers at the present moment, but we feel that the growth will be similar and sustainable.

Vikram Sharma — Niveshaay Investment Advisory — Analyst

Okay. Thanks.

Operator

Thank you. Next question is from the line of Aman Vij from Astute Investments. Please go ahead.

Aman Vij — Astute Investment Management Private Limited — Analyst

Yeah. Good afternoon, sir. My first question is, so we have recently acquired two new big clients. So, we were supplying some initial quantities to them. If you can talk about when do we expect the commercial scaling of the two, three big new clients over the last one, two years, we have acquired. When do we see the commercial scaling happening up?

Rajeev Ranjan — Chief Financial Officer

See, again, these are — I mean the customers that you are referring to, these are customers who have multiple product lines, multiple locations across the world. And we have been able to penetrate and become a part of their supply chain, which enables us to now go through and introduce our product lines into their multiple product lines as well as at different multiple locations across the world. So, it’s just the beginning. I would suggest that we have opportunities that will scale-up for us, based on performance of our products with them at the moment.

Aman Vij — Astute Investment Management Private Limited — Analyst

Sorry, so you expect to see commercial supplies to start this year or in FY25, FY26, when do we expect the commercial supplies to come?

Rajeev Ranjan — Chief Financial Officer

The commercial supply has already begun. The commercial supplies have already begun. With these customers, we are already approved as a supplier. We are supplying materials. And, we have — there are certain product lines where we have already ramped-up certain product lines where we are at sampling stage and for certain product line we will ramp-up.

Aman Vij — Astute Investment Management Private Limited — Analyst

Okay. So the final customer, the OEM customer, have they given approval for the Tier-one, because our product goes to tier one for this new tier one supplies. So those approvals we have already?

Rajeev Ranjan — Chief Financial Officer

Yes, absolutely.

Aman Vij — Astute Investment Management Private Limited — Analyst

Sure. That is good to hear, sir. My second question is, so, there is this very interesting slide of applications of shunt resistors in automobile. So if you can talk about, as of today is how much is BMS as a total percentage of our sales to the automotive — automobile? What was it say three, five years back? And where do you see this journey? Do you think this segment will be the 90%, 95% of our shunt resistors in automobiles? Or do you think the other application will also become dominant in the next few years? If you can talk about the journey three years before and today and three years forward.

Rajeev Ranjan — Chief Financial Officer

BMS is growing for us, but I would still say that the number is insignificant as compared to the overall volume of business that we do. And it is continuously growing and will continue to grow. And to be very honest, there are multiple other applications within the same automotive EV segment that these resistors go in, which are also going to become an important part of our product portfolio going-forward which includes EV as well as non-EV applications.

Aman Vij — Astute Investment Management Private Limited — Analyst

Sorry, a clarification. So, as of now shunt resistors in automobiles, BMS portion is small, not very big.

Rajeev Ranjan — Chief Financial Officer

Yeah, it’s still small.

Aman Vij — Astute Investment Management Private Limited — Analyst

And moving forward this will increase?

Rajeev Ranjan — Chief Financial Officer

Yes.

Aman Vij — Astute Investment Management Private Limited — Analyst

Okay. So as of now, what is the application if it is not BMS we are supplying for the centers there in automobiles, apart from BMS?

Rajeev Ranjan — Chief Financial Officer

Basically, other than automotive, we are into metering, we are into energy storage, we are into…

Aman Vij — Astute Investment Management Private Limited — Analyst

Sir, I’m asking specifically for automobiles. I understand energy meters and all those things, but in automobiles, apart from BMS, what are the other applications, we are supplying to as of now?

Rajeev Ranjan — Chief Financial Officer

There are electronic steering wheel applications, there are power window applications, various easy use that electrical — electronic control units that are — that are made, motor controllers of a car which will also have these resistors, which will be current sensing for various applications within the — within the automotive side.

Operator

Thank you, Aman. Sorry to interrupt you. I’ll request you to join the queue again for a follow-up question. I request all the participants please restrict to two questions per participant. Next question is from the line of Anand Chaudhary from Electron PMS [Phonetic]. Please go-ahead.

Anand Chaudhary — — Analyst

Thank you for the opportunity. My question is regarding the competition side. So I just want to know what are — who are the competitors here in resistors as well as the bimetal site. Domestic as well as outside, and what is their capacity?

