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Rashi Peripherals Ltd
NSE:RPTECH
Rashi Peripherals Ltd
NSE:RPTECH
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Earnings Call Transcript
Other Earnings Calls
Ladies and gentlemen, good day, and welcome to the Q4 and FY '25 Conference Call of Rashi Peripherals Limited. [Operator Instructions]
I now hand the conference over to Ms. Savli Mangle from [ Adfactors PR's ] Investor Relations team for opening remarks. Thank you, and over to you, ma'am.
Thank you, [ Rutuja ]. Good evening, everyone, and a very warm welcome. Thank you for participating in the earnings call of Rashi Peripherals Limited for the fourth quarter and financial year ended March 31, 2025.
Before we begin, please note that this conference call may contain forward-looking statements about the company, which are based on beliefs, opinions and expectations of the company as on the date of this call. [indiscernible] are not a guarantee of future performance and may involve risks and uncertainties that are difficult to predict.
On the call today, we have Mr. Kapal Pansari, Managing Director; Rajesh Goenka, Chief Executive Officer; and Mr. [ Himanshu Shah ], Chief Financial Officer. The management will take us through the operational and financial performance for the quarter and the year gone by, following which, we will open the forum for Q&A.
I now request Mr. Kapal Pansari to take us through the company's performance. Thank you, and over to you, sir.
Thank you. Good evening, everyone. We welcome you all to the earnings call for the fourth quarter and full financial year ending March 31, 2025. I hope you have had the chance to go through our financial results, earnings release and investor presentation that are available on our website and stock exchange.
I have with me today are CEO, Mr. Rajesh Goenka; and CFO, Mr. Himanshu Shah, who will discuss operational and financial performance as well as respond to your queries.
The year 2024, '25 showed some signs of stability allowing global economics to better align with their potential. The evolving favorable environment fueled a significant 10.8% search in global tech spending, primarily driven by strong investments in hardware and software, while IT services growth remained steady at 4.7%. The overall picture signaled robust digital adoption.
For Rashi, FY '24 and '25 was significant growth from strategies perspective, which strategically invested and expanded our portfolio of high-end products and implemented a robust CRM system, empowering over 450 users to enhance customer engagement. Furthermore, we extended our geographical presence with the opening of our 52nd branch in Srinagar. These initiatives have collectively driven exceptional growth, significantly outpacing industry averages.
Building on this momentum, our focus for FY '26 is on achieving comprehensive 360-degree growth. I now hand over to our CEO, Rajesh Goenka, who will further dwell into operational update for this quarter and full financial year with you. Over to you, Mr. Rajesh.
Thank you, Kapal. I extend a warm welcome to all the participants on today's call as we delve into the business highlights of the fourth quarter and especially the entire year.
I'm excited to announce that we continue to keep the momentum of all-round growth in the financial year '24, '25. We not only achieved double-digit growth but very importantly, excel in each of the verticals as planned. Our successful execution of significant projects for esteemed organizations like [ NMDC, Reliance ] alongside strategic expansion into high-potential verticals like visual display, quick commerce and surveillance underscores our proactive and forward thinking approach.
We have also made substantial enhancements to our operational infrastructure including an advanced embedded lab in Bangalore and the establishment of a state of art call center in Mumbai. Our recent recognition at [ NVIDIA GTC 2025 ] as the best distributor further validates our unwavering commitment to making latest AI technologies available in India.
Looking ahead to FY '25, '26, our strategic focus is on achieving deeper market penetration through the cultivation of stronger channel relationship. We will continue to expand our reach by adding new partners, new customers, more locations to our distribution network. We will continue to innovate in the technology space and especially in the AI space with newer products, technologies and solutions.
With this, thank you so much. And with this, I pass on to our CFO, Mr. [ Himanshu Shah ].
Thank you, Rajesh, and good evening to all the investors who have joined today's call. I'd like to take you through the financial highlights of the fourth quarter and full year 2025.
