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Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Ladies and gentlemen, good day, and welcome to the Carysil Limited Q4 FY '23 Earnings Conference Call. This conference call may contain forward-looking statements about the company, which are based on beliefs, opinions and expectations of the company as on date of this call. These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Chirag Parekh, Chairman and Managing Director. Thank you, and over to you, sir.
Good afternoon, everyone, and thank you for joining us on Carysil Limited Q4 FY '23 Earnings Conference Call. I hope everyone had a chance to go through our financial results and investor presentation, which were posted on the company's website and stock exchanges. I'm accompanied by our CFO, Mr. Anand Sharma; and SGA, Investor Relations advisers on this call today. Let me start with some economic updates. In last financial year, most of the global economies were grappling with persistent inflationary pressures, coupled with disruption in the banking industry. Central Bank across the globe taking calibrated measures to keep the inflation under control. However, the last data suggests that price pressures were easing among most of the global economics. U.S. debt is [indiscernible] remains a key threat to overall positive development witnessed over the last few months. On the other hand, India continues to be on the bright spot in the global economy. Some of the trends such as increases in product spending, rising per capita income, driving demand for housing and an uptick in home renovations augurs well for the improved demand per month. Now coming to specifics of our business performance for Q4 and FY '23. We're pleased to announce that in FY '23, we have surpassed our medium-term target of INR 500 crores, which we finally ended close to INR 600 crores. Our focused business approach and broadening of our product offerings across a variety of product categories helps us to achieve our objectives. Let me talk a bit about our exports business first. We are witnessing an increase in inflow of export orders, and few economies are showing signs of rebound in demand. Also, we recently renewed our contract with our customer, Karran USA for the supply of Quartz kitchen sinks worth $68 million, approximately INR 550 crores over a 5-year period commencing from FY '24. Our relationship with Karran started with an agreement in 2017 with INR 45 crores, and its average value of sales for the past 2 years had been INR 70 crores to INR 75 crores approximately. Karran is rapidly taking on the Quartz kitchen sinks in the United States from other manufacturers. Furthermore, Europe is showing encouraging -- both Europe and U.K. is showing signs of encouraging of recovery, especially on the demand side of things. However, the progress has been slow compared to the other markets. Now coming to the domestic market. While global markets remain uncertain and slow, we have to take lots of efforts to do market expansion in India. We are undertaking product expansion, team expansion, launching a range of new models. We are strengthening our marketing team and increasing efforts with aim to increase our brand visibility in India. To improve our channel mix and implement B2B strategy, we have decided -- dedicated team with a different vertical. We look at the flow of business from developers and architects. We are making significant efforts to expand our domestic market presence and increase [indiscernible] domestic revenues of our total revenue. We have expanded our dealer network to 2,500 plus and working closely with our dealers and distributors to penetrate deeper into the domestic market. Now coming to the steel kitchen sinks. We have doubled our capacity to manufacture steel sinks to 180,000. The additional capacity will be operational from June '23 onwards. On full capacity, we expect to generate revenues in the range of INR 80 crores to INR 90 crores. On this note, I would also like to mention that we have made a recent agreement with IKEA for stainless steel sinks with the production to commence in next 4 months' time. Now coming to the built-in appliances and faucets division. To update on our greenfield project of CapEx in appliances division, built-in appliances, especially kitchen hoods and hobs, we wish to inform you that implementation of the project is delayed by 3 to 4 months due to a high lead time of delivery of some critical machineries. We expect to commercialize the first phase of 100,000 units by end of September; 23 and second phase of 100,000 units expected by quarter 4 '24. The faucet assembly line of 100,000 units shall also be operational from September '23. We wish to update that we have incorporated subsidiary United Arab Emirates in the name of Carysil FZ-LLC and cater to GCC markets. The subsidiary will focus on the sale of kitchen appliances and bath products. The subsidiary will be operational from quarter 2 FY '24. Acquisition of The Tap Factory Limited. We have acquired 70% of the equity share of The Tap Factory Limited based in Yorkshire, U.K. We have option to purchase the remaining 30% in the next 2 years. By acquiring this company, we will be able to compete in the kitchen and the bathroom glassware market in U.K. more effectively. The acquisition also fulfills company's strategic objective of making market-leading brand decision segment and also see the company broaden its portfolio in the U.K. This acquisition will also enable us to have necessary technical know-how for manufacturing and assembling of faucets in India. The name of the company is changed from The Tap Factory Limited to Carysil Brassware Limited to align with the group name and brand. Now coming to our subsidiaries, Carysil Products Limited and Carysil Surfaces Limited. Our U.K. operating subsidiaries, Carysil Products Limited, erstwhile Homestyle Products Limited and Carysil Surfaces Limited, erstwhile Sylmar Technology Limited have shown good growth in Q4 FY '23 and expect it to grow further in FY '24. Successful implementation of SAP in the company. We are pleased to inform you that we have successfully implemented SAP ERP system in the company to integrate our various functions for better efficiency and controls. The SAP journey was not easy for the company, and it has taken a lots of management time and effort with the help of SAP team [indiscernible] and our dedicated employees who achieved -- we have achieved a successful implementation in record time. Since we have gone live on SAP from 3rd April 2023, our production and sales were operating at a lower scale as compared to the normal capabilities in the month of April 2023. This has led to probably a little bit of shortfall in our revenue in April 2023. However, we are confident to recoup the revenue loss by the next quarter going to decent order booking and consistent flow of the orders. We are committed to build stronger ecosystem for sustainable growth of the company. To summarize, I wish to inform you we have successfully sailed through the rough patches in last quarter. And we are confident to achieve 15% to 20% growth in FY '24. Now I would like to hand over our call to our CFO, Mr. Anand Sharma, to update you on the company's financial performance. Thank you.
