Elin Electronics Ltd

NSE:ELIN

Q2-2026 Earnings Call

[Operator]

Good evening, ladies and gentlemen. I'm Karthikeyan, moderator for the conference call. Welcome to Elin Electronics Limited Q2 FY '26 Investor Call.

Today, we have with us from the management, Mr. Kamal Sethia, Managing Director; Mr. Sanjeev Sethia, Director; Mr. Praveen Tandon, Chief Executive Officer; and Mr. Akash Sethia, Head of Strategy. [Operator Instructions] Please note this conference is recorded.

I would now like to hand over the floor to Mr. Gulshan Singh from Sunidhi Securities. Thank you. And over to you, sir.

[Unknown Attendee]

Thank you, sir. Good afternoon, and very warm welcome to everyone.

On behalf of Sunidhi Securities, I welcome you all to Elin Electronics Limited Q2 H1 FY '26 Earnings Conference Call.

Today, we have with us management represented by Kamal Sethia, Managing Director; Mr. Sanjeev Sethia, Director; Mr. Praveen Tandon, Chief Executive Officer; and Mr. Akash Sethia, Head of Strategy.

We thank Elin Electronics for giving us an opportunity to host the call. And we would now like to hand over the floor to management for their opening remarks and post which, we will open the floor for Q&A.

Thanks. And over to you, Sanjeev, sir, for your remarks.

[Sanjeev Sethia, executive]

Thank you very much, Gulshan. Good evening, ladies and gentlemen.

This is Sanjeev Sethia. We have on call today our Managing Director, Mr. Kamal Sethia; our Strategy Head, Mr. Akash Sethia; and our CEO, Mr. Praveen Tandon. Thank you for joining our earnings call for the second quarter and first half of fiscal year March 2026.

Coming to our overall performance for the quarter. Operating revenue for the quarter was at INR 375 crores against INR 305 crores in the same period last year, up 23% on a year-on-year basis. Our revenue growth was robust, primarily because of strong growth in our appliance and fan business. This can be attributed to new product launches and customer acquisition, as well as an earlier Diwali this year compared to last year due to which some sales were advanced to Q2 this year versus Q3 last year.

Consolidated EBITDA for the quarter was INR 20.4 crores against INR 11.3 crores in the same period last year, representing a strong growth of 80%. This has been driven by robust revenue growth, higher efficiencies in operations and overall benefits of operating leverage. Two anomalies in the current quarter. Power cost was elevated due to unseasonal rain, which led to both higher diesel consumption due to load shedding and lower-than-expected solar power generation.

Further, we also incurred a high amount of international air freights to accommodate increased demand from some of our customers. Consolidated PAT for the quarter was INR 10.3 crores against INR 4.8 crores in the same period last year. Our liquidity position remains strong with net cash of INR 94 crores as at September 2025. Our working capital position is at net 53 days, driven by a strong improvement in payable days. Our absolute amount of working capital has declined year-on-year, even though sales have seen a strong increase.

CapEx spend in H1 FY '26 was at INR 14.5 crores. Cash flow from operations in H1 FY '26 has come in at INR 36 crores versus INR 28 crores in the previous year. As stated in our earlier calls, the aspiration is to be a one-stop shop for all high-volume home appliances and durable needs of OEMs and our customers. This includes our existing business, lighting, fans, small appliances and our planned new business, medium appliances such as air coolers, chimneys, oven, toaster, grillers, et cetera. We will continue to look for such products to add in our portfolio over the next several quarters.

Now, I would like to share with you the performance and the strategy in each of our business verticals. In lighting, fans and switch segment, the revenue for the quarter was INR 72.4 crores against INR 66.6 crores in the same quarter last year. This was primarily driven by strong increase in revenue from fans, which was partially offset by a marginal decrease in revenue from lighting.

LED lighting, excluding flashlights, declined from INR 50 crores last quarter to INR 47.4 crores in the current quarter. As mentioned earlier on our call, this was largely led by volume decline from Signify, which was largely offset by gains from new customers. The revenue run rate on a quarter-to-quarter basis is on an improving trajectory. As on date, we are serving 4 new customers in lighting in addition to Signify. We expect to further add 1 or 2 more customers. We are reasonably confident that our exit revenue run rate of quarter 4 FY '26 will be higher than last year's overall average, which gives us confidence and comfort on the outlook of our lighting business overall.