On a consolidated basis, for quarter 4, 2025, total income stood at [ 29732 million ], so down by 1% Y-o-Y. EBITDA was [ 960 million ], up by 30% Y-o-Y. And PAT stood at [ 27 million ], higher again by 12.1% as compared to quarter 4 FY '25. On a consolidated basis for financial year 2025, total income grew by 24.1% to [indiscernible] million. EBITDA rose to 17.5% Y-o-Y to [indiscernible] million. That surge 45.8% Y-o-Y to [ 2097 million ]. Working capital days remained steady at 54 days in 2025, consistent with '24 levels, reflecting our continued operational efficiency.
On an annualized basis, [ ROCE ] was at 13.1% as of March 2025, and ROE stood at 12.6% as of March 31, 2025. If we look at segment-wise segregation on TTM basis, out of our two segments, 61% of our revenue was contributed by [ BES ] segment and 39% is contributed by [ LIT ]. When we see it region-wise [indiscernible], 66% of the revenue was contributed by metro cities and the rest was -- rest 34% was from non-metro.
With this update, we now open the forum for questions and answers.
[Operator Instructions] The first question is from the line of [indiscernible] from [ Muna ] Capital.
Sir, I wanted to understand a bit on the quarterly EBITDA margins, like what led to the growth?
So see, EBITDA margin essentially flows down from GP margins, which is a factor dependent on sales mix. So year-on-year, see, the EBITDA margin has grown from 2 -- sorry, on [indiscernible] basis, it is 2.77 to 2.62, but for quarter, it is [indiscernible] to 3.23. That essentially indicates the efficiencies and the sales mix, GP driven by sales mix.
Okay. And sir, secondly, what is the update on the replacement cycle for the laptops that you were expecting? How has the market been on that end?
Yes. So Microsoft refresh is expected towards the end of the year. So that's where the replacement cycle will begin. And in next 10 to 12 months, we are expecting significant refresh happening, especially in the commercial or the corporate segment, while consumer the transition may be a little bit slow.
Okay. So probably, sir, from which quarter can we expect the numbers to come in for [indiscernible]
So the expected is Q3 onwards, it should start the conversion.
Okay. And sir, just one last question. Overall, how is the data center deals that we were doing [indiscernible] and year-on-year, how do we expect that to move?
Yes. I think that's a good question. So while data center overall continues to do good. But as far as Rashi is concerned, last financial year, we had one single large -- or rather the largest order of INR 1,500 crores, which we successfully executed. However, in the current scenario, we are not looking at such large data centers coming at one shot. So there would be small, small data centers coming up at multiple locations with multiple users. So therefore, we are looking at small, small opportunities of data centers across India, rather than just being concentrated in one customer or one city.
Okay. So actually, sir, in continuation to that question, I wanted to understand that is there a slowdown in the data center because of any impact on the [ G6 ] side or any like that [indiscernible] that?
No, there is no slowdown as such. Only thing is the capacity addition of data centers are now happening in the phased manner. That's the only thing.
Okay. So there is no impact from the [indiscernible] side? Or is there something that we need to be concerned about?
No. In fact, AI mission by government is about to -- I think they have just released orders -- large orders to various AI data centers. I think that is going to be the catalyst for AI demand in the country.
The next question is from the line of [indiscernible] from Mona Capital.
Congratulations on a good set of numbers. Do you think, sir, what led to this increase in GP margins like any product in its which we have changed? And can this be the trend going ahead?
So [indiscernible], the trend more can be indicated by the animal numbers further than a quarter, a quarter can be a mix of sales mix, wherein the GPs may tend to -- or maybe sometimes deal specific. So more meaningful trend can be drawn from annualized numbers, which are in the range applicable to the [ trade ].
Okay. Okay. But anything in this quarter with any mix change as which help the margin because we have -- after 6, 7 quarters, we have come to this 3% plus. And while other competitors are still near the [ 2.3, 2.5 ], is -- will we look at the 3% plus going ahead? Or will we stick to our guidance of that 2.5% kind of margins?
So 2.5 standard margin is more meaningful to the sector. And this [ 3.23 ] is -- cannot be taken as a trend applicable.