Thank you, sir. Good afternoon, everyone. Let me take you through the consolidated financial performance of the company. Quarter 4 FY '23 performance. Consolidated total income stood at INR 146.0 crores in Q4 FY '23 as compared to INR 137.96 crores in Q3 FY '22, growth of 6.3% quarter-on-quarter. EBITDA of the company stood at INR 26.5 crores in Q4 FY '23 as compared to INR 25.3 crores in Q3 FY '23, growth of 5%. Profit after tax and monetary interest for the quarter stood at INR 12.42 crores in Q4 FY '23 as compared to INR 12.05 crores in Q3 FY '23, growth of 3%. On an annual basis, FY '23 performance. Consolidated total income stood at INR 593.9 crores FY '23 as compared to INR 492.4 crores FY '22, growth of 21%. EBITDA of the company stood at INR 108.9 crores in FY '23 as compared to INR 114.7 crores FY '22. Profit after tax and MI stood at INR 52.4 crores as compared to INR 62.8 crores in FY '22. Sales volume for quartz sinks stood at 5.14 lakh units. Standard steel sales stood at 1.08 lakh units, and the kitchen appliances stood at 28,895 units in FY '23. We have incurred CapEx of INR 60 crores in FY '23. Gross debt of company stood at INR 220 crores. Thank you. Now I open the floor for questions and answers. Over to the operator.
[Operator Instructions] We take the first question from the line of [ Ravi ] Monacrch Networth Capital.
Sir, my first question would be that earlier we saw that European players facing some issues, high inflationary issues and energy prices. So I just wanted to check what's the scenario over there? And are we able to grab any market share from this since they had -- since they were facing some issues?
So unfortunately, I think your audio is bad. But anyway, I think I understood your question is that talking about the -- our competition with the European economy, inflation is higher, right, with the energy issue. Yes, so I -- so what I would like to state here is yes, I think that remains pretty relevant. I think we are facing difficult times. And I think we -- like I said in my last call that we will have opportunities to grab larger market share, and this is what exactly has started to happen. Yes.
So sir, so are we gaining market share over there?
Yes.
Okay, sir. And sir, my next question will be on the [indiscernible] side. For the year FY '23, how much was the domestic [indiscernible] contribute to our revenue?
I think I just want -- I think total we sold -- I'll just pull it out. I think total we sold 650,000.
So that was for last year. FY '23, sir?
Yes. So last -- so on 2023, we sold 513,280 sinks. Out of it, 20% is domestic sales.
[Operator Instructions] We'll take the next question from the line of Devika Jain from Ratnabali Investments.
Sir, congratulations on the performance. Sir, just wanted to ask a strategic question. Our core strength has always been sinks. We are the leader, and we have the right to win in this market. Our products are of superior quality and design, and we have demonstrated the company.
However, now we are planning to move beyond being the sinks company. We have launched around kitchen appliances, bath fittings et cetera, and more so catering to Indian market. But the Indian market will be a different animal. And we may be competing with the likes of Bosch, Samsung, Crompton in the built-in appliances space. If we look at the performance of Sternhagen despite multiple years of selling, it hasn't yielded us any growth as of now. So how we plan to address this problem differently? Because now we are moving beyond sinks. We are competing in Indian markets with established players. What are the learnings that we have from the muted response of Sternhagen? And what kind of new efforts are being thrown behind the Indian market this time?
