IFB Industries Ltd
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Q1-2026 Earnings Call
AI Summary
Earnings Call on Aug 6, 2025
Revenue: IFB Industries reported Q1 FY '26 revenue of INR 1,310.82 crores, up 5.33% year-on-year.
EBITDA & Margins: EBITDA for the quarter was INR 69.95 crores, down from INR 86.55 crores last year. EBITDA margin fell to 5.34% from 6.12% (derived from prior numbers).
Cost Pressures: Material and fixed costs increased, notably due to higher commodity prices and more customer sales representatives, impacting margins.
Cost Savings Initiatives: The company expects INR 15–20 crores cost savings in Q2 from ongoing cost innovation, with a target of INR 200 crores in recurring annual cost savings by FY '27.
Operational Challenges: Early monsoons and lower sales in Russia negatively affected AC volumes; management is taking remedial measures.
Market Share: Market share in RAC (air conditioners) is about 3.5%. IFB aims for 5% market share in AC and 7% in refrigerators in the coming years.
Guidance: Management targets double-digit EBITDA margins in the medium term, driven by cost-down projects and efficiency improvements.
Revenue grew 5.33% year-on-year in Q1 FY '26. However, management acknowledged that the quarter was relatively weak in terms of performance, with some segments such as air conditioners affected by early monsoons and lower sales in Russia. Other home appliance categories continued to perform, but revenue growth was modest.
Operating expenses rose sharply, with a 23% year-on-year increase driven by more customer sales representatives, higher professional fees, and increased material costs due to commodity price inflation. EBITDA fell both in absolute terms and as a percentage of revenue. Management pointed to both higher fixed costs and slippages in controlling commodity prices as reasons for margin contraction.
IFB Industries is executing a cost innovation project with external consultants, targeting INR 200 crores in annual cost savings by FY '27. Around INR 60–80 crores in recurring savings are expected in FY '26, mainly from material cost reductions and fixed/warehouse expenses. Management expects meaningful savings to begin reflecting from Q2 and Q3, with ongoing projects in network optimization and team restructuring.
IFB has a 3.5% market share in air conditioners and aims to reach 5% in ACs and 7% in refrigerators soon. While acknowledging strong competition and relatively low market shares in larger categories, management maintains that product positioning and pricing discipline preserve margin potential. IFB claims leadership in front-load washing machines by price point and value.
The company reported high utilization rates in washing machine and AC plants during peak season, with up to 95–100% utilization expected in forthcoming months. The refrigerator plant is running at around 50% utilization, expected to rise to 60–65% in the season ahead. IFB continues to expand its range and capacity in major categories.
The Engineering Division is targeting at least 30% annual organic growth, leveraging both automotive and non-automotive business, with additional growth anticipated from acquisitions. A new chain manufacturing plant and expansion into advanced electronics are planned. Management expects margin preservation, noting that price increases in raw materials are typically passed through, though with a lag.
IFB relies on a franchise-based service model, with about 1,400–1,450 franchisees covering a wide geographic area. The company aims for service within four hours of complaint registration. The network has been strengthened over the past year to improve after-sales support.
There was debate over the true size of advertising and promotional expenses, but management clarified that pure advertising spend is about INR 100 crores annually. Sales representative costs are accounted for separately and have increased with the addition of personnel. Efforts are ongoing to optimize spend and improve visibility efficiency.
Ladies and gentlemen, good day, and welcome to IFB Industries Limited Q1 FY '26 Earnings Conference Call hosted by Nirmal Bang Equities Private Limited. This conference may contain certain forward-looking statements about the company, which are based on beliefs, opinions and expectations of the company as on the date of this call. These statements are not guarantees of the future performance and involve risks and uncertainties that are difficult to predict. [Operator Instructions]. I now hand the conference over to Ms. [ Asha Koshla ] from Nirmal Bang Equities Private Limited. Thank you, and over to you, ma'am.
Thank you, [indiscernible]. I, [ Asha Khosla], on behalf of Nirmal Bang Institutional Equities, welcome all of you to First Quarter FY '26 Earnings Conference Call of IFB Industries Limited.
From the management today, we have Mr. Bikramjit Nag, Chairman; Mr. Soumitra Goswami, CFO; Mr. [indiscernible], MD and [ Dimitri ] Division; Mr. [indiscernible], ED, Manufacturing of Bob Appliances Division; Mr. [indiscernible], CFO of Engineering Division; Mr. [indiscernible], Head Finance and Accounts, Home Appliance Division; and Mr. Ranjan Mohan, [indiscernible] Head, Home Appliances. I would now request the management to give their opening remarks, post which we shall open the floor for Q&A. Thank you, and over to you, sir.