Okay. Okay. Okay. Great. And sir, from the cash flow point of view, our cash flow overall has worsened a little this year. Any reason why because generally second half cash flows improve, but any reason why operating cash flows have [indiscernible] as compared to last year, anything of that? Because I think our deal -- [ Yota ] deal has been completely executed. So we were expecting some improvement there. Has that flown through? Or will it go through in your future?
So what has happened in last H2 since post Diwali the overall market from a business point of view also has been slower than anticipated. And concurrently, the overall collections also have slowed down. But while saying so, going forward, we see market also improving and collection is also improving.
Okay. Okay. So we can expect improvement going ahead in '26, '27?
Absolutely. In fact, if you remember, our January call also, we had indicated that there is a slowdown in the collection especially in the O&D quarter. Subsequently, JFM, there has been some improvement, but major improvement should come now onwards.
Okay -- sorry. Yes. Go ahead sir.
On an annualized basis, the impact on debtors is 5 days increase in the overall collection cycle.
Okay. That is 5 days has been increased. Okay. Okay. And the Yota deal is completely executed? Nothing left there?
Yes.
Part of it is pending. Small piece is pending, yes.
Okay. And in terms of growth going on, we've always maintained that double-digit growth is what we're looking for. So enterprise -- if we don't do these enterprise deals, which [indiscernible] sir was saying that we are not going to look for these larger deals. So how will that change over the [indiscernible]
So I would break our discussion in two parts. One is our regular run rate business. And the second is our large project business. I think majorly, it was [indiscernible], which was INR 1,500 crores.
So our run rate business in the last 20 years, we have delivered high double-digit growth, and our aspiration and confidence for similar consistency in the coming year is also there.
However, on the project business, this INR 1,500 crores, whether that will get replicated in the coming year, will it be INR 1,500 crores or will it be INR 1,000 crores or INR 2,000 crores, at this moment, it is difficult to predict. But all we can say at this moment that smaller deals but multiple deals are going on. They are there in our funnel, but it will all be subject to actual implementation.
The next question is from the line of [ Sameer Dosani ] from ICICI [indiscernible] Asset Management.
Partly my question has been answered. So core business, like run-rate business, what is your guidance, you can just reiterate?
And second is like how to think about working capital, it is at 54 days? Going forward, what should be the range because that will determine our ROC, ROE of our business. So if you can throw some light on that.
Yes. So I think on the business front, as I already explained, our run rate business, excluding the INR 1,500 crores, rest all the verticals last year, we have grown. And in the coming year also, we have a similar plan of growth. Yes.
So on working capital cycle, if you -- like we have been telling that 54 days is something in our kind of vastly penetrated distribution infrastructure is something -- demands a cycle of around 50 to 55 days investment in inventory only. Our debtors and creditors still continue to net off each other in terms of days.
And there has been a 4-day improvement in the inventory.
Inventory, we have, in fact, improved by 4 days in the current financial year.
Okay. Okay. So the run rate business has grown only 8% this year. That can improve next year. That's what we are thinking about, okay.
You're right.
Okay. Okay. And margin-wise, this year, we had obviously large deal. I'm sure that larger deals come at a lower margin. So should we think margins to improve next year from year on, if you see...
Yes. Larger deals, actually, we ensure that ROE, ROCE are not compromised. So it's not low margin, I would say. I would say it's more of protecting the ROE, ROCE, and that's what we strive to achieve that.
Okay. But margins like -- okay. So ROE, ROC could be...
Yes. Larger deals come at lower margin, but at the same time, the...
But margins can improve, right, because of that?
Yes, yes, of course. Yes.
The next question is from the line of [ Shankar ] [indiscernible] from [indiscernible].
Sir, my first question is regarding...
Sorry to interrupt you. Sir, may we request you to speak a bit louder. We are unable to hear you clearly.
Sir, my first question is regarding the Q4 revenue for this quarter. So what led to the decline of 1%? So I could see that in the past, Q4 FY '24, we had a 33% growth. So I do accept that a high base [indiscernible]. But keeping aside what led to this degrowth? Or at least you could have seen some 5%, 6% growth compared to RPS, right? So what led to this growth, sir?
Thank you so much for answering on my behalf, 50% of the question yourself. So one, of course, we had a disadvantage of a very large base of last Q4. Second, as I said earlier, H2 has -- the market has been flattish. Consumer market is a little bit negative, but consumer -- commercial market was positive. So overall, it was flattish.