Moving to our fan business. We have seen strong growth of almost 100% in our fans business on a year-on-year basis. This has primarily been driven by our BLDC ceiling fan business. We are also working on diversifying our customer base and adding new customers. We expect this strong growth momentum to continue in Q3 and Q4 as well.

Moving on to the home appliance segment. Revenue growth was robust and increased from INR 83 crores last year to INR 140 crores this quarter. Kitchen and home care revenue increased by 98% on a year-on-year basis. This was on the back of new product launches, particularly OFR as well as earlier Diwali this year versus last year. Personal care segment was up 27% year-on-year basis with good growth seen across categories.

Future growth is going to be driven by this segment and our strong focus also on also growing ODM share of the business. While still nascent, we expect ODM growth strongly over the next several quarters. A quick update about the medium appliance category. While these will be built out of our Bhiwadi facility, which will start off next fiscal, we have already initiated discussions with customers for this.

We had shared our optimism in our last call about a relatively nascent export business. We remain in exploratory talk with a few OEMs to supply from India and export to the U.S.A. The discussions are temporarily on hold given the uncertainty around the tariff situation. We are hopeful of a positive outcome once the tariff situation normalizes. Further, the government push for Make in India and disincentivizing import via BIS and QCO makes us further optimistic on our business going forward.

Moving on to the FHP motor segment. Revenue was stable at INR 74 crores in the quarter. Please note, this segment reflects only third-party sales. Therefore, while segment sales appear flat, underlying growth is strong given that there is captive consumption of motor for the appliance business. In terms of pipeline of new products to be launched, we will be launching cooler motors and BLDC chimney motors by next year for both third-party sales and captive consumption towards manufacturing the finished product.

Now, I would like to set our guidance. We had started off the year with a revenue guidance of INR 1,350 crores, representing a growth of 15% over FY '25. As on completion of H1 FY '26, we are at INR 670 crores, which is 50% of the guidance, so we are exactly on track. However, our guidance included revenues from export to the U.S.A., which has been milled since August 2025 due to the tariff situation. Given that there is possibility of this situation continuing for the next few months, revenues for the year may be impacted by up to 3% approximately.

You will appreciate that this is beyond our control. If the situation is resolved soon, we are hopeful of adding a few more explore projects over the course of next 4 to 6 quarters. EBITDA for the year was forecast at 6% to 6.5% margin. As on completion of H1 FY '26, we are at 5.7% margin. Adjusted for the one-offs, we would be at 5.9% for the H1 FY '26.

Further, please note that the margin on export is higher than domestic sales. Therefore, EBITDA margin could also be impacted and come in at about 5.5% to 6% for full-year FY '26. CapEx for the year will be INR 100 crores to INR 110 crores, split at INR 60 crores to INR 65 crores for Phase 1 of the new plant at Bhiwadi and INR 35 crores to INR 40 crores for growth of the existing businesses and factories.

Once the new facility is stabilized in few years from starting, this will also help us drive up the return on capital employed since cash sitting idle on our balance sheet has been a drag on the ROCE. A quick update on the Bhiwadi factory. Total project cost is estimated at INR 100 crores. Construction has commenced in July 2025 and is progressing well. Given the current progress, we expect the plant to be ready and operational by March or April 2026. We expect revenues of around INR 140 crores in FY '27 and INR 250 crores in FY '28, reiterating that as per current estimates, revenue potential of the plant is at around INR 500 crores to INR 600 crores. Further, we expect a steady-state EBITDA of 7% to 7.5% for this plant. At these levels, our return on capital employed for the plant will be at around 20%.

With this, we conclude our opening remarks. We can now open the floor for Q&A. Thank you so much.

[Operator]

[Operator Instructions] First question comes from the line of Kunal Mehta from Sunidhi Securities.

[Unknown Analyst]

Congrats on a good set of results. My first question would be on the gross margin. Why has the gross margin declined from the last quarter? Are we -- I mean, because in the last quarter, you mentioned that there were procurement side efficiencies brought in. So in this quarter, again, the gross margin has fallen by about 4% over last quarter. Any update on that?

[Akash Sethia, executive]

Sure. Thanks, Kunal. Look, gross margin is a function not only of efficiencies in terms of sourcing, but also a function of the sales mix, right? So if you look at our current quarter, especially the components business, the components business is approximately, if I'm not wrong, 20% of the total turnover, whereas in Q1, it was close to 24%, if I'm not wrong. I could be off by a percentage point here or so, right? So, that is one of the key reasons. We've always mentioned that our components business is more profitable than our finished products business. So it's a function of the sales mix. This is subject to change quarter-on-quarter. So, that is the key reason in terms of the variance in the gross margin.