Good afternoon, everybody. I am Soumitra Goswami, the Chief Financial Officer of IFB Industry Limited. I welcome you all for IFB Industry Limited Investor Call for First Quarter FY '25, '26. I have with me Mr. [ Vikram Dita], Chairman of IMD Industries Limited; Mr. [indiscernible], Managing Director and Chief [indiscernible].
She just said all that, so you can just get on to the call. She just said all of it.
Okay. Now I will inform you about quarter 1 results. The revenue for the quarter was INR 1,310.82 crores. against last year, INR 4,244.44 crores, which is a growth of 5.33%. EBITDA for the period over INR 69.95 crores which percentage to revenue was 5.34% as compared to last year's INR 86.55 crores, which was [indiscernible].
Fee expenses for the quarter was within budget. However, in case of some expenditure [indiscernible], the expenditure has crossed the last year's expenditure. [indiscernible] for the period are INR 32.93 crores against last year [ 3 ] year of INR 52.4 crores. Quarter-on- [indiscernible] was INR 5.36 crores, which is 1.93% on revenue against last year, INR 38.84 crores, which was 3.12% on revenue. Indeed, I will request to start the question and answer session.
Hello. You can start the question and answer session.
This is [indiscernible]. Just one point, please, before we start the Q&A. If you see the results, there is increase in fixed cost as well as some material costs. Kartik will explain. Kartik and Govindaraj will explain exactly why and remedial measures which are being taken and Mr. [indiscernible] will explain the issues on sales, especially related to AC due to monsoons, et cetera, early onset of monsoon, et cetera, and us not getting the required sales in Russia, which has caused margin issues and remedial steps to be taken in Q2, which are underway.
Okay. Please start and Kartik, you will answer most of the questions, but I'm here.
[indiscernible].
Hello. We are here, but I think there is some problem at their end. We can't hear. What is the problem?
[Technical Difficulty]
Madam, we can't hear anything. We are [indiscernible] in our opening remark. Mr. [indiscernible].
Yes. We heard that -- just give me a second. [indiscernible]
Yes, yes. Okay. Thank you.
Should we begin with the question-and-answer session?
Yes, we have said it twice. Please do start with the Q&A.
[Operator Instructions]. The first question is from the line of [indiscernible] from [ Tonga Investments ].
If I just look at your advertising expenses to INR 285 crores or thereabouts, right? And in addition to it, we also have the sales opportunity cost of around INR 126 crores or so for the last financial year. Now if I put this in context of the other companies like Voltas, [ Bluestar, Belco, ] et cetera, our advertising expenses is far higher for the proportion of the sales we actually do.
So I just want to understand, is there an opportunity to actually balance between the [indiscernible] people you have as sales representatives at the counters versus is there an opportunity to kind of reduce as well as in spend? Are we getting the right return on advertising budgets? That's my first question.
What I've understood is you wanted to know why our cost of adding promo more compared to Voltas and other companies.
Yes, Yes.
So let me, first of all, tell you that in our in promo, the CSR cost is also included, which majority of the companies don't include in their [indiscernible].
Ranjan, first, please give your name, so that they know you are answering the question.
Yes. I'm Ranjan Mathur, I'll be replying this. So -- so was trying to explain to you is in case of we take years of [indiscernible] promote expense. So that's why it --
No but here is our expenditure is also called out separately as other in the other expenses that's in a separate line item. So I didn't understand.
Then Mr. Kartik here from Finance [indiscernible] CS for Mr. Mathur [indiscernible] is customer sales representative. The person who is there on the counter or a [indiscernible] cost as well. So on the -- there's definite opportunity to optimize the add and promote cost.
Okay. Okay. So that is something --
Kartik, give them like clarity. Advertising cost is not INR 240 crores.
Yes. Our add-on promo cost annually is around INR 100 crores and we are working on reducing the ad and optimizing the add-on from a cost by increasing the visibility with the same spend. We are also evaluating and working with partners to help us how to reduce the cost and optimize the benefits from this.
Got it. Sir, that is a expense of around INR 126 crores paid towards [ IMP ] appliances. So that is your promote cost rate, the PSR cost you're mentioning?
Yes. Yes, correct.
So INR 284, minus INR 126, that's still around INR 160 crores of advertising [indiscernible].
No, our advertising spend purely is INR 100 crores because apart from the appliances, we have another agency who also provides us customer sales representative. So if we remove that cost and our annual cost will be around INR 100 crores on ad spend. [indiscernible] is named Kartik. Yes, the [indiscernible].
So what is the total number of customer sales representatives you have on counters?
Currently, we have 4,000 odd customer sales representative across the country.
Okay. Okay. But IFB appliances, itself has 4,000 people. So [ Genius ] is that plus this right?
What is the number and then answer your question.
The total number will be around INR 4,600-odd 600 are on [indiscernible] stopes.