So I think let me first address your first question. The business model for one-stop solution is for India. This I would say 5 years back when we launched it. Out of the total revenue in the domestic market, 40% revenue is through the new product initiatives. If we have not taken this any schedules, I think we would have not able to achieve -- we would have not able to cross INR 100 crores. As you can see, the Quartz kitchen sink market is a premium market. There's a limited market share, though it's growing rapidly year-on-year. But when the consumers ask that we want to have a Carysil steel sink if somebody does not want a quartz sink, we need to have an option. If somebody asked, I wanted Carysil appliance since I'm buying a thing, and that's the demand coming from the market. It is not something what I have thought. So it's still coming from the market side that you need to have a one-stop solution because you already have the channel ready. You need to optimize your -- the channels and your sales team. So I think that's your answer to question one. Question number two, and again, I would like to say that Sternhagen is not our focus category. This is a luxury brand, which we just wanted to put in the market to test. It's understand -- we are not even putting 5% of our time on it at this point of time, especially me. We have a very small team. We are doing very, very niche. So when the right time comes, we will definitely push the button. Our latest collaboration in Sternhagen with Sussanne Khan is probably going to yield into two- to threefold of sales in the current year, which we've already seen it coming. So I just want to clarify this that Sternhagen is not our focus point. It is a test marketing for luxury brands, Sternhagen in India. And I'm sure that when the right time comes, we will be able to press the buttons that we're able to spearhead the growth in this category.
Sir just trying to understand because I myself had gone down to visit a couple of stores, et cetera. And in the kitchen appliances space, the competition is quite hot, and there are established players with larger marketing budgets. How would we be able to differentiate within them?
So this question was asked doing our launch also by many investors and a lot of shareholders also. So why are you doing this, and there's a lot of competition, they're established brand. How do you think -- Carysil is a kitchen sink company. How are you going to be? But we have been successful in doing built-in appliances because when Carysil comes, it's -- yes, we are experts in the sinks, but what it also comes, it comes with the trust. It comes with technology and Carysil brands been German engineered. We have technology. We have a great quality. We have a great service team. So a lot of trust comes with that, and when you are buying a Carysil sink and you have your Carysil appliances, then it's a one-stop service. You can solve it just by one stop. My guys could come to service all.
Sinks or faucets, we'll also come and service them, appliances. So life becomes very easy for a consumer. You imagine and that was my wife said that please, I do -- I want to avoid 4,5 brands in my kitchen because how many agencies I have to call to do it. So this makes life very easy or easy. Second thing also that the appliance and the built-in appliances, what we have in our category are very different. Not -- every product is different because you'll deal with the competition. It'll be like more in trends, but we have lots of new products, which is -- which we -- is very different in terms of design and technology. So that kind of gives an edge to us.
We'll take the next question from the line of Mehta, Pranav from Equirus Securities.
Sir, so I just wanted to understand on the demand scenario. So how are you seeing things picking up on big box retail are starting to get their inventories back and by when you foresee that the Quartz volumes will start picking up meaningfully? That was my first question.
Sure. You wanted to answer that first?
Yes, sir.
So the demand has already started growing. So whatever you have seen in the quarter 4 is that the demand of the quartz sales has been reviving. And like I said in my last call, the destocking is taking a lot of time. I thought we will be done in 2 quarters, but it has taken a third quarter. From the fourth quarter, we have already seen it going up. And there is still a destocking problem. I was also speaking to some of the people in our category also. Some have even not finished with destocking from their end. So -- but fortunately, I think for as far as our customers are concerned, I just came back from the U.S., U.K. and Europe trip just 2 days back. I went to see the customers and we have stopped it. So I think the good thing is it's all gradually going down. The order booking is coming back to the normal what we had. So yes. So I think it's -- and as -- yes, and at the same time, like I mentioned in my speech that we have made a lot of efforts for new channels, new market expansion, new product expansion. And also, like I said, that the U+ strategy, where we -- our competitors are facing challenges with very high fuel cost and energy cost. So that kind of gives us an edge. So yes, so I -- so honestly, we are quite pleased what is happening now. We have a lot of new inquiries from many new customers across the globe. I think probably, I think for us, it seems like the bad times go up. And I think we are looking at a good, positive recovery of our business.
Okay, sir. And sir, just a related question. Here, you have highlighted that you have renewed the contract with Karran USA. Any other customers that you are expecting to convert and start sourcing from you anytime soon? Is there a possibility of that happening?
So we have that, another 3 new customers in the U.S., but we have not made any formal agreements. So I'm not -- we're not able to disclose it. So the last 5 contracts are disclosed. So yes, we have tied up 3 new customers in the United States. We also started supply to few. We have already -- we have moved the orders. We have also penetrated into with some German kitchen manufacturers. We are also in talks with large box retailers around the world. We are penetrated to about 50 new customers in U.K. market, where we are using this, the cross-selling opportunities between the offices and things. We have -- yes, so there are a lot of things, honestly, what we've been doing across the world. A lot of new customers are coming in. And yes, and I think the inquiries of how many of the new inquiries will fall into place, how much I think that I think we'll be able to update you on a quarter-to-quarter basis.