And third, the payment collections also in H2 was slower. So as a result of all these three factors put together, our Q2 -- Q4 to Q4 is flattish. But that disadvantage now is gone. So April onwards, we are back to normal, and we are quite optimistic.
Sir, usually, this Q4 is responsible for commercial quarter, right? So can you give the breakup of this quarter with regards to [indiscernible] segment? Or even if you're saying the commercial quarter have performed well, but that's not reflecting numbers, that's what I [indiscernible].
That's why I said, the payment cycles also were relatively slower. And as a result, the business did not scale up. And normally, we would anticipate.
Got it, sir. And my last question is with regards to the quick commerce segment. So how are seeing...
Sorry, one more point, maybe just for clarity. We also -- since you -- someone mentioned that our debtor days had gone up. So we also went a little bit in the shell not to further extend our credit.
Got it, sir. Sir, my second question was on the quick commerce segment. So how that segment is playing well, sir? Because it's a comparatively high margin segment than e-commerce. So how it's performing?
So this is a new avenue. Quick commerce, as you know, is the blue eyed boy right now. Everyone wants to do quick commerce. We are using quick commerce for all our grocery usage. But Rashi Peripherals had the first-mover advantage, where we work with all these quick commerce companies. And currently, we are almost doing 8 or 9 brands, we are distributing through them.
This -- it seems that this is an additional business that we are getting. And the overlap with the regular channel and e-commerce is minimal. But it is still, I think, at an experimental stage, especially for IT kind of products in grocery and on, of course, I think they will be super, super successful.
But with this first mover advantage, we are very optimistic to have a very high growth on this quick commerce business.
Got it, sir. Sir, my last question was on our ROE. So currently, we are doing a 12.6% ROE and our plans or to increase the ROE slowly to 15 or 16 percentage. So let's say, if we are not expecting the kind of growth in the enterprise vertical. So usually, it has a high receivables and payable cycles. But overall, it will increase our return metrics.
So how -- what's our plan on improving our margin profile from, let's say, 12% currently to 15 or 16 percentage?
So on ROE, as we have taken growth capital last year and the growth capital when it comes into full cycle of the growth in revenues, then the ROE will come back to the levels of the standards applicable to the industry, which is 17% to 20%. So yes, current levels of 12.6%, we expect in a year or 2 to jump to 15%. And beyond that, then when the full capital utilization happens.
So we have -- as we have taken growth capital, this dip is seen in the ROE.
Got it, sir. And I expect this working capital to remain in the same range?
So we see some improvement scope in the same by maybe 5%, 10%.
Got it, sir. And my last suggestion from investment communities to add the brand-based revenue contribution for each quarter, sir, like what you have did in Q3 FY '24. From there on, you have removed that brand-based revenue contribution in your presentation. So I request you kindly add that in our presentation. Thank you, sir.
The next question is from the line of [indiscernible] from [indiscernible]
Congrats on a decent set of numbers. Sir, I just wanted to have your perspective on the consumer demand in the next upcoming year. Do you see it kicking back given that there is a tax benefit [indiscernible] so do you think there will be a bigger spending from consumer side as well along with the demand from the corporates?
So while the income tax advantage may not directly affect the IT business, or ICT business, that's more of leisure and easy spending by consumer. But I think considering the overall sentiment, second, overall, our economical growth; and third, education. And last but not the least is the enterprise, corporate and data center, all this accelerating.
And third-party reports at this moment are indicating double-digit growth in the demand per se in the coming year. And I'm just back from U.S. from some conference. And there also, I heard that globally also, the PC demand has already started picking up. So that's an additional comfort that we get that in the coming year, the demand will be at least doubled -- in double-digit -- higher double digit.
And for our company, are we expecting similar at least 10% to 15% growth in the top [indiscernible]
So our guidance always right from inception has been that our last 20 years history is almost high double-digit growth. So our aspiration continues to be the same. Even...
But high double-digit growth can be -- like 50% growth is a high [indiscernible]
Yes. So 15% to 20% growth is. Our CAGR at this moment is 21%, if you see.