[indiscernible] can you please give clarity, what is the advertising cost exactly?
Yes. Actually, for the quarter, we are talking about first quarter. First quarter sales promotion expenditure was INR 30 crores [indiscernible] last year INR 88 crores, which has increased by INR 2 crores only, that is due to increase in, in-shop branding in the dealer [indiscernible]. Point 1.
Point 2. [ FR ] costs have increased INR 20 crores --
Out of the INR 30 crores, how much is advertising?
[indiscernible] receive the full amount of that, but has been articles advertisement and sales from a cost for the first quarter against --
How much is advertising only?
Yes. So the -- Yes, sir. We'll work out and give it.
Give it now. Bring it. You can't give answers which are -- next. We will give you this answer. Please gives us 5 more minutes please. Carry on please to the next question.
Your next question is from the line of [indiscernible] from [indiscernible] Research.
So sir, if I look at our gross margins for the quarter and if I compare the gross margin with same quarter last year versus the previous quarter as well. I can see some improvement. Is this a correct to [indiscernible] understand that the project which we have taken up with as well as [indiscernible] consultant that has started to pay off and the improvement you are looking for?
Yes, Kartik here. Yes, the project with [ Alvarez Marshall ] started from 15th Feb. In quarter 1, we have got a reduction of around INR 3.5 crores due to this project. With -- but when you compare with quarter 1 of last year versus quarter 1 of this year, there is a slight dip in the gross margin. This is mainly because compared to quarter 1 of last year, there is an increase in commodity prices, which is mainly in copper, GP, [indiscernible]. And also, there is an I&I depreciation against U.S. dollar, which is around 3%.
But this has been mostly offset because of the cost innovation, whatever has been done. And the net impact is that the material cost has increased by 65 basis points with respect to last year quarter 1.
So [indiscernible], just to clarify and [indiscernible] have done. In Q1 FY '25, the gross margin was 38% and in Q1 FY '26, which is this quarter, I can see gross margin almost [ 13 40 ]. So I have 160 basis point improvement here. So this is averaging to see and therefore, the question which I wanted to understand give me the improvement on [indiscernible] improvement sustainable and can we consider a 40% gross margin as a steady state number as we move forward so, yes. Sir, are you referring to the appliance division, gross margin or the company-level gross margin?
No, no. Only level gross margin.
Kartik, company level, gross [indiscernible] mostly driven by [indiscernible]. Yes. So then I will talk separately because the margins are not 40%. I'll connect to you separately to give more details on this.
Sure, sure. And regarding the operating expenses, there is a sharp increase of around 23% on a Y-o-Y basis. So just wanted to understand what are the factors that are driving this high increase of revenue has thus increased by 4%.
Yes. So as far as operating expense is concerned, as we explained earlier, customer sales representative cost has gone up. This is because we have added 680 numbers of CSR compared to last year. Second, our professional cost has run up due to engagement with A&M. And the third point is [ EV ] compliance cost and salary cost also has marginally gone up. So these 3 together, this all together has the increase [indiscernible].
The next question is from the line of [indiscernible].
Okay. I wanted to understand what is the total capacity for [indiscernible] and top loaders and refrigerators in across our plants. And what kind of utilization we are actually saving at for this year.
Okay. This is [indiscernible]. As far as the rent [ loader ] is concerned, we can make about 85,000 working machines in a month and we will be touching about 95% to 100% capacity in the season effect in both in August and September and October, we should be able to touch 95% to 100%.
As far as air conditioner is concerned, we can make about 65,000 as of today. And the peak, whatever we have touched in month of March and April was, we had touched about 100% utilization. And as far as [ refrigerate ] is concerned, the plant has been built up about for 1 million capacity. At the peak we are touch is about 50,000. That is about 50% utilization. And the season ahead, we will be able to catch about 60% to 65% utilization.
Right. Okay. So [indiscernible] as you mentioned is for on [ piping], right?
Yes, per month. Yes.
And what are you making -- what is the split between as and of loaders sir? Can you just explain that?
Front load, we have a separate line for [indiscernible] loader. We are now going to touch about 85,000 in September and October. And in top loaders, we have a capacity of making about 60,000. I think in the month of September, we'll be doing about 55,000. So about 90% utilization.
Sir, the second is that when I actually travel, when I actually look at some of your products, I see that the [indiscernible] with some of the credit cards, which you have is comparatively less when compared to the [indiscernible] switch some of the other brands have. So have you looked at it in terms of [indiscernible] are the reworking or revisiting this particular thing in terms of sales? And how much of that would actually save up your profits or so? I mean if you think -- you have to -- there is a [ subvention ] something which you need to give, et cetera. Can you just touch upon your tie-ups with credit cards on [indiscernible] products?