[Unknown Analyst]

Just one question. The payable days improved I think, 4 or 5 days. I mean, this is just something which I was thinking where can we maybe pay earlier and maybe get some discount on the raw material, if that is something that can be worked out? Is that an option that we can consider to improve our margins?

[Akash Sethia, executive]

Yes. Look, that's -- I mean, theoretically speaking, that is always an option. However, one has to factor in the working capital impact that it has in terms of payment upfront. But your point is well taken. We keep looking at various options in terms of what is best suited from all angles for the company and go ahead on that path. But I mean, to put it simply, your point is well taken. We'll keep that under consideration.

[Unknown Analyst]

Okay. And in the Personal Care segment, I think, can you mention a few products that have seen an uptick in this quarter, a few? Or is it across the basket?

[Akash Sethia, executive]

It's by and large across the basket. So here, the products that we manufacture, hair dryers, hair straighteners, trimmers, sterilizers and heated hair dryers, right? These are the 5 key products that we manufacture. Amongst the larger ones are hair dryers, hair straighteners and trimers. And all 3 saw a reasonably strong growth Y-o-Y.

[Unknown Analyst]

And in the medical cartridges, I think since the last -- in this quarter, the last quarter and even Q4, there was about INR 8 crores to INR 9 crores or INR 8 crores to INR 10 crores of revenue every quarter coming in. So has this -- have we found some customer who regularly requires the cartridges? And can we expect that as a run rate going ahead?

[Akash Sethia, executive]

Look, we currently have only one customer in this segment. That said, we were operating at pretty much full capacity, which was approximately that INR 9 crores, INR 9.5 crores per quarter kind of number. Just about a couple of weeks back, we have just decided to expand capacity here because we are seeing that this business has become sticky and it's fairly consistent. So, we have expanded capacity. We've ordered full new machinery, which should expand capacity by approximately 15% to 18%, right? That's what we are doing. But it will obviously take some time in terms of the whole project to come on stream. Right now, just the machine has been ordered. So it will take maybe a couple of months, 3 months for capacity to come on stream.

[Operator]

The next question comes from the line of Ananya from Thinqwise.

[Unknown Analyst]

Fans, I had one question. We've seen a strong growth. I wanted to ask if you're confident of this momentum sustaining. And in the FHP division because in H1, it's degrown. If we see fans pick up in the future, will the motor segment degrow as more of them are used in the fans? That's my first question.

[Akash Sethia, executive]

So just in terms of motor, I think it's not really degrowing. It's just that we have a certain capacity for production of these motors. What is reported in terms of FHP motor sales, the sales to third party, very honestly, that number is not so important for us as is the total utilization of the motor plant. So as long as adequate number of motors are being produced and they are utilized captively, we don't mind that because once you utilize that captively, there is a higher value add that you are capturing. So, we are not perturbed by the fact that third-party sales to -- third-party sales of motors are kind of flatlining because just in terms of the overall growth of motors, that is doing fine.

Sorry, what was the other part of your question? I just lost that.

[Unknown Analyst]

Sustainability of growth in fans segment.

[Akash Sethia, executive]

The fans segment? Yes, yes. Yes, yes, we are fairly confident of growth in the fans segment. I'll just hand over to Sanjeev Ji for his views. He looks at the fans business.

[Sanjeev Sethia, executive]

Yes. Like Akash mentioned, fairly confident, and we already have pretty strong orders for this quarter as well as the next quarter. We will be adding customers also in -- especially in the BLDC ceiling fan category. Recently, we participated in fan exhibition in Delhi-NCR. And we have fairly good queries there. So, I mean, overall, quite bullish on the overall fan business, which includes ceiling fan, fresh air fans and table, pedestal, wall fans.

[Unknown Analyst]

Okay. Okay. Sir, how much is the utilization of your FHP plants? You just mentioned that that's what you track.

[Akash Sethia, executive]

I mean, you're talking of utilization of the FHP motors as a whole?

[Unknown Analyst]

No, you just mentioned that the total utilization is what you keep an eye on rather than sales to third-party. So just in H1, how much was the utilization, just FHP?

