CARYSILNSEFebruary 19, 2025

CARYSIL LIMITED

9,189words
115turns
11analyst exchanges
2executives
Management on call
Chirag Parekh
CHAIRMAN AND MANAGING DIRECTOR
Anand Sharma
EXECUTIVE DIRECTOR AND GROUP CHIEF FINANCIAL OFFICER SGA, INVESTOR RELATIONS ADVISORS
Key numbers — 40 extracted
rs,
most trusted one-stop kitchen solution company by forming partnerships with global marquee customers, leveraging technology, strategic marketing, building a robust ecosystem, keen understanding on evo
INR35 crore
rgin kitchen faucets to cater the domestic industry. To support the development, we invested over INR35 crores in new moulds, machineries, utilities and new products, reinforcing our commitment to deliver hi
INR3 crore
f distributors and customers meet. Also, we run social media campaigns and invest in ads of about INR3 crore plus last quarter over our regular marketing spending. Our participation in the Ace Tech exhibi
65%
As of December 31, 2024, our plant capacity utilization stood at 65%. We are also happy to inform a second breakthrough by the new SKU has been approved by IKEA for t
80%
pproved by IKEA for their global requirement and will overall improve our capacity utilization to 80% in the coming quarters of FY '25, - '26. Stainless steel sink business. In quarter 3 FY '25, ou
INR205.5 crore
olidated financial performance quarter 3 FY '25 performance. Consolidated total income stood at INR205.5 crores for Q3 FY '25. This grew by 8.9% on Y-on-Y basis, but marginally lower than the previous quarter
8.9%
Y '25 performance. Consolidated total income stood at INR205.5 crores for Q3 FY '25. This grew by 8.9% on Y-on-Y basis, but marginally lower than the previous quarter, primarily due to holiday season
INR31.2 crore
verseas subsidiary and lower sales in steel sinks segment. EBITDA for quarter 3 FY '25 stood at INR31.2 crores as compared to INR36.1 crores in Q3 FY '24. EBITDA, margin for quarter 3 FY '25 was impacted mai
INR36.1 crore
ales in steel sinks segment. EBITDA for quarter 3 FY '25 stood at INR31.2 crores as compared to INR36.1 crores in Q3 FY '24. EBITDA, margin for quarter 3 FY '25 was impacted mainly due to reasons like the ex
6.5%
r quarter 3 FY '25 was impacted mainly due to reasons like the export freight cost increased from 6.5% in March '24 to 9.3% in December '24 due to Red Sea issues. This has resulted in impact of margin
9.3%
s impacted mainly due to reasons like the export freight cost increased from 6.5% in March '24 to 9.3% in December '24 due to Red Sea issues. This has resulted in impact of margin by INR2.1 crore on Q
INR2.1 crore
March '24 to 9.3% in December '24 due to Red Sea issues. This has resulted in impact of margin by INR2.1 crore on Q-on-Q basis. However, with the current ceasefire with Israel and Hamas, freight rate has came
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Guidance — 20 items
Chirag Parekh
opening
“Attracting, developing, and retaining top industry talent, we aim to foster country innovation, enhance operational efficiency, and deliver an exceptional customer experience.”
Chirag Parekh
opening
“As we move forward, our focus will be on creating awareness with consumers, industry professionals, and businesses about the unique benefits of Quartz sink through well-structured and strategic marketing campaign.”
Chirag Parekh
opening
“We aim to accelerate value creation, enhance working capital efficiency, improve profitability in the coming quarters, and position our business for sustained growth.”
Chirag Parekh
opening
“However, we expect a more value-driven growth in the coming quarters.”
Chirag Parekh
opening
“We are also building capacity to meet the demand of the current sales forecast and to seize any OEM opportunities.”
Chirag Parekh
opening
“We anticipate strong domestic growth in the faucet industry.”