Yes. We are working on this. As you said, we are strengthening our team on consumer finance and affordability, so that our cost has to further go down. At the same time, affordability to our customer is to go up. And that is a sellout for IFBs, which will help us to increase our sales.
Okay. Okay. Okay. Now is this like -- will it hamper our gross margin because of this?
Look, this is Ranjan Mathur. In our case, what we see is we have enough business of selling protect rather than selling at discount which is the trend in the market. So what we do here is we have a product at the right price and then give support in terms of cash discount. But that cash discount what other brands do is they take the price and then they [indiscernible] and burn money. So we've -- the operators not be that much that the other brands will have.
Got it. Okay. And the third question which I have is in terms of our services outreach, what kind of services network we have after sales network? And then whether it is run on a franchise small or on a company owned? And how you have strengthened in the last 1 year?
So our service is basically on the franchisee more. But the network is very strong in India, right from [ JNK to Kangere], the network is really fairly good. And ensuring to provide service in 4 hours of the campaign register, and that is what we all are driving.
So how many you have now? Like how much was this last year?
I think it's about 1,400, if I'm not mistaken, but just check. [indiscernible].
Sorry, sir?
[indiscernible] 50 franchisees.
Okay. Okay. And they are all different franchises, I believe it. Every franchisee is different. There's not one group or a couple of --
We don't entertain that.
Kartik also, Kartik, also please look into this point, the franchisees are covering how many pincodes.
Yes, sir.
[indiscernible] covering how many [indiscernible] and how much time? So how many [indiscernible] into us, how many in 3 hours, how many 4 hours are like that? Can you please differentiate it and come up with this for another time.
Next question from the line of [indiscernible].
Sir, my first question is, sir, I'm just looking at your replication ramp-up. Somewhere in the presentation we've written, we've done about 1,18,000 units for this quarter. And on Page 8 of the presentation, we've said that we are doing about 18,000 a month in refrigerator, right? So 54,000. So I'm just trying to understand that differential is all OEM sales or all rev sales are branded sales?
Okay. There is another company which we have IFB refrigeration. So 18 is for IFB [indiscernible].
Why don't you explain properly, Kartik?
Yes, sir.
It's very simple to explain it.
Yes, sir. Sir, 118,000 is a total refrigerator managed and sold by IFB refrigeration retail where IFB Industries is holding 40% stake. Out of that, IFB Industries is setting approximately INR 18,000 per month.
So the difference is what OEM sales, sir?
No, no, no. [indiscernible]. 1,18,160 is the figure of IFB Refrigeration Limited. And at least around [indiscernible]. And IFB Industries [indiscernible] sold -- sorry, 54,000. That is absolutely [ 16,000]. Is it clear?
No, sir, not able to actually understand.
The IFB Refrigeration Limited is a separate company, right? We are having a shareholding there of 41%, correct? IFB Refrigeration is directly selling to dealers, distributors through branches, and they are giving some material to IFB Industries also. IFB Industry is [ willing ] to their dealer and distributor. Whatever sales is happening from IFB Industry Limited, that is 18,000 [indiscernible]. And in case of IFB refrigeration, it is 40,000 per month. It is not the question of balance quantities partaking to OEM production.
So the structure is really confusing. And so then INR 60 crores -- not confused.
It's not confusing. IFB Refrigeration Limited is a separate company, clear? Is that -- is that point clear to you? IFB Refrigeration Limited is a separate company. Is that point clear?
Yes, sir.
Okay. IFB Refrigeration Limited has sold 18,000 per month to IFB Industries Limited. Clear?
Yes.
Now suppose IMB Refrigeration Limited, hypothetically. Producing 50,000 a month. 18,000 [indiscernible] IFB Industries Limited or balanced approach hypothetically [indiscernible] under IFB Refrigeration Limited in different states where IFB Industries Limited is not selling it. You understood? And 2,000 went into stock. That's a sub 50,000 produced, clear?.
Then INR [indiscernible] crores of revenue in quarter 1 is this the industry revenue for 54,000 units, right?
Yes, correct. Correct.
Okay. So then are we [indiscernible] to say that we have 2 distinct distribution team one in IFB refrigeration and 1 in IP industries for [indiscernible].
IFB industry sells refrigerators in certain states, hypothetically that are [indiscernible] refrigeration is selling in Maharashtra, IFB Industries does not sell in Maharashtra. So I refrigeration has some people to sell it in Maharastra.
Got it. Sir, second question is what would have been the volumes for us in air conditioners for quarter 1 versus last year?
Yes. Kartik, you can answer that.
Yes. During the quarter, we have sold -- during the quarter, we have sold 1,15,000 air conditioners against last year 29,000. And as far as OEM is concerned, we have sold 9,800 air conditioner versus last year 6,600.