Okay, sir. And sir, any guidance on the consolidated EBITDA margins for next 2 years? So this year, we have ended up around 18%. So you had highlighted that because of that U.K. acquisition, [indiscernible] and this other one, the new one. So mainly what kind of margins can we expect going forward?
So I think one thing I'm very pleased, and I said it in my speech that the costs are obviously going down. We have made some -- seller price increases. The foreign exchange rate's on our favor. Fortunately, we have not decreased the price, what we have increased during this time. So that is coming to play at this point of time. You have seen improvement in the margin. I think we have crossed 18% on a consol level. As soon as -- which we are looking at quarter-on-quarter top line increases. So there is a potential to improve our EBITDA margin. So if this goes at this rate, like overall, we said that 15% to 20% growth in top line mix comes. So if it happens, then we would probably again land back to our original margins or EBITDA around 20%.
[Operator Instructions]
We'll take the next question from the line of khush Gosrani from InCred Asset Management.
Sir, just A, wanted to ask what would be the contribution from solid surface sinks in terms of volumes this year?
Solid surface sinks?
Sinks, yes.
Your actual value or volume?
Volume, volume. Value, you have given at 25%. So I wanted to understand volume margin.
So volume is not possible for us to work out because it's based on...
What we mean -- we don't do sinks.
Talking about U.K.
Surfaces.
Surfaces.
Not sinks. So surfaces is about INR 150 crore business.
Volume is...
Volume, we will not...
Yes, volume is not possible because...
That is [ flat ].
[ Fit ], square feet and depends on the customization sold. So it's not a unit rate we can mention.
Sure, sure. And sir, how should one think of -- what would the gross margins across products right now on steel appliances and these solid surfaces?
So on the Quartz side, we had average margin of around 20%.
Net gross volume. [indiscernible]
Gross -- you're asking EBITDA margin or gross margin?
Gross.
Gross margin, okay. So we have the gross margin Quartz around 48% to 49%. Steel sinks have a margin around 35%. On the appliances side, we had around 40% margin. Yes, these are 3 main categories.
Sure, sir. And final question, sir. Historically, we have grown by 20% plus margins -- sorry, 20% plus growth numbers. So a guidance of around 15% to 18%. Isn't it a bit on the conservative side? I can understand because there was inventory rationalization from clients. We had a peak demand in '21, '22 so that got rationalized but going ahead in a normal demand situation.
So see, this rebounding what is happening that is happening quarter-on-quarter. When you were giving guidance 15%, 20%, it is on an annual basis. So yes, the improvement is coming, but it will be a quarter-to-quarter basis. And at the annual rate, we have given the guidance of 15%, 20% growth.
Sure, sir. And with the brand investments we are doing in the domestic business, will we still be able to achieve 20% margins?
We still need to be same because we have to invest in the branding, promotional and marketing activity also. And so we'll see, but our focus is to expand the business in domestic market first.
We take the next question from the line of Mr. Dhavan Shah from AlfAccurate Advisors.
So my question is on the exports revenue. So can you please share the STL revenue for the Q4? I think the total export comes to around INR 113-odd crores. So what was the actual number during this quarter?
Only export. 1 minute, the export number. So we have INR 96 crores in the export for the quarter 4.
What's the last quarter?
Compared to the corresponding in last -- Sorry, Dhavan this number is INR 64 crores for the last quarter and corresponding quarter is INR 96 crores.
Okay. INR 64 crores versus INR 96 crores. There is a degrowth?
INR 64 crores versus INR 96 crores. There is a degrowth, 44%.
Okay, okay. And in terms of the demand, I think sir already mentioned that the demand has been reviving. So is that mainly because of the restocking or there is real demand on the ground in the export market?
So both the things are happening. The destocking is also happening. And like I said, the fundamentals of our business are very strong. And I would like to stress here the demand of the Quartz sink is continuously on a rise. And second point I had stated earlier also that when this is exceptional times that people are cutting costs. I think it's a great opportunity for a company like us because people then move to different suppliers. They try -- so we have been able to, to a large extent also, compensate or kind of substituted with our sales by entering in contracts with a lot of new customers. And one thing when there is a slowdown in America, they call a sink and a work of a recession proof because when the times are bad, you don't change the whole kitchen. What you change is just a sink and a worktop. So sink is they're forcing what they change, and they don't change the whole kitchen. So that's why the demand, the renovation market is on a rise at this point of time. And hence, we are getting this benefit out of it.