[Akash Sethia, executive]

Broadly speaking, it would be maybe in the 75%, 80% kind of mark. But that's a very high-level number. It could be because there are multiple product segments within FHP motors. So, I'm just giving you a ballpark number. It could be different segment by segment. And this is for the last 6 months in H1 FY '26.

[Unknown Analyst]

Just one last question. How much was the power cost that you mentioned, the one-off power cost for this quarter?

[Akash Sethia, executive]

You are talking about the elevated? That approximately would have been higher by approx. INR 50 lakh for the quarter.

[Operator]

Next question comes from the line of Samarth Ashok from Janak Merchant Securities.

[Unknown Analyst]

So like the Philips Group, which is the Signify, Philips like Versuni and Philips Personal Care used to be a large chunk of our overall sales. And we were trying for last 2, 3 years to diversify away from this. So, can you elaborate like how we have been able to -- how much we have been able to diversify in this? And what is the ODM share presently?

[Akash Sethia, executive]

So, if I aggregate all 3 customers that you said, Signify, Philips and Versuni, maybe about 3 to 5 years back, they would have contributed to north of 50%, maybe towards -- even touching maybe 55%, 56%. If you look at the number, maybe last year or in this 6 months, this number would be down to maybe about 43-odd percent approximately. And these are approximate numbers. It could be off by a percentage point here or there.

[Unknown Analyst]

And the ODM share, sir?

[Akash Sethia, executive]

ODM share -- and this I'm talking only for the appliances segment. This would be approximately in the range of 25-odd percent right now.

[Unknown Analyst]

Okay. Sir, another question, like historically, what has happened in our components and motors, that business has been more profitable. And in appliances, we consume a lot of these components captively. So at what scale you need in an appliance so that you are able to get the complete benefits of the backward integration? And which are the categories where you -- like in fan and mix, which are these categories where you are able to in 2, 3 years down the line, where you are able to get this full benefit of the backward integration that we have?

[Akash Sethia, executive]

So, we are -- I don't think I understood your question. We are fully backward integrated. So, those benefits are available today also. Maybe I misunderstood your question. Can you just elaborate?

[Unknown Analyst]

Like in appliances, which is more of an assembly business, like in a mixer, we have like 25% will be the plastic molding and the steel component and 40% will be motors. So, do we need a certain scale in every appliances so that we'll be able to reach a 9% or 10% margin in our appliance category also? Like at what scale we can reach that?

[Akash Sethia, executive]

No. Look, firstly, I don't think if at all it is possible to do 10% EBITDA margin in appliances. It is very, very difficult. We have never really even spoken of these kind of margins because at least at the scale that we operate at today, we do not think it is possible. What is possible is to maybe go to around 7%, 7.5% margins, which we've always mentioned is in terms of -- there's always the concept of a floor and a ceiling. This is towards the higher end that you can assume margins to be at. I don't think 9% and 10% are sustainable and achievable.

[Unknown Analyst]

We did post these numbers in September '22 quarter. So that's what.

[Akash Sethia, executive]

So, that might have been a one-off. But in general, it's not sustainable.

[Operator]

[Operator Instructions] The next question is from the line of [ Achyut Pawar ], an Individual Investor.

[Unknown Attendee]

So, I just wanted to know what is the full-year revenue guidance for FY '26 and FY '27, possible?

[Akash Sethia, executive]

'26, the guidance was 15% growth, which in terms of a rupee number, it works out to INR 1,350-odd crores approximately. What we have just mentioned is that given the uncertainty around the tariff situation for export of products to the U.S.A., that business has been stalled and had 0 since August '25. Now, we don't know when that situation is going to resolve. Assuming that it continues for the next maybe 3, 4 months, revenues could be impacted by approximately 3%. That's the number that we have shared. So instead of INR 1,350 crores, it could be possible that we are approximately 3%, 3.5% or maybe 2.5% lower than the guided number.

[Unknown Attendee]

Okay. And can I know what is the major revenue and which products are getting major revenue?

[Akash Sethia, executive]

Can you just repeat?

[Unknown Attendee]

I just wanted to know from which products we are getting major revenue? Like what is our product-wise revenue breakup?

[Akash Sethia, executive]

So, I mean, for that, you are welcome. I would encourage you to look at our earnings presentation. We spell that out pretty clearly in terms of segment as well as some of the key products. But the largest category, at least in this quarter was the appliances category. That was the largest for this quarter.