Rajeev Ranjan — Chief Financial Officer

So on the — on the domestic side, I would say we don’t have any competition for the product lines, we are into, whether it is with shunt or the bimetal. Internationally, on the bimetal side, I would say we have three major competitors. And on the shunt side resistor side, when it comes to the real manufacturing capability that we have, the kind of segment that we would probably say maybe one or maybe two. But of course, a lot of competition that we compete with also buys a lot of material from us.

So it’s hard to kind of treat them as a competitor or should we treat them as a customer, or as a partner.

Anand Chaudhary — — Analyst

Got it. And second question is regarding, if you want to provide some margin guidance for the medium-term.

Rajeev Ranjan — Chief Financial Officer

Sorry?

Anand Chaudhary — — Analyst

The overall margin.

Rajeev Ranjan — Chief Financial Officer

Yeah. See, the margin we have been making currently is sustainable and with the volume it will grow to a certain extent.

Anand Chaudhary — — Analyst

Okay, my last question is, what is our revenue contribution from top-five clients or top ten clients. If you can provide some rough estimate.

Rajeev Ranjan — Chief Financial Officer

Yeah. See, if we bifurcate into thermostatic bimetal, and the shunt, so the concentration of customer in thermostatic bimetal is is less than 30% top-five. And similarly in shunt it is less than 40%.

Anand Chaudhary — — Analyst

Okay, shunt 40%?

Rajeev Ranjan — Chief Financial Officer

Yes.

Anand Chaudhary — — Analyst

All right. Thank you so much.

Operator

Thank you. The next question is from the line of Vaibhav Badjatya from Honesty and Integrity Investment. Please go-ahead.

Vaibhav Badjatya — Honesty and Integrity Investment — Analyst

Hi, thanks for providing the opportunity,. Sir, apart from this electric vehicle —

Operator

Vaibhav, sorry, we are losing your audio. Can you please speak through the handset.

Vaibhav Badjatya — Honesty and Integrity Investment — Analyst

Yeah. Just give me a second. Hello? Can you hear me?

Operator

Yes, thank you.

Vaibhav Badjatya — Honesty and Integrity Investment — Analyst

Yeah. So what I was asking, apart from this EV segment, any other segments where you are seeing very — which can have potentially very high usage of electronics being welded materials, any new applications, they see that this can be a big opportunity going-forward, it didn’t, the initial stages of value —

Rajeev Ranjan — Chief Financial Officer

Hi. I think initially also we just spoke about it. The focus today with the climate situation that we are all-in, the climate pact, that global compact that we all are — all countries are signing, there is lot of focus on renewable energy and generation of energy through renewable sources, which includes solar, wind. So with the generation, and there is a demand for generation of power. So whenever there will be more generation of power, they will be need for energy storage. And when we talk about energy storage, we are talking about energy and energy measurement. And that’s where we feel that energy storage is going to be another very important industry, where our product lines will go in on a global level.

And also, smart metering. Metering applications, smart meter applications are also another significantly important industry for our kind of product line.

Vaibhav Badjatya — Honesty and Integrity Investment — Analyst

Got it. I understand. And in terms of margins on a just to understand of company fundamentals better historically say if you look at the margins, obviously there has been sharp jump from FY21 onwards. But. I think in the last analyst meet also, when it was conducted it was said that in FY20, there was a decline in margins and primarily because of the decline in gross margins. And the product mix was mostly same during that period, from FY19 to FY20.

So what, if you can help us understand what explains the fluctuation in the gross margin, particularly in that year, so that it helps us understand margin fluctuation better going-forward.

Rajeev Ranjan — Chief Financial Officer

Yeah. You understand rightly. There was the product mix. So at that moment in ’19, ’20, we used to supply it straight, more than the components but after then we are now supplying components in a larger-scale compared to the straight.

Vaibhav Badjatya — Honesty and Integrity Investment — Analyst

Yes. Sorry, I’m not talking about our transition from FY20 to ’21, I’m talking from transition from FY’19 to ’20. So FY’19 your gross margin was nearly 50%, which declined to nearly 42% in FY20. And FY20 is pretty much normal, I mean most of the impact of COVID has come later. So, I was just, just wanted to understand the transition from FY19 to FY20.

S.S. Sandhu — Chairman

’19, ’20 is the basic reason was the debt — sudden death of confirmed death of the current picture tube industry. Because we were the sole suppliers to the all the CPT manufacturers in the country up to ’18, ’19, till that that industry was operating. So it was basically of that product going off-the-shelf that dropped in that little variation.