You can total, Kartik. 1,20,000 this year, last quarter, against last year corresponding quarter, 1,37,000. Then it will be beer for them to understand.
Sir, my last question is, what is the kind of cost savings [indiscernible] quarter 3. I think in the presentation, we tried to mention that, but I think some of our [indiscernible]. So what is the kind of cost because it bigger impact expected in Q2?
Kartik, you can replay -- redo -- discuss this today.
Yes, [indiscernible] into a year, I explained the quarter 2 innovation, what we are expecting is will be to the tune of maybe about INR 15 crores to INR 20 crores. And we have time with the target whatever you have taken for the fiscal year.
And [indiscernible] continuing for the balance 3 quarters.
Yes, it will continue and it should improve that we are in light yearly target at [indiscernible].
The next question is from the line of [indiscernible].
Just a broad level portion [indiscernible] that in terms of the market share, [indiscernible] for the washing machines, you are not in material and in the rest of the segments and the larger ones like refrigerator or [indiscernible]. So how do you look at yourselves in a very highly competitive industry when your market shares are very less? How can you able to improve your margins sustainably and also have very good return ratios?
Along with [indiscernible], we have good market share in our micro base as well as the cost. We launched a [indiscernible] and lastly, we shared in last meeting the [indiscernible] last year. And we intend to -- we are targeting around similarly, in refrigerator, in [ 2 ] years, we are now taking around [ 140,000 ] every month. And -- so we are targeting around INR 65,000 per month [indiscernible] share around 7%.
Sir. But even in your presentation, you mentioned that by FY '26, you want to be like 5% market share in AC. And then probably now we were seeing region [indiscernible]. Is that market share when in your competition is like global peers like Samsung or [indiscernible] or Haier or [indiscernible]?
So is it possible for you to sustainably improve the margins from where you are or how difficult or how challenging it is experience in the last 5 years, you guys tried a lot on the sales and improving the marketing but still the margins are still struggling. So we're just trying to understand these challenges is [indiscernible] or is it because of something else? Or is it a problem of [indiscernible] what, where is the issue? We have investors outside of [indiscernible]. This is primarily because of probably the lower market share is not giving kind of a pricing for. That's our adjustment. These are assessments right or even something else to think about?
No. Look, in this, I'll only say one thing. In terms of air conditioners, [indiscernible] which we got in the category in last financial, last 1.5 years have been very good. And this year also, if you see the site of a major drop in the industry, we were able to sustain our volumes. And same thing is that refrigerator in a span of 2 years we are practically touching 4%. Our biggest strength is our network, we work -- we are working on improving --
[indiscernible], this question is not that. Please answer when people ask you all a question. One problem with all of you is you don't answer the question. Answer the question. If you don't understand the question, you ask him again to repeat the question. But he's asked a very clear and factual question.
Yes. Can you please repeat the question, please?
My question that some washers, you don't have a substantial market share in any of the products. And this industry is extremely competitive. So what in the single-digit market share is like 5% to 3% to 6%, do you be able to have pricing for or not? And if not, then can just be impacting your subscale what [indiscernible] I can say EBITDA margins, which was there for quite some time. So is it the right way to think about it? Or is it something else or other which we should think about?
So as I was telling you, our market shares in microwave, our market share in dishwashers, our market share in [indiscernible] are substantially at a good position along with our washers. Top loaders, which have -- after the launch of the new rate we share. The market share have further -- a have started improving. With regard to AC and [indiscernible], -- so as I just not shared now the question which you are asking, whether we'll be able to sustain the margins and sizing. So in IT, we firmly believe that we should give us good for technology products. And that product give us good sustainable volumes. And that is what that is --
That is not his question. [indiscernible], can you answer the question? [indiscernible] first, you hear the question well and answer the question. Please don't make up stories for the public. This is not a marketing meeting.
Sir, pricing power is not coming from the market share. If we see the new products what we have launched also our market share is only going up -- and in front loading washing machine, we are #1 as far as the customer selling price is concerned, we have features and we give value for what price we are charging. In air conditioners, as you know, it is a crowded market. There are more than 40 brands operating.
If you look from the price point, we are in top 10. So lower market share doesn't mean that our price point is discounted. So margins will not get impacted because of market share. And also in air conditioner, if you see the market leader has around 20% market share. So 4% to 5% market share is a good market share to start with, which ultimately we want to further increase.
The next question is from the line of [indiscernible].
Regarding the cost-down measures in the last phone call, [indiscernible] INR 200 crores, we are targeting from the material cost reduction, around INR 75 crores from the fixed cost reduction and INR 20 crores from the warehousing [indiscernible] reductions. So I wanted to know, sir, what's the time line on that and [indiscernible] from when we start to see these savings kicking in?