Chirag Parekh
opening
“Strategic priorities, following key initiatives: product innovation, infrastructure expansion, A new factory will be constructed on the land opposite to existing facility to support above expansion plans in the built-in appliances.”
Anand Sharma
opening
“However, with the current ceasefire with Israel and Hamas, freight rate has came down sharply and current freight cost will be at pre-March '24 level.”
Anand Sharma
opening
“Till now we have utilized around INR5 crore because the major capex plan is underway, which will be utilized in FY '25, '26.”
Anand Sharma
opening
“The remaining fund will be utilized in the coming period and the said balance we maintained in the FD with the banks.”
Risks & concerns — 10 flagged
This has resulted in impact of margin by INR2.1 crore on Q-on-Q basis.
— Anand Sharma
There was also an adverse impact of GBP INR translation difference due to the consolidation of the UK balance sheet in the Indian rupee as of 31st March '24, where the rupee appreciated from INR112 in September '24 to INR107 in December '24.
— Anand Sharma
But do we see that tariffs as a risk to our kitchen sink exports to the US, the Quartz and stainless steel sink?
— Resha Mehta
And the second question is basically, we've been encountering weak demand, right?
— Resha Mehta
Because we have also seen volume degrowth in Quartz, stainless steel sink and appliances, we have seen a pretty sharp decline, right?
— Resha Mehta
So how do you see this going forward considering US, it's an uncertain probably market.
— Resha Mehta
And we have not seen a major decline in the kitchen sinks.
— Chirag Parekh
Hence, the quantity has remained same, but we have a decline in the value growth.
— Chirag Parekh
US have definitely the decline in the US sales have spoiled the game.
— Chirag Parekh
So we were also trying to minimize the inventory level, which has also resulted in some decline in sales in the US.
— Chirag Parekh
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Q&A — 11 exchanges
Q
A few questions from my side. So firstly, on the gross margin front. So if you could kind of help us understand the dip in the gross margin, especially on a sequential basis. So even if I adjust the increase in the raw material cost, the dip in the margins at the gross margin front is almost by around 250 to 300 basis points. So one question is that -- so when I do consolidate minus standalone to find out the subsidiary gross margin, it seems that there has been some one-off or maybe I don't know the reason for the drop in gross margin at the subsidiary level. So if you could kind of help us u
Anand Sharma
So the gross margin dropped, mainly because of the US subsidiary where we have an operating loss. Secondly, since we are doing consolidation in the Indian rupee, as I explained in my speech, when we did our consolidation on the 30th of September, theGBP/ INR equivalent is INR112, which came down to INR107 as on 31st Dec-2024. So when we do again the consolidation on 31st December, the difference in the consolidation is all got into quarter 3 because we cannot change the first 6-month period number. So the consolidation difference came in quarter 3 itself. So that has brought down the gross mar
Q
I just wanted to know if you could give me an exact number for this quarter on how much we have sold in value terms in each segment, that is Quartz, steel sink and appliances. Could you just help me with that number?
Anand Sharma
So I'll give you the number for the quarter. So in Quartz sink, we have value of INR92.95 crore. Steel sinks, we have INR12.76 crore. Appliances, we have INR7.62 crore. Faucets and FWD INR3.4 crore and others INR1.56 crore. So total INR118.3 crores for India business. So this is India alone, you're saying? Yes, India business. So that includes Carysil Limited India and Carysil Steel India. Understood. And also, could you just share some light on the faucet part? Is there any kind of demand? I mean I would have missed it in the initial comments, I wasn't present. But could you just like shed so
Q
So one question is on exports to the US, so it's almost a 20% revenue contributor for us. So any thoughts that you can share in terms of are we expecting any kind of tariffs to be imposed on the kitchen sinks that we export? Because while we hear you that instead, you were rather talking about the China plus one opportunity that we have. But do we see that tariffs as a risk to our kitchen sink exports to the US, the Quartz and stainless steel sink?