Vaibhav Badjatya — Honesty and Integrity Investment — Analyst

Got it. Understand sir, that’s it from my side. Thank you.

Operator

Thank you. Next question is from the line of Neha Sharma, Individual Investor. Please go-ahead.

Neha Sharma — Individual Investor — Analyst

Good evening, everyone. I have just one question. I’ve noticed a decline in the number of working capital days. Could you please shed some light on the factors that have clearly opportunities. And are there any efficiency measures —

Operator

Neha, sorry to interrupt you, but we lost you audio in between.

Neha Sharma — Individual Investor — Analyst

Okay, should i just repeat the question?

Operator

Yes,

Neha Sharma — Individual Investor — Analyst

Okay, so my question was on the working capital days. Can you please shed some light on the factors that have led to the reduction in the working capital days. Are there any efficiency measures are operational changes that has contributed to this outcome.

Rajeev Ranjan — Chief Financial Officer

Yeah, so you will see our dependency for the material to be on global supply of certain material. So now the certain material we have developed domestic supplier, that has decreased the lead period, and inventory holding on floor with reduced almost 2022 days in the working capital cycles.

So the inventory management, I can say the key to reduce the working capital cycle now.

Neha Sharma — Individual Investor — Analyst

Okay, thank you so much.

Operator

Thank you. Next question is from the line of Akhilesh Kumar from ILA Investments. Please go-ahead.

Akhilesh Kumar — ILA Investments — Analyst

Yeah, hi, sir. So, I had a question two questions, the first question, so I would say that more hypothetical answer, should we look at — in 2020, if you go back two, three years back, so you had been doing EBITDA for around INR4 crores to INR6 crores.

So if you see the huge likelihood performed magnificently from that time to today where we’re generating almost 30 crores of EBITDA. So we are — while we are attributing a large part of it to — I mean, significant part of the EVs. So my question is that, if not for the EVs, like had EV regularaization like whatever the shaft I think that have been on-the-ground over the last few years have been taken place.

Would we have been in similar position now, what we had been at the moment — what we are at the moment. And the second question is that, I mean, in the last one year or 1.54 years as — circulated quite a lot of downturn in the auto industry global facilitate the semiconductor shortages etc. So when one would have expected the revenues to help, to have bought and shipped by the company, still you haven’t able to cash in on the momentum. So what is the reason here as well sir, these two questions sir.

Rajeev Ranjan — Chief Financial Officer

So, as I correctly understand your question, first you were asking about the increase in EBITDA margin in the last three years.

Akhilesh Kumar — ILA Investments — Analyst

No sir. The first question is that, if the EV revolution hasn’t taken place, so would we have been in a similar position from two years back on?

Rajeev Ranjan — Chief Financial Officer

Yeah, absolutely. So the it’s — in fact, that’s exactly what I was trying to explain earlier as well, if you were part of the call at that time, I think that when it comes to automotive side of the business because of shortages in the semiconductor, I think the market is yet to kind of see the real growth coming in. And that’s where we now feel that the time is coming where we would actually start seeing a momentum shift from in the automotive side of the — with the semiconductor shortages easing up. And in fact, it’s not the same. We might even see better results as we go into that side of the business.

So, it’s something which will even add value to our operations going forward.

Akhilesh Kumar — ILA Investments — Analyst

Okay. But we would have expected the revenue to have been hit, right sir, like in the last few quarters I would say. But we haven’t. Because the auto numbers have been going down globally, but we haven’t. So what has played a part here?

Rajeev Ranjan — Chief Financial Officer

See, the diversity of our product line, the applications we go into enable us to continue to grow. And that’s the key area our focus has always been not be specific to one specific industry or application. Because no time is the same for all industries. It keeps fluctuating, and keeps varying from one industry to another. So being present in multiple industries and multiple applications enables us to kind of maintain the so-called growth aspirations that your company has.

Akhilesh Kumar — ILA Investments — Analyst

Okay. Okay. Fine, sir. That helps.

Operator

Thank you. Next question is from the line of Keshav from RakSan Investors. Please go-ahead.

Keshav Kumar — RakSan Investors — Analyst

Hi. Sir, for shunt resistors, if say, you and somebody else are making resistors of same attributes. So, same homage [Phonetic] and whatever else needs to equate for that. Now would a customer always prefer the product of that specific component supplier using which they’ve built the assembly or could shunt resistors of same attributes but of different suppliers be used in a fungible manner?