This is [indiscernible]. We had already indicated that out of the INR 200 crores plant, INR 85 crores will be -- approximately about INR 85 crores will get in the fiscal year '26 and we are on track of that. We will be able to achieve that INR 85 crores.
And like you said that some part of it was available in Q1, but we could -- I mean, it was offset by the increase in material costs. So could that happen in the future as well?
Our estimate for the quarter 2 commodity price increase is not as high as what has happened in Q1. So we should be able to get substantial benefit from the cost innovation activities, whatever we are doing --
Mr. [indiscernible] please also inform them what we did not do in Q1, which have led to this. Why don't you and Kartik not give them visibility. What did we do wrong?
Even though we could achieve about -- in terms of 1.6% cost innovation, but the commodity price increase happened more than that. So that there was a less increase in the material cost, which not have happened. Our cost innovation [indiscernible] so that the impact of the commodity, we should have been able to absorb, point number one. And number two, the realization took some time, which happened in Q1 as we move to Q2 because of the validation we had to complete.
No, Kartik. There is another point. What did we do wrong?
Yes. But from that overhead cost has gone up.
No, what did we do wrong on commodity pricing.
Yes. Okay. We are --
[indiscernible], you should be able to explain. You are the manufacturing director. What did we do wrong? You should transparently say.
What we could have done better is the control on the commodity pricing. We have [indiscernible] with regular follow-up and the [ wide commodity ] of [indiscernible] and what measures we can get to mitigate that we do it properly, we are now corrected.
SP1 Okay. So if I understand correctly, sir, from -- for FY '26, we get around INR 70 crores to INR 80 crores from the material cost savings. And for next year FY '27, we will get the full INR 200 crores for the material cost savings. That's what I'm [indiscernible] correct?
Yes, that's correct.
That is not correct. Total is 200 [indiscernible], correct?
[indiscernible]. This year, you're supposed to get 60 to 80. So the balance will be only 120, for example. So the total will get 200 -- Yes. So 120 plus 80 is 200 million.
So this is like a onetime saving or it's like a recurring savings since we have reengineered the product?
Mr. [indiscernible], am I right or wrong?
That's right, sir, the savings or recurring or and target of overall INR 200, the realization will be about INR 60 crores to INR 80 crores in this fiscal year. The remaining will get in --
It's a recurring only.
Sir, ultimately, okay, the recurring part will be around INR 120 crores or it will be INR 200 crores? The recurring part?
The recurring part will be about INR 120 crores.
Okay. And with respect to the fixed cost that we talked about that will be reducing around INR 6 crores per month and the warehousing and logistics costs. What is the visibility on that?
[indiscernible], we are putting in place a team for this along with [ Alvarez and master]. We have identified areas of overhead cost reduction, and we are setting internal [indiscernible]. So if you say [indiscernible], we have done trial on network optimization for Bangalore project is complete. Now we are rolling out Pan-India. So we expect that the savings will start coming in from Q3 of FY '26.
Okay. And regarding the fixed expenses, sir, is there any visibility on that?
Yes, yes. This is for fixed expenses also. The same team is going to work on. And from Q3, we expect the savings to come in the P&L.
Okay. Okay. And sir, if we look at the year-on-year sales, the sales have increased, but the margin has gone down. That's because of the material cost increase or some other reason?
Yes. That should normalize going ahead since the cost savings will also kick in. Yes. As we explained, our service are in the pipeline. [indiscernible] but we expect [indiscernible] to INR 80 crores to come in FY '26.
At the same time, we are putting a team for a pricing company will look into commodities and in the ways to reduce the commodity prices. So the effect of commodity price on future quarters to be much lower or we expect a reduction in all this to add to P&L because our eventual target is to reach 10% EBITDA margin is what we've been targeting.
So with these cost savings, you think in the next 2 or 3 years, we can achieve that -- our intent is to hit double-digit EBITDA in this financial year in this. So that would be for the whole year, that would be like on the exit. Yes, the first quarter, we could not do, but we are working towards double-digit EBIT.
The next question is from the line of [indiscernible] from [indiscernible] Management.
My question is on the Engineering division. What kind of growth are we seeing for the next couple of years? And in what segment of the engineering do you want to drive that growth?
Mr. [indiscernible], can you take this question?
Yes, I'm not here. Actually, we are now looking at almost INR 3 crore and we are also having mine [ banking]. We are also having stamping. So we are now trying to improve both in time banking as well as [indiscernible]. So we are also having plans here, we are looking at a growth of around 20%. So in the next 2 years, we are looking at around more than around 30% growth. We are not working other than automotive, other customers also.
Mr. [ Maran ] he asked the question. You started off by saying 3x growth. And then you said 20% and 30%. Does that add up to 3x [indiscernible] is asking. [indiscernible], that is how you're answering a question. Can you answer? [indiscernible], can you answer? Can you answer? If you can just throw some light on -- are you there?