[Operator]

The next question comes from the line of Sahil Doshi from Thinqwise.

[Sahil Doshi, analyst]

Just on the export bit, I just wanted to check. Last year, our foreign exchange earnings was around INR 4 crores. I assume this was the exports which we did last year. So, what is the 3%, the reduction in guidance. So, we were expecting this to go to like INR 30 crores, INR 40 crores for this year? And what segment was this expected from, if you can share some color here? And also, it seems like the margin impact you called out would be higher. So, what was the expectation there in that sense?

[Akash Sethia, executive]

Sahil, one is, obviously, just in terms of the export business, it was very nascent. It just started off last year. This was predominantly for fans. So, we were making fresh air/exhaust fans that were fitted in recreational vehicles in the U.S.A., right? That is the product category. So, that business was growing quite well. It grew quite well in Q1 this year. And then pretty much since August, it has been kind of 0, right? So, we don't know when this tariff situation is going to resolve itself. So just in the interest of transparency, we've just mentioned that there could be up 2% or 3% impact in terms of revenue. And this is -- I mean, not only this, but in general, exports are far more profitable in terms of margin than domestic sales. So the value addition or the EBITDA margins for a similar product in export versus a similar product in domestic, the margins are widely different. It's at least 4%, 5%, 6% higher in terms of value addition. So that's why the slight margin impact also.

[Sahil Doshi, analyst]

Understood. And are we factoring any of this in our estimates for FY '27 also? And will there be a risk to those guidances as well?

[Akash Sethia, executive]

For '27, again, this was factored. So when we mentioned broad guidance for -- I mean, a little more specific guidance for '26 and a broad guidance for '27, we had assumed export numbers. In fact, we assumed -- as of today, we only had this one large project to the U.S.A, but we also assumed one more coming in because we were -- like we mentioned, we were in talks with more than 2, 3 people to localize, and we assumed at least one of them would come in. But as of now, all of that is, as you can imagine, on hold. So, we don't really know the impact. So, I don't want to give you a number right now for '27 until the situation kind of normalizes. Once it does, we will, of course, let you know.

[Sahil Doshi, analyst]

Yes. Understood. Second, just wanted to check on this onetime. You said INR 50 crores is on power. Is there anything on the air freight, et cetera? And what is the reason for that as well?

[Akash Sethia, executive]

This is approximately the aggregate on these 2 accounts is close to INR 1.1 crores. INR 50 lakh was on account of power, like we mentioned, because of higher-than-anticipated rains, there was very frequent load shedding. So, we had to run especially, our Ghaziabad plant for a fairly elongated period on diesel, on genset. right? So that is one.

And two, as a parallel corollary, generation from our solar power plant was also much lower than anticipated because of the rain, because of the lack of radiation. So the aggregate impact of both of these is approximately INR 50 lakh. That's point one. On the air freight, it's about, again, close to INR 60 lakh. This is predominantly to accommodate there was some last moment demand increase from customers. So rather than let those orders go, one never wants to let a customer order go. So, we decided to kind of take the hit in terms of air freighting, I mean, the material and then supplying it to our customer. Those are the two main kind of...

[Sahil Doshi, analyst]

Actually, it is not in domestic ones.

[Akash Sethia, executive]

Sorry, your voice was just breaking. I couldn't hear you.

[Sahil Doshi, analyst]

Sorry, air freight was about domestic order, not an export order, right?

[Akash Sethia, executive]

No, domestic order, but imported material is what I mean with that. I mean, this is input of raw material.

[Sahil Doshi, analyst]

Understood. Second, just wanted to discuss more on the gross margin. So, I understand quarter-to-quarter variations could come in. But as we go towards appliances as share of appliances increase and our, say, motor sales standalone reduces, the blended gross margins, what should be the band, which we should be comfortable with? Because we've seen 28% in last quarter and 24% now. So broadly, how should we think about this?

[Akash Sethia, executive]

In terms of the full year number, quarter-to-quarter variations are going to be there. In terms of the full-year number, we've always said that you should look at anywhere between 74% and 76%. That's the sort of number that we always guide for. But that said, quarter-on-quarter variations are part and parcel of the business. It's just that seasonal nature of the business.

[Sahil Doshi, analyst]

[Indiscernible] standalone typically.

[Akash Sethia, executive]

Your voice is breaking. I'm not able to hear you.