Chirag Parekh
So all I can say is that nothing has been heard in Quartz's side as of now. Regarding metal, the announced import duties on stainless steel and metal sinks remain unclear.. I spoke with a few of my customers last night, and they are still seeking clarification from their internal trade teams, If there are no duties imposed on steel sinks and raw steel.. We don't export to US, I think maybe 1% maybe it's a very, very small. But if it is applicable, then we see only the rise in demand of the Quartz sinks in the US. So it may work in our favor. But you're not hearing anything on the Quartz sink s
Q
Sir, my first question is you sort of mentioned that we can see the expanded capacity as in the capacity utilization to go to 80% in the coming quarters. When can we sort of achieve this?
Chirag Parekh
I would obviously like to have it soon as possible, but I think you'll be able to see it coming quarter gradually from this quarter, slowly, slowly. So I would say 80%, if I'm trying to be optimistic, it will be from quarter 1. And we are currently working on the entire 1 million line, right? We are currently operating on 800,000, 900,000. Capacity is 1 million. As we said that current last quarter 3 capacity utilization was around 65%. And sir, just also you mentioned about IKEA as well that the second set of SKUs have been approved by them. Yes. So can you highlight what kind of order flows
Q
So my first question is on to the capacity expansion. So as you know, when we reach to the capacity utilization of 80% to 85%, we tend to increase our capacity. So what will be the planned capacity expansion for Quartz sinks, steel sinks and faucets?
Chirag Parekh
So I think it's a very good question. I think the quarter where we receive 80% expansion, I think the company should start planning about how do we increase the capacity because like I said, any large major customer wants at least 10% to 15% idle capacity in the plant before they do. the quarter which we touch 80%, the company will start looking at expanding the capacity of more than 1 million sinks, and that's why exactly the QIP was raised for this reason. And my second question is on to the margin side. So if you look at our operating margin, so it has gone below to 14%, which is the lowest
Q
Sir, my first question is in previous con-call, you mentioned that there is 1 lakh capacity you have added to the kitchen appliances. Could you please clarify which specific product in the kitchen appliances category has this capacity increased?
Chirag Parekh
Yes, it is for the kitchen hoods and cook tops. And my another question is, are we generating any sales from countertops in the Indian market? Not yet. No. And my final question before I jump to the queue, like what are our plans to grow our domestic segment, like our plan to improve and grow our Indian market business segment overall in the Indian market? Yes. So we are kind of drawing up a great plan. I think the first plan we got into play for introducing high-margin products, sinks with better utility. Now what is that? That is a sink you saw it in the 8 stack, they called the workstation
Q
Thank you for explaining the growth prospect going ahead. Just wanted to check on the numbers that given all the orders and the growth that you are talking about, so the quarterly run rate, which will take us to INR1,000 crore number on an annualized basis, when do you expect from which quarter should it translate?
Chirag Parekh
Good question. You see, this INR1,000 crore, I think it's also hitting me as a CMD of the company. Why do we are reading? We are talking about INR1,000 crore. What has happened is suddenly and last quarter also, I mentioned this or I think probably you were in our factory. I don't know, I remember maybe I've seen you or met you. But I had mentioned this, this is not an attempt to avoid the question nor I'm trying to duck the question. But global scenario, who knew this we are in a period where there's so much of uncertainty and now the trumpet blows everyday morning, you don't know what's happ
Q
Sir, just wanted to know like in the domestic market, you've been increasing your dealers, and distributors, but in tandem, the sales are not growing. Firstly, the reason for that? And secondly, sir, what are your marketing efforts that you are planning going forward in order to create a brand in India? Yes, sir, that would be my questions.
Chirag Parekh
Yes. The whole demand in India market is muted. There is a low demand. Last quarter, Delhi was suffering from pollution. All the construction was stopped. Everything was stopped come to a halt. Not our company, other companies also suffered that. So we have seen growth in other states of India, but minus north, when the north comes back in, you will see the growth in the domain. That's point number one. The point number two is when the market is flat or muted, we try to see what opportunities, what can we see in India. And that's what I'm saying. We're not looking at a quantity. We're seeing v
Q
Sir, how is the current quarter shaping up? I mean we were expecting to cross INR850 crores in the current financial year. So are we on track to achieve it?