I just got cut off. I just joined.
Can you please answer the question?
I didn't hear the question, please?
Can somebody repeat -- Mr. [ Narayan ] said 3x growth you are planning and then [indiscernible] sell to 20% this year, [indiscernible] add up to [indiscernible].
No, it doesn't.
What is your plan?
The plan is that we have to grow organically, minimum 30% per annum. And also we have to grow through general acquisition route which we are actively pursuing. And we have already seen 48 companies and due diligence have been done for many -- so apart from that, we are also working on some breakthrough projects like which are new lines. For example, [indiscernible], et cetera, we are working on these, which will give us additional revenues using the fine blanking methodology.
Okay. If you see our margins or margins had been [indiscernible] --
[indiscernible] sorry. Sorry, I'll just say onto -- it's important to learn how to present matters, sir, and the [ CEO ] both, there is a division, time blanking division. What is your plan for that extent the shareholders? What is your plan for [indiscernible]? What is your plan for Electronics division? Why don't you go step by step? Have some water and present.
Okay. Okay. So the fine and the engineering division basically has 4 verticals now. The primary vertical is the fine pricing region, which is about INR 600 crores out of that.
What will be the growth in that? Get to the point.
We are aiming to grow by the end of by March '27 new orders into the pipeline. INR 445 crores by March '27. So this will come from new lines of business, which is the [ brain disk ] line as well as we are talking to decrease our profit business with the various OEMs. So -- and we are pushing for newer businesses in the non-auto sector also with companies like ABB, et cetera.
You don't have to say all that. Just explain. What are the segments you're getting into? Just explain.
So automotive as automotive segment as well as we are also now embarking into the non-asset [indiscernible] and with the onset of EVs, we are -- there is a test to keep our portfolio [ TV ] neutral so that we are certainly not out of business. So gradually, we see the onset of [indiscernible] automotive horizon. So we are aligned with that. And so this is in fine glancing.
In [ stamping], our plant is in Bangalore, and it is working at full capacity. So there is -- we are adding some pressure in that facility there, but our -- we are also planning a new facility in North of India, because most of the big OEMs are there, including [indiscernible]. So we are planning a new greenfield facility here.
And we are also talking to innovative new products -- contemporary products like the battery can for the [indiscernible] so these products also, we are talking to the suppliers in [indiscernible] pass. So we are in advanced stages of discussion and we are hopeful of good order pipeline in the near future. We have a vertical which we call the aftermarket. That's about close to 100 cars.
We need the [indiscernible] the change we were importing from China, the profits we were manufacturing in our fine blanking in plant. Now the government is imposing some restriction on imports to our Board has heard our investment for setting up a chain manufacturing plant in India. We will do that, but our Chairman has said to get the organization right before we go ahead with the procurement of the -- we are setting the organization right, which we will complete by the next 30 to 45 days.
And thereafter, we are going for -- and we hope to put up this plan in the next 8 to 10 months. the supplier has been identified, the equipments have been shortlisted. We are in discussions with them. Very recently, we have set up made a foray into Electronics sector, we have named this Advanced Electronics division.
We are making components for a global player. [indiscernible] clear who will be the ultimate consumer. We have made a beginning, and we are quite hopeful that this business will grow substantially for us and we are also in talks with other electronic players. So we want to grow this segment also, which is headed by a separate person and we successfully independent vertical under the engineering division.
[indiscernible] congress question on this. So your margins saw a very sharp increase in '25. So you expect this margin to kind of stay around this level? Or because in the past, your margins have been volatile over the past 4, 5 years. So you see further improvements in margin from here on?
My answer to this question is, last 2 years, we have been blessed with a stable commodity price, it has not been very -- now in quarter 1 this year, the steel prices have been increased by INR 3,000. So in the automotive industry, it is the standard norm that we -- whenever there is an increase in RM input, we get it from the customer. But there is a lag of quarter to half year. So we definitely will defend the margins we have been doing but our target is to improve it further. And definitely, we do that.
The next question is from the line of [indiscernible] from [indiscernible].
Please in the beginning of the call, you mentioned that our expenses have increased because increase in sales representatives, an increase in professional and legal services. Can you quantify these charges, which has led to increase in bigger gross margin expenses on a company level?
Yes. Kartik here. CSR spend PSR expenses has increased by around INR 7 crore for the quarter. professional fees has increased by INR 3 crores. And EVS expenses has increased by another INR 3 crores.
Sorry, what was the last you mentioned for [indiscernible]?
[indiscernible].
Yes. Second question is you briefly also mentioned about margins, gross margins had fallen in home plans division. So that was primarily due to increase in RM cost? Or was there any other reason also?