Okay. And so basically, in the presentation, it is mentioned that the IKEA has doubled the order book plus Karran also given the incremental orders. So based on the current order book, what kind of the incremental volumes do you foresee for the quartz sinks? So we did roughly 500,000 kind of units for the FY '23. On that number, what kind of volume growth we can see for the quartz?
So we, like I said, we're looking at approximately 20% growth on the annual side. The 500,000 looks like we'll be able to do around 600,000.
Okay. So it can still be lower than FY '22 volumes? I mean, the demand is still not that great in the export market. Is that understanding correct?
So I think none of the assumptions work at this point of time, especially the market sentiments are really -- they're not -- so -- but good seeing the positive sign is it is increasing. Now it would be around 600,000 sinks. If we're able to hit some contracts with the buyers, what we are talking. It can also be 650,000 sinks. So it depends on what stage we are able to realize our contracts with the new buyers.
Right, right. And in the appliances side...
I'm sorry to interrupt you, sir. [Operator Instructions]
We take the next question from the line of Udit Gajiwala from Yes Securities.
So when you talk about a 20% EBITDA margin, so in order to achieve that, I mean, what kind of cost reduction are you witnessing?
So this, Udit, it is mainly driven by the volume because costs initiative and reduction what we have already taken. So that is already under control. The volume was increased. It will be a leverage for the market also.
Plus as I stated in my statement, the input costs has gone low, the freight cost has gone low. So we are -- so I think that is coming into the play now. We are -- I think we are very confident that the margin, EBITDA margins are -- we're hopeful that it's going to come back to the normalized 20% what we were doing earlier. And then on the cost reduction side, we are making every effort in the company. We are putting up a solar plant for sustainable energy to reduce the energy cost. We are doing the Kaizen program on a continuous improvement in the company. So across the board, we are -- the company is doing every bit what they can trying to -- then also the variable side as also in the cost side of it.
Right, right. And sir, on your total debt that were on the books now and with the new acquisitions that we have made, do we foresee debt going up for '24 and '25? What kind of a debt that we can look into?
So Udit, on the debt side, if you look at our debt, it's more further acquisition and remaining is the working capital. So we are very less on the CapEx side. It's all funded from our internal accruals. So on the working capital side and the CapEx side, we don't have any major requirements for the current year.
We are not making large CapEx.
Yes, we are not making any large CapEx. So I think we will be comfortable for this period. So nothing major planned unless we get some very good opportunity.
So this kind of debt -- I mean, we'll have this debt maintained on the books and not a major upswing, is that right?
Yes. Right now debt level is 2x of EBITDA approximately.
Yes, 2x.
We take the next question from the line of Mr. Varun Goel from Nippon India.
I wanted to check our margins from 2013 to 2020. We were 17% or below. So is that the headed profitability in the business? Except for the 2 COVID years, you always had margins in that range. So how confident do we feel that we can be at 20% going forward?
I think I've already stated earlier that the input cost, the freight cost has gone tremendously low at this point of time. Second aspect is our foreign exchange rates, dollar close to $83, Euro close to EUR 90, pound close to GBP 103. [indiscernible] So that's obviously working in our favor. A very important part is that whatever the price increases what we have made during this COVID time because of the inflationary pressures and input costs that we have been successful not reversing that. So that stands. It is a while the other costs have gone down. So I think that's giving us a benefit. That's kind of giving us an upside on improving the EBITDA margins. And third thing that the product mix has also changed. So the new models that we have developed for the new IKEA for U.S. markets, they are more high value-added products. So that's going to help us in improving our EBITDA margin.
Yes. Just to add that, if you look at the average price per sink, it was between INR 4,000, INR 4,500 between the period from 2012, 2017. Yes, it's gone up to INR 5,800 to INR 6,000 average.
We take the next question from the line of Harsh Shah from Dalal & Broacha Stock Broking Private Limited.
Yes. A few questions from my side. Firstly, on the renewal of the agreement with Karran. So would it be safe to assume that annually approximately INR 100-odd crores would be reflected in the top line?
INR 100 crores average current contract. Is there INR 100 crores we are looking at on annual basis?
Yes. So I think the -- so the contract is based on a year-on-year increase in the sales, right? So we have taken out the year-on-year increase by 15% year-on-year. So I think the first year, as we had mentioned that the average sales of Karran I think it was INR 40 crores, INR 50 crores and INR 70 crores, INR 80 crores. So we should have a 15% increase, about INR 90 crores, yes.
Okay. So it's basically a staggered manner?
Correct, yes.
Yes. Is it -- so just a bit longer-term question. Is it possible that by FY '26, we can reach a top line of INR 1,000 crores? And at that time, could the domestic market contribute close to around 30%?