Chirag Parekh
So I think we are definitely on a track to cross INR800 crores. Now let's see how this quarter 4 ends, but we are definitely looking -- if the same momentum comes, I think we'll be doing INR815 crores, INR820 crores or something like that. Yes, something like that. And sir, in terms of EBITDA, I mean, we were at the lowest in terms of EBITDA, 14% in last many years. So I mean, how is the current quarter shaping up? And by FY '26, where do we see the EBITDA margin settling down? See, one thing, if we can just split on a standalone and consol basis, right? So I think our CFO and Executive Direct
Q
I have 3 more questions. So one question, sir, is this Carysil Surfaces, 9 months, we have had INR6 crore, I think, PBT loss. So how do you see this subsidiary doing in FY '26?
Chirag Parekh
No, no. There is no loss. There is no loss in Carysil Surfaces. Loss you see in US subsidiary... United Surfaces. United. Right, there's a loss in the 9-month period. But if you look at the quarter, it is at the break-even level. As we already stated this quarter will have break-even at the operating level, it will not be a loss. And going forward from quarter 1 onwards, we see that it turn into the profitable. And is that subsidiary growing, sir? Can we expect like a $10 million kind of sales next year? No. So I think we were expecting the demand to grow, which has not grown to be honest. We'
Q
Thank you, everyone. I hope we've been able to answer all your questions satisfactorily. However, if you need further clarification to want to know more about the company, please get in touch with SGA team, our Investor Relations Advisers. Thank you. Have a great day.
Management
Speaking time
Chirag Parekh
46
Moderator
13
Anand Sharma
11
Rupesh Tatiya
10
Harsh Shah
7
Ayush C.
6
Nikhil Gada
6
Resha Mehta
4
Gautam Vandra
3
Saumil Shah
3
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Opening remarks
Chirag Parekh
Good evening, ladies and gentlemen. Thank you for joining the Carysil Limited quarter 3 and 9 monthly FY '25 earnings conference call. I trust you have an opportunity to review our financial results and investor presentation, both available in the company's website and on stock exchanges. Joining me on this call are Mr. Anand Sharma, Executive Director and Group CFO; and SGA, Investor Relations Advisors. With over 30 years of learning at Carysil, we focused on rapidly translating those learnings into action, which has helped us grow over the years. We have also step ahead and emerge as a bigger, stronger force in the market. We have continued with our multi-prolonged holistic strategy for growth and continuous innovation, investment in capacity expansion, brand visibility and expanding our reach across new geographies worldwide. Our commitment to brand development, both in India and internationally, has been instrumental in strengthening our position as a trusted name in the kitchen in
Anand Sharma
Thank you, sir. Good evening, everyone. Let me take you through the company's consolidated financial performance quarter 3 FY '25 performance. Consolidated total income stood at INR205.5 crores for Q3 FY '25. This grew by 8.9% on Y-on-Y basis, but marginally lower than the previous quarter, primarily due to holiday season in overseas subsidiary and lower sales in steel sinks segment. EBITDA for quarter 3 FY '25 stood at INR31.2 crores as compared to INR36.1 crores in Q3 FY '24. EBITDA, margin for quarter 3 FY '25 was impacted mainly due to reasons like the export freight cost increased from 6.5% in March '24 to 9.3% in December '24 due to Red Sea issues. This has resulted in impact of margin by INR2.1 crore on Q-on-Q basis. However, with the current ceasefire with Israel and Hamas, freight rate has came down sharply and current freight cost will be at pre-March '24 level. We have incurred a strategic additional marketing spend of INR3 crores in Q3 FY '25, which will drive the growth fo
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