Correct. Correct. So that's why I wanted to say [indiscernible] shift.
And just a second question on the margin front. So are we providing any services or are you planning to introduce some service, which might help better our margin like even selling cloud and getting commissioned from that or just on that service front?
So currently, we do not have revenue from services. Whatever warranty services we do is to support our business and our brand, and that is the reason we have a lion's share of business in those particular brands. So at this moment, currently, there is no plan is the answer.
So the miniscule element of services in our P&L is coming from our subsidiary, whether we have 51% stake. And cloud computing services are being done through that subsidiary, [indiscernible]
Understood. But I've seen other companies, they are starting initiatives where they just, on a commission basis, sell cloud as a service to their clients and to other organizations. So any thoughts, plans to start a similar thing? Because that would just directly add to your bottom line.
Absolutely. So your feedback suggestion is noted.
The next question is from the line of Rohan [ Patel ] from Total Capital.
Sir, I just want to know the characteristic of a new business vertical that starts reflected in our financials for FY '25, which is AI-based business. So can you just share some perspective on what are the customers that, what kind of business it is like service-oriented or product oriented? And what kind of margins do we enjoy? And how will this business grow going forward?
So is your question specific to AI or it's a generic new business question?
No, the one you are showing in your presentation as a different vertical.
So -- yes. So are you referring to the [ Yota Server ] deal again?
See, sir, I'm talking about the revenue that shows [ 1,687 ]
Yes. So that's why I'm going to re-clarify. Yes. So I think that I have already explained is in the call that the -- this was one large AI data center order that we successfully have executed. But the current industry trend is not to go for large -- such large units at one go rather than have small, small units and keep on adding.
But at the same time, multiple customers are building up small, small data centers, which they eventually will expand into 2x, 3x, 4x. So therefore, right now, as against this INR 1,500 crore order, we are not giving any guidance that whether it will be INR 1,000 crores or INR 1,500 crores or even INR 2,000 crores, or if not more.
Okay. And what kind of margins did we make in this business?
Yes, the margins obviously are lower, but then the debtors and creditors also are offsetting each other. So -- but percentage margin obviously is lower.
Inventory days are also less in such kind of deals.
Okay. And sir, in last call, you just mentioned that you were like entering into a different set of business of embedded solution. And we wanted that to be 5% to 10% of your revenue [indiscernible]. So can you just update us regarding the development that has been over there?
And give a sense about the business, it would look like? Like what is that business about? What will be our end clients be? What would be the coverage of products?
Okay. So our embedded business is shaping pretty well. It's a very unique -- it is very unique and different business. The skill set and expertise required are also different unlike our ICT distribution, where we are doing almost such a large business. We have created a separate team for it.
We've also, as a part of the value add, we have created a laboratory in Bangalore, where the designs, samplings are done, testings are them. And when they are ready the prototypes are given to the potential customers to test once they test, approve it, then it goes for eventually production.
The second point question was who are your customers? So typically, [indiscernible] customers, manufacturing customers, automobile customers they are our potential customers, some buy directly, some by indirectly.
Okay. And would that be a margin accretive business? I hope that would be because it's a way value-added business that [indiscernible]
Yes.
So can you just throw a light on what would be like our margin profile, what kind of ROE that business would generate for us?
You are only -- you are talking about embedded business?
Only embedded business.
So at this moment, we are more into an investing stage where we are building capacity, expertise, technical know-how, laboratory investment. But the opportunity is huge. I think more than $2 billion of semiconductors are already being bought in India. We are just at the tip of iceberg. And needless to say that more value add you do in business, the margins are higher.
So obviously, the margins will be higher. But at this moment, today, if you ask me, it will be difficult to spill out.
Okay. And just if you can -- you might have done this calculation, what kind of payback period you are expecting from this business?
So we are already profitable on this business. When said investments I meant from -- in terms of margins and ROE and ROCE. So we are already profitable if we look individually only this as this business.
Okay. So can you just give us like what kind of revenue it has contributed in this financial year for us and what kind of margin? Because we are already talking?