Rajeev Ranjan — Chief Financial Officer

Can you just repeat that question once again?

S.S. Sandhu — Chairman

You were not clear.

Rajeev Ranjan — Chief Financial Officer

You were not very clear to me.

Keshav Kumar — RakSan Investors — Analyst

So sir, basically, I’m trying to understand that if you and another supplier that supply shunts of same attributes, is there a — could they be used fungibly or is there a client-specific lock-in also?

Rajeev Ranjan — Chief Financial Officer

No, no. Shunt — that’s why we have players in the market who are providing similar shunt as well, as we mentioned earlier. But, of course, if you go through our presentation the biggest moat that we have is that we have an integrated in-house manufacturing setup, which enables providing customers standardized as well as customized products. So, of course, for a customer for critical products like this, it’s not just the product availability, but also the risks can be, and the so called ability of the supplier to deliver a type of products and design [Phonetic] that they desire and that’s sometimes becomes the reason for our decision for selecting supplier A versus supplier B.

Keshav Kumar — RakSan Investors — Analyst

Okay. And sir, lastly, is there also a trend you’re seeing of shunt-based current sensing taking share of magnet-based? Or are the use cases distinct?

Rajeev Ranjan — Chief Financial Officer

Man-made and other alloys [Speech Overlap] magnet-based or man-made based? [Speech Overlap].

Okay. So when it comes to the alternates, to be very honest, at the moment we see a lot more advantages of the EV welded, shunt resistors over the other magnet, as they’re more expensive as well as they’re less accurate. And a lot of industries and lot of especially in the automotive applications they’re being completely phased-out.

S.S. Sandhu — Chairman

Even in energy business.

Keshav Kumar — RakSan Investors — Analyst

Sure sir. Thank you. Thanks a lot.

Operator

Thank you. Next question is from the line of Sabyasachi Mukerji from Bajaj Finserv. Please go ahead.

Sabyasachi Mukerji — Bajaj Finserv — Analyst

Yeah. Hi. Thanks for the opportunity. So first is, you know, I wanted to understand that how do you go about in getting the orders from the customers. Are these long-term contracts or is it short-term, like nature, are the prices fixed? Or there is a volume commitment? I mean, what is the nature of these contracts if you can explain.

Rajeev Ranjan — Chief Financial Officer

We do go on long-term contracts with the customer. But when it comes to price fluctuations and variations, those are built-in into the contracts, because any fluctuation in the commodities are passed on in either way in the positive or the negative side. And these are volume as well as project-based contracts, which we generally enter into with our customers.

Sabyasachi Mukerji — Bajaj Finserv — Analyst

And is the — I mean, one year contract or how long is the tenure?

Rajeev Ranjan — Chief Financial Officer

It depends on the applications. In certain applications, it might be more than — more than a year, in certain applications it could be specific to a year. So, it depends on the application and the product-line that you are into.

Sabyasachi Mukerji — Bajaj Finserv — Analyst

And when you say the price pass-on agreement is there, is it fair to assess that, let’s say per volume or per unit gross profit or EBITDA level you are making the same amount that is kind of maintained?

Rajeev Ranjan — Chief Financial Officer

Let’s say in this case, price mechanism is very simple, for any product there is a product price methodology. Only thing we can share here is the fluctuation of LME, which is a contractual obligation between us and the customers.

Sabyasachi Mukerji — Bajaj Finserv — Analyst

Okay. And what are the key raw materials you use, and where do you source from all these raw materials?

S.S. Sandhu — Chairman

You see, for bimetals, which is from nickel, manganese, and alloys, which are not manufactured in India, and there are about three or four manufacturers globally. And we have three suppliers for these materials, one in Europe, one in China and one in Japan. And then we consume lot of copper, which we also have been using from companies from far-East, but we have successfully developed quality vendors in India.

Operator

Thank you. Sorry to interrupt you, Sabyasachi. A request to all the participants, please restrict to one question per participant. Next question is from the line of Prateek Chaudhary from Saamarthya Capital Management. Please go ahead.

Prateek Chaudhary — Saamarthya Capital — Analyst

Sir, are we exploring any long-term [Technical Issues]

Operator

Prateek, sorry to interrupt. May I request you to speak through the handset, please?

Prateek Chaudhary — Saamarthya Capital — Analyst

Hello? Am I — is it better now?

Operator

Much better. Thank you.

Prateek Chaudhary — Saamarthya Capital — Analyst

Sir — on, are we exploring any long-term partnerships or alliances with any of our major customers?