No, no. That was in part of commodity recovery through innovation.
Right. And my next question is what sort of growth do we expect in the washer segment top load and front load individually and in RHC this year? All 3 separate as you can quantify?
Yes. So in case of food, the growth what we are targeting is around we initially -- in the financial year, we were targeting from 25% growth, but the industry in front load is a bit segment. So we still feel that this actual season will be cold and we'll be able to recover our volumes. And we'll be -- Malawi be growing by around 20% to 25%.
In the top loader, we have been able to -- with the launch of new range, we have been able to grow at a much higher level and have been able to gain the share here being the page around 35-odd percent growth for us which will be better than [indiscernible] want industry, and we'll be able to gain some market share.
Refrigerator -- sorry, air conditioners, you asked, in the air conditioners, there was a drop of 30% plus in the industry in first quarter, but what we feel is our -- first of all, our [indiscernible] able to sustain our volumes, compared to industry. And what we feel is in -- from quarter 3 and quarter 4, we'll be able to get the volumes which we have lost in quarter 1. So then we need a growth of around 25% to 30%.
And sir, my last question is what sort of market share do we currently have in [ RAC ] segment?
We marginally gained we are at around 3.5%.
The next question is from the line of [indiscernible].
You mentioned [indiscernible] was provisioning. So approximately, what is the amount you would provision for the full year?
Yes, our monthly cost is around INR 2 crores. So [indiscernible] is around INR 24 crores to INR 25 crores.
Got it. Got it. So the savings would be after accounting this only, right, the savings we are talking about.
Yes.
Got it. The second question is that in terms of our compressors have you -- have we secured compressors for both risks and the ACs for the next [indiscernible] as we expand because there has been some shortage in terms of complete capacity in India, be it [indiscernible]. How secure we are in terms of the supply chain?
We [indiscernible]. We are aware of the demand supply gap in Compressor, but we are already discussing with a manufacturer. And as of today, we are secured with the quantities, whatever is required in the -- for the season.
Got it. Sir, can you just ask what is the capital structure of this IFB refrigeration, 40% is owned by IFB industries. So what is the 60%?
I think individuals are owning about 20-odd percent. And others in Promoter Group are owning significant shares. A promoter group, meaning the ones they led to [ CBS ] Promoter Group, they are owning shares.
Okay. And the rest by the employees, you mean to say the 20% various individuals?
Yes.
Okay. And is there a plan to kind of consolidate it at some point in time? Like is there a --
Yes, I think now if you look at the overall thing, IFB refrigeration above threshold volume mix, positive EBITDA, et cetera. As we've said, 55,000 to 60,000 is what we must sell to make a decent amount of money. Hopefully, we will get there soon. And we hope to at least consolidated in the near term. Near term meaning maybe in the next 6 to 12 months, hopefully, subject to both approvals.
And strong in BC or no frost in the refrigerator?
So we now make more of these, but the no-cost is increasing because we are producing more of that now. We are launching the 328-liter very soon. And after that, we will launch other models, our brand prism ideally should have -- I mean, our ideal start would have been to launch the higher-end models first because that's what [ IFB ] stands for. But then when we were considering the project we realized that if you don't do the lower end also to succeed in this is going to be very, very difficult. So going forward, we will do more of the higher end.
Got it. And one last thing on washing machines. So have we -- I mean, are we -- do we still manufacture the fully drive-driven washing machines? Or actually, we have moved to completely motor?
We have moved completely to BLDC. We are moving on. We are moving some like completely to BLDC.
Thank you. Due to time passing, that was the last question. I now hand the conference over to the management for the closing comments. Thank you, sir.
I think one of them meant things we have to say is -- sorry, I'm just going to set up something. Performance has been relatively weak. And all -- most of the participants have asked the question, what happened to the issue on cost, commodity costs, et cetera, et cetera. And I think whilst we were working with A&M on cost down, the team that was supposed to handle commodity price, et cetera, got defocused and some slippages will happen there. And that's an area that we need to tighten. I think that let us down.
On the fixed cost increase, if you see increments are giving ethic has to be done. -- but areas where consolidation of work, et cetera, should have happened, have not happened as fast as it should have. And that's also an area of slippage. So we have slipped. [indiscernible], of course, got affected due to the monsoons, I think, across brands. In other categories in various areas, we still not tightened and change management, where required that work is still done [indiscernible]. We've been very, very slow at it. Hopefully, in this quarter, a lot of that will get fixed formality. So we throw anything else?
No, sir.
Thank you very much to everybody for participating in the call. We meet again after quarter 2. Thank you.
Thank you. On behalf of Nirmal Bang Equities Private Limited. That concludes this conference. Thank you for joining us, and you may now disconnect your lines.