[Operator]

Sahil sir, I'm sorry to interrupt. Your voice is breaking, sir.

[Sahil Doshi, analyst]

Is it better now?

[Akash Sethia, executive]

Yes. Better.

[Sahil Doshi, analyst]

No, I was trying to say as the appliances business scales up for us, do you think it would be like 25% kind of raw material range should be the new normal and that 25% gross margin would be the new normal?

[Akash Sethia, executive]

Look, if -- I mean, appliances have a slightly lower gross margin, but then the way to look at that is that they also have a slightly lower employee cost, right? So then the way to look at that, if one would assume that, say, in 2 years' time, our Bhiwadi plant is, say, INR 250 crores kind of top line. So, one would expect some contraction in terms of gross margin at that point in time, but that would be more than adequately compensated by a lower employee cost.

Our employee cost, which, say, was approximately 14.5% last year, full year, which has come down to, I think if I'm not wrong, 13.5% for the first half of the year will continue to then trend downward such that the EBITDA margin is not only maintained, but probably rises to about 7%, 7.5%. That's the way you should look at it. So it's probably a trade-off between gross margins and employee costs, especially in terms of medium and large appliances.

[Sahil Doshi, analyst]

Understood. Understood. And lastly, on cash flow, you've done a decent job in terms of working capital management. Is there a further room here? And you had once called out 45 days as a target. Is that possible in the current environment?

[Akash Sethia, executive]

It is possible. I won't say it's not possible. It's a bit of a stretched target, more aspirational, but we are on the right track. So, we're working very hard to get those days down to 45. Like we've mentioned, we would have hoped to do that by September or maximum December, but probably it might be delayed by a quarter or so. But rest assured, we are working very hard towards that line item as well.

[Operator]

The next question comes from the line of Chirag Shah from White Pine Investment Management.

[Chirag Shah, analyst]

Only one question. So with respect to U.S. who would be our competing countries where there is a threat of losing the business?

[Akash Sethia, executive]

Not audible. Can you just repeat your question?

[Chirag Shah, analyst]

Okay. My question was for the export to U.S., assuming the tariff issue is not resolved for the sake of assumption, which are the competing countries are beneficial or advantaged position and which can see a shift in business opportunity?

[Akash Sethia, executive]

Look, this was all a shift of business from -- or largely from China to India as a China-Plus-One strategy that a lot of OEMs are looking at. Assuming this does not get involved, then either, a, China continues or maybe -- I don't know, maybe Vietnam or someone. I mean, I'm not 100% sure about that, but my guess would then be that it would continue from China.

[Chirag Shah, analyst]

Okay. So China, it's largely China as a supplier. I thought some of the smaller countries would also be supplying or making these but this isn't true.

[Akash Sethia, executive]

Well, look, it's very hard to make a general statement. Since your question was a little bit generic, I've just made the general statement, but I'm not sure it varies product to product, customer to customer, very difficult to make a generic statement. But in general, yes, China is a well-known fact that they are the manufacturing brands of the world.

[Operator]

[Operator Instructions] We have a follow-up question from Kunal Mehta from Sunidhi Securities.

[Unknown Analyst]

My question is on the Bhiwadi facility. How much capital has been deployed till now tentatively?

[Akash Sethia, executive]

So approximately, I think the number is INR 20-odd crores of capital advances have been made towards that.

[Unknown Analyst]

And in terms of product approvals, are we seeing any hiccups when it comes to, let's say, air coolers or cooling products that we are planning to launch there because a lot of brands have given flat guidance for FY '26 and '27 also doesn't seem that promising. So, are we seeing any hiccups where brands or OEMs are maybe delaying the -- maybe approvals or something for your products?

[Sanjeev Sethia, executive]

Yes. So if you look at the product profile, which we planned for Bhiwadi, it will include the OFR heaters. It will include chimneys, ovens and air coolers. So, these are the 4 products which are planned to be launched from the Bhiwadi plant. Two of these products, I mean, one, oil field heaters, we are already making in our Ghaziabad plant and there will be a shifting of locations. So, that business is kind of assured. I mean, it just gets shifted from Ghaziabad to Bhiwadi because we have much more space, and then we are building up that factory also to take care of medium-sized appliance. So, not much of an issue in this product line.