Rajeev Ranjan — Chief Financial Officer

Yes.

Prateek Chaudhary — Saamarthya Capital — Analyst

And what — what can these partnerships be in the nature of?

Rajeev Ranjan — Chief Financial Officer

Well, it is too premature at this time to share any information. We will positively share information with you once we have the contracts in-place.

Prateek Chaudhary — Saamarthya Capital — Analyst

And would these be for similar product lines or…[Speech Overlap]

Rajeev Ranjan — Chief Financial Officer

Obviously, they are from the similar product lines, established product lines, and some new developments has been.

Prateek Chaudhary — Saamarthya Capital — Analyst

Okay. And sir, in our — the long-term contracts that we have signed with our customers, these programs as has been mentioned by you in previously MCA [Phonetic] programs for eight to ten years of the life-cycle of the product. And these customers give you [Phonetic] certain volume projections for the same. So, in your understanding, as far as the ramp-up is concerned, where are we in that lifecycle, in that eight or ten year program that you foresee?

Rajeev Ranjan — Chief Financial Officer

See, if you see the history of Shivalik, we have been growing at a CAGR of almost 10% to 15% range since beginning. And in this product line the commitment for growth is difficult to quantify, but we assure you that this will be the significant as we are growing in the last five years at the rate of — at a CAGR of more than 25%.

Operator

Thank you. Next question is from the line of Sriram, Individual Investor. Please go ahead.

Sriram — Individual Investor — Analyst

Thank you for the opportunity. Just one question from my side. What is the revenue from electrical contact business for this year and last year? And where you classify the contact business? Is it part of bimetals or resistors?

S.S. Sandhu — Chairman

As far as the product category is concerned, it’s different, but it’s similar — it falls on a similar industry as thermostatic bimetals, because the primary customer for both being switchgear, primary customer base being from switchgear industry. And as far as revenue is concerned, there has only been a marginal increase in the revenue between last year and this year. Part of that is also because the plant — current plant is, the new plant for this particular business is under-construction. And as of now running at full capacity. So we would see a faster growth rate as long as far as soon as we move into the new plant, which is — which we are expecting to do in the next eight to ten months.

Operator

Thank you. Next question is from the line of Akhilesh Kumar from ILA Investments. Please go ahead.

Akhilesh Kumar — ILA Investments — Analyst

Thanks. And this is regarding the raw materials and pricing of the products. So you had mentioned that any fluctuations up or down of the raw materials will be passed on to the final product. So, my question is that, if I take a– if there is a product, like, given a product and say the raw materials are fluctuated and — like [Indecipherable] or say they are have in place 50%, so is my product absolute profit gross profit remain the same or is it like margin is indexed to as a percentage? Like how does it — will the absolute profit be the same? Or as the raw material changes my margin also increases, because if I am basing it on percentage of cost of production?

S.S. Sandhu — Chairman

As far as raw material formulas which are established with all of our customers across-the-board, all fluctuations are to their account to — it does not affect the price and it does not affect the margin it is passed on.

Akhilesh Kumar — ILA Investments — Analyst

When we are saying margins, so it is a rupee margin.

S.S. Sandhu — Chairman

Margin will not get impacted.

Akhilesh Kumar — ILA Investments — Analyst

Okay. So the margin here is a rupee margin, like not percentage margin?

Rajeev Ranjan — Chief Financial Officer

Yeah. So, that’s a very good question, and the formulas are in place in such a way that we ensure that the overall margin don’t affect too much. But as you rightly mentioned that there would be certain composite value that will remain there and the percentage of raw-material can significantly go up or go down. The only — the specific cost attached to the percentage of attached to the increase in raw-material or the fluctuation will be accounted for.

Akhilesh Kumar — ILA Investments — Analyst

Okay.

Operator

Thank you. Ladies and gentlemen, we’ll take that as the last question. I now hand the conference over to the Senior Management of Shivalik for closing comments.

S.S. Sandhu — Chairman

Yeah. Thank you all for joining us today and actively participating in our discussion. We are committed to delivering sustainable growth, and we firmly believe that our success lies in our unwavering focus on advanced technology innovation and maintaining the highest quality of tenders for our clients.

We remain committed to transparent communication, sound financial management and creating long-term value for our stakeholders. We appreciate your ongoing commitment to our journey. Thank you. Thank you very much indeed.

Operator

[Operator Closing Remarks].