So this year, about INR 100 crores plus revenue we have done in this business.
Okay. And we are like we have already breakeven and now we have profit?
Yes, yes.
Okay. Okay. And sir, when we see historically in your presentation, we have done ROE of, say, 23%, [ 20% ] before our capital IPO of money. So why are we targeting 15% ROE there? Like what has changed that now we are targeting a lower ROE?
It's not targeting lower ROE, it's building up gradually. Because when you take a growth capital of such a size and the market dynamics and all what are there to grasp the opportunities -- it builds gradually, the volume doesn't come so fast.
So once we reach to 15%, obviously, we will strive for higher, but our initial target is to get back to the base ROE of 15% and then build from there onwards.
The next question is from the line of Manoj [ Rajani ] from Rajani Family Office.
Congratulations on a good set of numbers. So just wanted to ask you that given the tight working capital cycle, which is common in the industry. So what is our plan to maintain this growth? And also just without adding any debt to the balance sheet?
So I think Himanshu has already clarified that the industry standard is this. And we -- our aspiration also is to maintain something similar or better. There are basically three parts of it. One is the inventory. Second is our debtors, and third is our [indiscernible]. So all these three corners, we have to keep a tight watch on this, and control while maintaining our aspirational growth of double digit.
So if you see last year, inventory has gone down, but debtors have marginally increased. But net, we are still the same. So there is no deterioration even when the market was -- the H2 was a little bit slower.
So this is the current level would be a comfortable level for us even in the future?
Absolutely.
Okay, sir. And what is the range that we are comfortable with it in case it such situation worsens?
So it's 50 to 60 days is the overall range, but we see that the business can go or demand the working capital cycles. Not beyond 60, again, the [indiscernible] get raised and it gets [indiscernible]. We have that standard deviation range of that.
Secondly, more important to see here is as long as we are able to net of debtors and creditors in terms of days, we are in the safe zone.
Understood, sir. And sir, just one last thing. So I just wanted to know the -- I mean, sorry, if it has been answered. So what is the proportion of the revenue of our top 5 OEM partners?
And is there any risk of more concentration in this?
I don't have the exact data, but I can only generally answer that Rashi Peripherals is the least riskiest in terms of product coverage, because we have a very wide variety of brands and product categories. And last but not the least, our 52 branches. So we are toward pan-India. That is one of the reasons our business has always been consistent and have a consistent growth of 15% to 20% Y-o-Y.
Understood, sir. So any approximate names that you could take, I mean, just top 2 or 3 maybe?
Yes. The top names, I can say is ASUS, Lenovo, Western Digital, Intel. These are our top names.
The next question is from the line of Ajay [indiscernible] an individual investor.
My question is, what is the -- if I see the last year full year percentage of channel mix vis-a-vis the corporate or enterprise earnings and e-commerce. I understand [indiscernible] commerce is still an early day baby, or newborn baby. But I just want to know what's the mix? And from a revenue point of view and margin point of view?
Yes. So our channel mix is 85%, and our LFR is 7% and e-commerce is 8%. And we are hovering around the same as we always explained that ICT products are not -- they are technology sales and you need consultancy in some form or the other to make the ICT products sales. Therefore, despite all the onslaught of online, the ICT industry -- the ICT industry is still dependent on the channel community, whom we call it our partners. And that's the reason 85% business is coming from channel community.
And my next question is how about profitability? What's the profit mix?
Yes. So I about to say that and to add to what I already said, that if you work with e-commerce companies, the profitability relatively is lower. So that is, again one discouragement to -- therefore, we -- and since we are present in 52 cities of India, our first preference goes to the channel business.
Of course, we cannot ignore all other forms of business, which are e-commerce, LFR and the new one quick commerce.
Okay. My next question is what's the revenue mix of PC versus non-PC business of Rashi for the full year basis?
So broadly, 55% to 45% would be PC versus non-PC business.
Okay. And within this PC business, what is the percentage of revenue mix between consumer and commercial?
That number, I don't have off hand to give you. We'll need to collect the data.
Yes. So the idea is just to understand whether the consumer business is growing or commercial business is growing. So...