The second product line, which we are going to launch in Diwali is going to be the kitchen chimney. Here, the strategy is that a similar infrastructure is already available. So, we will get the product approved basically from our Ghaziabad plant and full-fledged production will start from the Bhiwadi plant. Here, more or less, we already have aligned 2 customers, which are marquee customers, who will be taking this product. So, we expect that by the time Bhiwadi plant comes online and is ready for production, we would already have these products approved from our Ghaziabad plant. So, kind of expecting a seamless transition from Ghaziabad to Bhiwadi plant for these 2 products. And similarly, OTG also, the strategy is similar. So, 3 out of our 4 products would already be pre-approved for production from our Ghaziabad plant, and then there will be the infrastructure and some of the tooling will be shifted to Bhiwadi for actual commercial mass production.

Now air coolers, you're correct. I mean, in terms of this particular season for both air conditioners and coolers has been a little bit of a downer. It's been very flat. Currently, we are in the process of getting our design and product approved by the customer. We are trying to get a buy-in from the customer before we start investing. There is a little bit of a delay because the whole key cooler season has been delayed, but we are still quite hopeful that we are -- we have some sure customers on our hand.

So the investments in the plant and machinery of the air cooler will be in line with, let's say, the customer approvals. So, there might be a slight delay, but still quite hopeful that we are able to add some customers and then we'll proceed accordingly. So, 3 out of 4 products, which we will start in Bhiwadi will be pre-approved and will be ready for production. And the fourth one, air coolers, there, we are trying to first get and have a handshake with the customer where we have a little bit of assured order from them so that we can start launching the project. So, I hope this answers your question.

[Unknown Analyst]

Yes, sir. And one more follow-up question. I think the FHP motor sales, as someone pointed out earlier, has been, quarter-on-quarter for fans, has seen a decline because most of it was used for captive. But are we facing capacity constraints to supply to our -- in the market as well? And are we planning to increase our capacity for FHP motors in this coming years?

[Sanjeev Sethia, executive]

So, a, from our existing range, we don't have a capacity issue as such. Some of it, like we mentioned, was diverted for in-house consumption because the fan production went up. And secondly, if you know, this was an unseasonably wet monsoon. So a lot of the TPW, especially table, pedestal, wall fan, requirements for a big flag. So we lost some market there, but we gained some market in chimneys. But in general, for our product range, there is no capacity constraint as such. And as far as expanding capacities, the new ranges which we are getting into, that's the cooler motors and the BLDC chimney motors, that's where we are expanding our capacity.

And the third category, which we are working on is the washing machine motor. Currently, not much of manufacturing in this category is happening. We are trying to work out a strategy by which we can start washing machine motors manufacturing in India. And as you know, a lot of -- all these motors will be covered under BIS probably in the coming year by August or September. So, there is potential that other categories will open up. We are studying those also. So, washing machine motor, maybe the motor for air con BLDC indoor and outdoor units. Those 2 motors are under study. So, that would maybe avenues where we could further expand our capacities for motor manufacturing.

[Unknown Analyst]

Okay. And just one question. What would be the tentative lag in impact that can be seen once BIS is implemented in next August?

[Sanjeev Sethia, executive]

Lag?

[Unknown Analyst]

Sir, by lag, I mean, once the BIS is implemented, I think -- I mean, the impact might not be immediate. So the actual impact of shifting of, let's say, the manufacturers to, let's say, from China or other manufacturers, how will that happen? Will it be like a 6- to 8-month period?

[Sanjeev Sethia, executive]

See, like I said, we're also working on certain strategies of making -- starting those motors here before BIS comes in. So, there are 2 things to it. A, of course, earlier, Chinese companies are also getting BIS certification for the products so that they could be supplied to the Indian market. But if you follow the trend and the way the government has moved around, getting BIS certification for Chinese companies have become exceedingly difficult. Now, we have to wait and watch out whether the government follows up with that kind of strategy or they open up and they are willing to give the BIS to the Chinese companies also. And of course, in the case of enough infrastructure and capacities are not built up, then you can imagine there will be a lot of resistance also from the product manufacturers to that kind of slow down the BIS.

So, a little bit of wait and watch how it goes. But generally, people are building up capacities, and we are also looking to build up capacities for motors, which are currently being majorly imported with the hope that the BIS will open up the Indian market as well. As far as lag is concerned, there will be some capacity buildup in India and then as a precaution or as a secondary because any supply chain manager for this will have a secondary line of supply so that they don't really run into issue in case the BIS is not granted to the Chinese companies.