You're talking for FY '26?
Yes.
So we are absolutely sticking to our target of FY '25 INR 1,000 crores. If we are able to -- we are -- and based on the current trend, I think it really shows that we are going to hit a run rate of annual about INR 700-plus crores from quarter 2. And so the year after -- year or year after that, we could take a 15% growth this year, and next year, we will touch INR 1,000 crores. And your second question was on the...
So when we reach INR 1,000-odd crores, would domestic market...
I think but all means we want to ensure that our domestic market share do not fall below 20% to 25%. So our endeavor is to maintain this 25% to 30%.
Okay. And just last one question. So basically, a lot of [indiscernible] we have done on the quartz sinks. So basically, what has happened is that the awareness is not there, right? And the real estate market, especially in India and Middle East, is quite growing at a rapid pace. So in terms of currently what percentage of my domestic revenue comes from quartz sinks?
So right now, of the -- what I said about 20% odd comes from the domestic market.
How much do you anticipate growing in the next couple of years?
So let me just come to a more of a fundamental question here. You see one of them, the Indian market is obviously not matured enough for the quartz sinks. Now that U.K., U.S., like the U.K. has passed 50% of the share of granite sink. The quartz sink, or stainless steel sink. Germany has already passed 50%. France has passed. U.S. is still about 20%, 25%. So where there a lot of the big players are inside there, so the market is material quartz. In India, we are probably one of the largest players who is trying to do the marketing of the quartz. So you are right. I think it is -- if the Europe and America has matured now, we may take about another 5 or 10 years to get mature. But I think this is where the trend is going quite fast. And on the marketing side, what initiatives company is taking is that we have formed a completely new marketing team. We have formed a new team. And this new team with single agenda is how to promote the quartz sinks in India. So what we have done, which have never been done until now, is that we are going to start banging everywhere across that why a quartz sink is preferred over stainless sink, right? So from the material to its properties, so we did all the pros of the quartz over stainless steel sink that we are going to start doing it. We are going to hire influencer, we're doing marketing, advertise a lot of things. Plus we are also participating in the ACETECH exhibition coming in Bombay end of the year where we are going to have a proper lab to show that how a quartz sink is made, what are the properties of quartz. So I think a lot of utility has happened now for people to do it. So that third thing is a very important thing is that the awareness is not probably the right way, I would say. Sometimes the people don't want to. They know Carysil. They know the quartz sinks, but some they don't want to take risk in terms of a sink. We cannot do anything about it. I think the only thing we have experienced is that the -- once the builder has used our sinks, they've always come back to use our quartz sinks. So I think that mostly happened more on the Western Bombay, especially Bombay are still very close to industry. If you say, Western -- Gujarat, Bangalore, North, everybody started using quartz sinks. Secondly, we have also started, as I mentioned in my speech, a new vertical called the B2B. The B2B vertical focus is only going to be on architects, builders and interior designers. So we are never at a formalized unit of this to focus on it so our case people used to do it. But we never had a process now. They're job is the top 100 builders, they moved another top 100 about -- in the next 2, 3 years, 500 top builder, they need to tap across. And whatever marketing materials they need to tap that, we're going to do. So I think there's a lot going to happen now from our part since we would like to maintain the market share in India of the total revenue of 25% to 30%. And I think one category which we have substantially not grown is on the builder side. So I think this is what we need to focus on.
We take the next question from the line of Bala Murali from [ Oman ].
Yes. Last time we have spoken about this European -- getting some new European customers. And could you give us an update on that, and we had a new customer in this quarter from the Europe region. And if it is so, then what could be the volume of the order?
So I think it's very hard for me to understand. But anyways, I think what you're asking is new customers in European market, sir?
Yes. And the last time I spoke, I mean...
I'm sorry to interrupt, Mr. Bala your voice is not clear, sir.
Yes. I will repeat again. So last time when we have -- in last call, you told that there is a possibility of getting some new customers from the Europe region. So is it happening, and you have added any new customers in this quarter from the Europe region? If it is so, then what could be the order volume from them?
So like I said, that Germany, we have entered into contract with a lot of new kitchen manufacturers. In U.K., we have added 50 new customers. So lots have happened in Europe, and our endeavor to promote our things in Italy, Spain is -- so we -- how much is going to come quarter wise is very, very hard to say. But like I said, there is -- annually, it's going to be 15%, 20% growth. So I think that's an average group. We can say that that's what incremental business we aim to get.
Okay, sir. Then secondly, on this home appliance segment and the CapEx is, I think, INR 20 crores. So what would be the added turnover ratio we can expect from this one?
Sir, can you repeat your question?
Very hard -- sorry, you're not clear.
You're not audible.