Yes. I think I have explained already, at this moment, commercial business growth is far higher than consumer. So for us, also our mainly growth is from commercial segment.
The next question is from the line of [indiscernible] from [ Monarch ] Capital.
Yes. So just a couple of things. We are at INR 900 crores debt. Now we -- our cash position is also a really lower. So will we take any incremental debt like going ahead for growth? That is my first question.
See, as far as working capital cycle, when it is maintained at 54 days out to be more specific, [indiscernible] cycles, any growth comes, or any division comes, within the year, the availment of debt? And then it gets normalized along with the collection cycles, which happens in the business. So debt requirement will be availed or not will depend upon growth opportunities coming into the business. And what is the combination of the controls of those businesses.
Okay. Okay. And in terms of, sir, how are like April, May, like you're almost done with April, May. So how are things looking up? Like have we seen demand increase or improve or see any guidelines on how things are looking up now?
Yes. So I think, again, this also I explained. Our H2 was slower but this H1 seems to be on track and all third-party reports are indicating about 10% demand growth.
Okay. Okay. And sir, on [indiscernible] the release is expected in June, July. So are we expecting some demand from that also since we are the largest distributor for them? So are we expecting some kind of demand from that coming in '26?
Yes. So NVIDIA demand continues to expand in consumer, commercial and data center, all three. And thanks for you to acknowledge that we won the Distributor of the Year Award from NVIDIA.
Okay. And this pivot from the larger deals to more smaller probably INR 200 crores to INR 500 crores kind of deals. Is it because of the margin issue? Or was it because it gets working capital in H1? I mean what was the reason for this pivoting strategy so just want to understand?
So this -- what I said was more market, the way the market is going on. And right now, we are not seeing such large 4000 or 8000 GPU data centers coming up at this moment. But at the same time, demand is not subdued, we are seeing multiple data centers coming up across other cities as well, simultaneously.
Just one last question. One thing we have that we have a 15% [indiscernible] benchmark, which we want to get back to. So any plans how we're looking towards [indiscernible] company has been like seeing since IPO at 15% is what you're looking at this year, obviously, was a little lower. And obviously, that was attributed also to the larger deal.
So without this, can we go back to that 15% margin from the [indiscernible]?
Yes, it is achievable. And 15% is the target what we have said is for short run in the next 1 to 2 years' time. Long run definitely remains in the range of 17%, 20%.
The next question is from the line of Shankar [indiscernible].
I just have a follow-up question. So what's our current business on our exclusive distribution rights? We do have on the certain product rates. So what the overall revenue from that right, sir?
Currently, our exclusive distribution business is roughly about 20%.
Got it, sir. So by the way, it has increased from 15 to 17 percentage to 20%?
Yes, it has marginally increased, but I must say that exclusivity and non-exclusivity does not have too much of relevance in this business because it's more demand, supply and the value adds that you bring to the market.
Also, maybe I can take this opportunity that majority of the businesses that we are doing even if we are not exclusive, we have the lion's share in the businesses that we are doing. And that is what is more important.
Got it, sir. And for the products that we have exclusive rights, we do have -- we do sell at a premium rate, sir, because we don't -- we only have the rates in the market. So we have a higher gross margin in the segment, sir?
So this industry is more of a flattish, if not fixed margin. So the scope of earning extra margin even in exclusive is very small. It is not but it is not very big, unlike other industry. But the positive side also is that if the exclusive product doesn't get sold, then it's not your loss. Ultimately, it will be covered somehow. So it has its own pros and cons, not very high, but not very low as well.
Got it, sir. And regarding our recent news on [ SatCom Infotech ]. So what has changed in the plans or the acquisitions, what have really changed?
So this [indiscernible] acquisition to we announced as a plan to acquire. However, that has -- that plan has been terminated. I think the conversation between the two companies did not proceed as per plan and certain expectations decided to end the [indiscernible]. So that is not in our radar for next coming foreseeable time.
Sir, but you do focus on acquiring companies in the business of software reselling because our other competitors also do the same and they have posted good results on software reselling business because it has a huge opportunity in a country like India. So how are we going to capture that growth in our business?