So, I expect some local buying to add and capacities to be added in India and local buying to start in these categories very soon so that there are alternate sources of supplies. But total shift, it could take 3 to 6 months from maybe a little more also for really capacities to come for total shifting. It could be a little more because currently, the export -- the quantity of imports in certain categories is extremely high, as high as like probably 90% of the local demand. So, there will be a lag for sure, extent maybe 6 months to a year or something like that.

[Unknown Analyst]

And sir, in which category do you feel that Elin can most benefit when BS is implemented? Is it the fans? Is it the kitchen and home appliances in the start?

[Sanjeev Sethia, executive]

In terms of -- see, if you look at fans, there's a lot of local manufacturing happening. So according to me, this categories in case of -- in terms of motors, washing machine would be one. There's a fairly large market, which is totally more than 90% is imports. AC, IDU, ODU would be the other category where there's massive demand, but imports are very high. In appliances and small appliances, the product by -- nutri blender kind of those products or motors, which are used in nebulizers, et cetera, there you could see local manufacturing adding and picking up. But the big ticket categories would be washing machine motors and air con motors in our product range.

[Operator]

[Operator Instructions] The next question comes from the line of [ Ronit Kapoor ] from [ Invest IR Investments ].

[Unknown Analyst]

Sir, I want to know that a few of the larger players are expanding into the smaller appliance segment since the demand has been low for the AC segment. So, how do we see the competitive intensity coming across?

And my second question is about -- does the company plan to move into larger appliances? Like you spoke about washing machine motors, so do you plan to move on to washing machines in the near term?

[Akash Sethia, executive]

I'll just answer the first question. Look, you're somewhat right. Competitive intensity is reasonably high already. So to that point, even if a new customer is coming in, it is not easy to displace current supplier because there are multiple options available to a customer for the same. So anyone coming in has to really think deeply in terms of what the USP is for them to get a new customer on board. That's point one.

Just in terms of your second question, I'll just hand over to Sanjeev.

[Sanjeev Sethia, executive]

Yes. If you see the movement we've embarked on from small appliances then to medium appliances, our general strategy is if in terms of appliances, if a motor is required, we first get into motor manufacturing, if maybe some of the appliances have one or other types of motors and generally get into the product itself. So once we complete these 3, 4 products which we've spoken about in Bhiwadi and then there are 2 more which are allied to it, I think the washing machine category or other larger appliances would probably be a natural progression for us.

Just to elaborate, let's say, if we start -- like not if -- when we start air cooler manufacturing, our molding profile, which currently in general is up to 400, 450 tonnes of machine to cater to our products will move up to, let's say, about a 1,200 tonne kind of molding machine to take care of the air coolers. Then to add the washing machine category in our range would probably require 1 or 2 molding machines of similar or larger range, and then we will be able to take care of that. So the idea is generally build up the infrastructure, which supports manufacturing of medium and larger appliances and then add those appliances as a natural progression of our growth story. Yes.

[Unknown Analyst]

So apart from washing machines, is there any other product category in large appliances we're looking at like?

[Akash Sethia, executive]

I think we've already identified 4 categories to start with in Diwali. Other than that, we've mentioned about washing machines. No other category immediately that we can speak. There are multiple products that are under evaluation, but we only want to speak about them once there is a reasonable amount of clarity.

[Unknown Analyst]

Okay. And when the company starts washing machines, so existing CapEx is enough for that or like you'll have to again undergo further CapEx?

[Akash Sethia, executive]

No, no, of course, we'll have to -- I mean, in terms of -- look, in terms of space creation CapEx, we probably won't need much. But in terms of tools, molds, maybe some limited machinery, all of that will, of course, have to be incurred.

[Unknown Analyst]

No, I mean the existing manufacturing facility would be now, right?

[Akash Sethia, executive]

In terms of space, yes.

[Operator]

As there are no further questions, I now hand over the floor to the management for closing comments.

[Kamal Sethia, executive]

Thank you very much. I'm Kamal Sethia.

I thank you all for sparing time for this earnings call. And we are working hard to scale up our operations in a very strategic way. And so I assure you, in times to come, we are going to deliver as per our expectation.

Thank you so much for your time. Thank you.

[Operator]

Thank you, sir. Ladies and gentlemen, this concludes your conference for today. Thank you for your participation and for using Door Sabha's conference call service. You may disconnect your lines now.

Thank you, and have a pleasant day.