Yes, just a second.
Sir, I'm sorry to interrupt. Are you on a speakerphone?
No, no, no. Now maybe you're able to hear. I'm talking about the home appliance segment. So we are investing around INR 20 crores in the current financial year. So what could be the asset turnover ratio we can expect from this one, home appliance?
So you are talking about the CapEx, what we're going to incur for the kitchen appliances, right?
CapEx of INR 20 crores of I'm aware of that. What will the asset turnover ratio will be?
That ratio is 4 to 5x.
4 to 5x?
Yes.
We take the next question from the line of Mr. Tushar from Kamayakya Wealth Management.
I just want to understand that [ worldwide ] and volume of 6.5 lakhs in the quartz sinks. When can we achieve that? That would be my first question.
So like I said, again, that we are looking at a 20% growth on an annual basis. So that would be from 500,000 last year will be around 600,000, close to 650,000. And if we are able to realize some large contracts if we are in negotiation with one of the large -- few large box sales, so the same question I answered just I think a few minutes back. So it depends all upon how fast we have to realize the contracts. And based on that, we'll be able to do -- we are going to cross 600,000 or 650,000. But on a longer term, I think we need to try to look at more on a longer-term business. The long-term business is that the fundamental business of quartz sink looks very strong. Right now, the market sentiments are bad. I think that's a INR 1,000 crore revenue on the FY '26 (sic) [ FY '25 ], our new target is going to come. So I think it's matter of time when are we going to start hitting those numbers. It can be 1 or 2 quarters back and forth. But overall, the business fundamentals is very strong. So it would be very tough for any company management to say that every quarter what's happening or are we going to touch that. Basically, in the next 2 years, the company is heading for a INR 1,000 crores sales and are moving in that direction, are we able to track through some large buyers, clients. That is what's happening now. Now the only thing we'll have to do, we'll see quarter-on-quarter how much we're going to realize out of that.
So you're doing this acquisition like Tickford Orange Limited and this Tap company. Sir, I just want to understand what sort of impact of this acquisition we see in the margins going forward. So it will be margin accretive or like your thoughts on that?
Talking about The Tap Factory where we have worked that?
Tap factory also and the Tickford and other acquisitions you might do. I could see your increasing the bath fit. Like you are only catering to kitchen sinks. Now you have increased to bathroom sinks, and there also you're going to Taps. You're increasing the total market of U.S. So I just want to understand the margin profile, how will it look like next 2 to 3 years.
So can I just quickly touch on the fundamentals is that everything is attached to a worktop. You cannot sell a sink without a worktop at home. Every kitchen sink needs a tap, which has to be fit in the kitchen, right? So that's the integrated model of us. So nothing is outside the box. So that's my first answer to this. And second, on the margin side, The Tap Factory margins are very accretive as the hot water tap business is amazing, technology of having 4 flows of sparkling water, drinking water and boiling water 99.9-degree at a single shot from one tap. This is going to be the future of taps. Hence, we are at an early stage able to tap this company to bring this technology to India and get it across the world. You guys would have heard that American company got sold at value of $3.3 billion a year or 2 years back, who is making the same category of hot water tap. So -- and as far as the Tickford, which is a Sylmar Technology surfaces, the EBITDA margin are on an improvement side. It's about 15% plus, and The Tap Factory would be about 18% to 20%.
[Operator Instructions] We take the next question from the line of CA Garvit Goyal from [indiscernible] Research.
Sir, basically my question is on the Tap Factory side. It's is a very small company and has not yet shown any significant growth action considering their small base in last year. So what is our strategy in relation to this acquisition? Like looking at the numbers, it doesn't seem it is a scale of brand in the U.K. So kindly put some color on this and correct my understanding, sir.
Ladies and gentlemen, the line for the management is disconnected. Please hold while we reconnect. [Technical Difficulty] Ladies and gentlemen, we have the line for the management connected.
Yes. So my question was on Tap Factory side. It is a very small company. So I was thinking like how is it going to add value? Or whether is there any technology kind of progress that we are acquiring via Tap Factory acquisition? Or how is it looking like?
So there are 2 main aspects. One is the marketing. So the Tap Factory has a great market access, which we are completely absent in U.K. So we're able to get that market access. Secondly, we are going to get the technology access of this hot water tap, which I just said, a 4-flow hot water tap, so which is right now the faster-growing CapEx category. And that's the future of the taps, so market access and technology access.
Okay. And just a clarification on whether this INR 1,000 crore mark, is it for FY '25, right?
'26.
FY '26 ? No, no, sorry. FY '25, yes.
Yes, that's what I hoped. And last one question, just on the subsidiary in France. Sir, can you give some color on behind the rationale for this like size of opportunity we are looking there? And what is our existing revenue? And how is it going to be in coming future in France subsidiary?