Yes. You are absolutely right, and that is one of the reasons why we engaged with this company in the first place. Unfortunately, this transaction is not going to -- but we have not dropped our plan to acquire or penetrate in this segment. since this is still at the nascent and the drawing board stage, and we do not have concrete information or any development to share with all of you. We are just informing that [ Satcom ] takeover acquisition is currently not progressing positively. But our focus for entering this segment remains strong.
But we -- and we want to do it more based on this learning of this transaction, the way it proceeded, the way it went back fell apart. We are now redrawing the strategy to ensure that we do not face the same issue again in the next engagement that we work with.
The next question is from the line of [ Rohan Patel ] from Total Capital.
Sir, can you just give us insight into what are your plans to improve our cash flow from operations because we are consistently having negative cash flow. So to grow at 10%, 15% we will [indiscernible] sufficient level of internal accruals, which we are lacking right now.
So it will be dependent all upon our ability to borrow or [ raise ] capital, which is not a healthy way to grow our business?
So we are trying to find out solutions and implementing those also from the balance sheet like of balance sheet solutions, which can be -- which can help in improving the cash flows, first of all.
Second thing, the optimizing the working capital cycle, what is the scope I mentioned, that will also help. On funds generated from operations, definitely, there's no issues, and those things are getting contributed directly on getting [indiscernible] back directly into the businesses only.
I hope I'm able to answer that?
Yes, yes, yes. It was -- and sir, just one of the last time when I got opportunity, I asked about your embedded business. So can you just give some clarity about what kind of products or services we are working on?
Like just to give us insight?
Yes. So semi -- these are basically semiconductor chips, and we have tie-ups with companies like, again, NVIDIA, Intel, [ Elmos ], Micron, Western Digital. We buy their chips. And these ships are then used to make some solutions.
Maybe I can give you an example without naming anything. Today, a car has more than 60 different types of chips because nowadays, all the cars are totally automated, right? Again, if I go a little bit one step further car headlight, for example, again, they are all automated. So car headlight, there are at least 3 to 4 chips. So these chips are essentially provided by Rashi Peripherals because we have tied up with those companies.
But what different we do is these solutions, for example, [indiscernible] solutions sampling we at our laboratory. And then we do business development work with various manufacturers for implementation.
Okay. And just if you can provide us with now [ INR 100 crore ] revenue base, we are profitable. So what kind of margin we are making right now?
It's obviously higher than the regular ICT margins.
Okay. But just a rough ballpark figure, if you can give is it in double-digit margins right now? And if so, how will this margin trajectory will be going forward?
Yes. It is -- at this moment, I can only say it is definitely higher, but the costs are also there at the same time. Once we reach to a good scale, I think that's where we will see, and that is why we are putting so much of effort, time and energy in building this business from scratch.
Assigning a range at this level of business is difficult and cannot -- instances cannot be drawn. But as Rajesh said, it is definitely a higher margin.
And based on what work you are doing and you might be having conversation with your clients and customers. Can we see this business being 5x the size in the next 3 to 4 years?
So the -- as I said earlier, currently, the market size is $2 billion, $2 billion [Foreign Language] is the existing market and with so much of more manufacturing happening in India, more automization happened, this market will rapidly grow. So that's the opportunity.
Opportunity is very large. We are only at the tip of the iceberg. But I think we are there at the right time at the right place.
Ladies and gentlemen, that was the last question for today. I now hand the conference over to Mr. Kapal Pansari for closing comments.
Thank you, investors. Thank you, shareholders, for participating in this call of [ FY end ] Q4. As in all the questions in all your queries, we have answered, one outlook that I want to leave with all of you is that we have now completed with 1 year of our operations in the listed space in the public domain, where a lot of learning, a lot of questions and a lot of deliberations have happened about how we take this company forward in the next coming years.
I think the journey has been exciting, and we can only share with more confidence that the opportunity of this segment of semiconductor, of the enterprise, and our traditional businesses put together contribute in this digital India of the future will only present more and more opportunities driving growth and better profitability for all of us put together.
Thank you once again for participating in this call and wish you have a very great weekend. Thank you so much.
Thank you. On behalf of Rashi Peripherals Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.