Where? Sorry, in which category?
The new subsidiaries that we have opened in France.
In where?
France.
No, no. So I think right now, we were looking at some opportunity over there. And that's why we -- it takes a lot of time to do it. So we have just floated it right up. But nothing is happening on that side at this point.
We take the next question from the line of Harshil Shethia from AUM Fund Advisors.
Yes, yes. All my questions have been answered.
The next question is from the line of Mr. Rajat Parab from Prosperity Wealth Advisors.
Hello, sir? Am I audible?
Yes, yes, yes.
Yes, sir. Sir, I have only a couple of questions. Some of them are answered already. So I just wanted to know what are the new innovation, innovative products the company is working on.
I am very happy to -- pleased to tell you that the company is launching one of the most innovative kind of kitchen sink range, which is going to be launched in the end of September where it will be launched first time in India, will be first time in the world. The innovation on the kitchen sink side is more on the functionality side. Second is that we are planning to launch a range of new faucets. We have got a tremendous demand on the faucet at this point of time, be able to almost kind of 50% growth approximately on the faucet side, kitchen faucet side. We're bringing a range of new faucets with new colors and exciting functions in the tap. Third thing, we have tied up with one of the very technology advanced companies in the world for the new line of kitchen hoods. And this is -- I will not be able to give details at this point of time because we applied for worldwide patent on this. But this would change the whole dynamics of the company, and it has got the potential for global launch. So -- and the stainless steel sink side, the -- so other within appliances on the lifestyle, a lot of things happening, but these are the 3 major things what at this point of time we are doing. We are also trying to look for the Sylmar Technology in U.K. if we are able to get this technology to India to give the Indian consumers a taste of a seamless technology integration of a sink to a worktop. This is something we are working. We are doing a market research through our current channels, and we'll see what is the response what we are getting.
Sir, one more question. As we are trying to penetrate in domestic market, so most of our kitchen appliances are in premium categories. So will there be any assets going forward as the inflation -- inflationary cost as Indian markets are more price sensitive. So do you think there will be effect on sales of kitchen appliances on domestic side?
I think the company keeps on importing the kitchen appliances is always going to be challenging in terms of pricing. So that's why we have -- we are setting up for manufacturing units. Once the manufacturing is up and on, I think we are -- we can -- we'll see the advantage of the cost by more than 15%, 20%.
The next question is from the line of Mr. Nikhil Shetty from Nuvama Wealth Research.
So just wanted to check the -- we have witnessed around 21% decline in the quartz volume in '23. So is it purely because of destocking? Or it is also because of we might have lost some big customer?
Yes so actually 2 types of a point, whether there's the decline or you have gone back to the normal range. So the COVID pent-up demand was high, and second thing is we had a backlog of 4 months' time. So I think in our what we probably would have profiled wrong is that we thought that the demand of the backlog is going to continue. But the backlog, once it got over, so that backlog never came back to us. So for example, we're doing about average 40,000 normal sinks. We used to get about 20,000 of backlog sinks a month. That gives to about 720,000 sinks. And just so we increase the capacity to 840,000 sinks and plus new taps we are doing. And so we thought that 1 million sinks be the right thing. Now we -- this happened, the COVID level. But normal order booking was coming at about 40,000 to 50,000 sinks, which we have already hit that rate at this point of time. So the COVID times that volume, what you are saying, and that's why it is a very, what I would say, abnormal month or not a benchmarking year for us because that center demand was very high during this time. So honestly, I think we have come back to the original level of our business now. The further going up, that's the pent-up demand. It's been soaring high in loop. I think that demand to cover up that -- like I said, at about 600,000 sinks close to -- want to go back to 800,000 sinks plus, we are working in the company. We give all the efforts to strike deals with new customers, expand our markets. And that's what we are doing at this point in time.
Okay. That's helpful, and secondly, it's about the appliance part. So since it got delayed by a quarter, so how much revenue can we generate from this greenfield expansion in '24?
So I think we have said -- I think it should be around anything INR 10 crores to INR 20 crores or something, yes.
Okay. INR 10 crores to INR 20 crores in '24.
Very rough, tentative estimate.
Ladies and gentlemen, due to time constraint, that was the last question for the day. I would now like to hand the conference over to the management for closing comments.
Yes. Thank you, everyone. I hope we have been able to answer all your questions satisfactorily. However, if you need further clarification or want to know more about the company, please contact our team, our SGA, our Investor Relations advisers. Thank you once again for taking the time to join us.
Thank you. On behalf of Carysil Limited, we conclude this conference. Thank you for joining us, and you may now disconnect your lines.