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00:00Jasbir Singh, Executive Chairman and CEO of Amber Enterprises, joins us.
00:04Mr. Singh, it's been a really long time, but good talking to you again.
00:07This is Neeraj here.
00:08Good morning.
00:09Thanks for joining in.
00:10I hope all is well.
00:11Good morning, Neeraj.
00:12Thank you for having me on the show.
00:15The pleasure is entirely ours.
00:17So put the quarter into perspective.
00:19Yes, the estimates were strong, but you've beaten estimates by a handsome margin.
00:24Did some order or execution get pre-poned or is this the sign of things to come?
00:30Well, we've been working on diversifying our portfolio, both in consumer durable electronics
00:40and railway applications.
00:41And I think that is fructifying now, that is showing the results.
00:45So what we are looking at this quarter is the result of the hard work team has done
00:49in the last three years.
00:51We have added some more customers.
00:54We have added some new products in all the divisions.
00:56And that's where the positive growth is coming from.
01:00Well, OK, so please highlight what's gone behind this kind of uptick, both in quarter
01:06two as well as H1 maybe.
01:08And what does this mean, therefore, for the whole year for Amber Enterprises?
01:15And let's start with FY25, then we'll move to the longer term.
01:18Well, I'll talk to you about the three divisions.
01:22In consumer durable, what we have done is we've added some new customers.
01:26We've also shifted some product portfolio.
01:30So we have added tower air conditioners, we've added cassette air conditioners to begin with.
01:35And also we begin the washing machine business and commercial air conditioner business.
01:40So all of them has been added and now it is reflecting in the top line.
01:48On the electronic side, we have basically, you know, we've acquired S& Circuits and in
01:56the application of PCBAs, we have graduated from consumer durables to wearable.
02:01We added telecom and we've also added automobile customers very recently and smart meter customers
02:07very recently.
02:08So all this is fueling the growth in both the divisions.
02:13So hi, it's also Samina joining in.
02:15One vertical that unfortunately has seen a degrowth is the railway segment, where revenues
02:20were down 6.3% yoy.
02:23But of course, I believe you're confident that there will be improvement, but it'll
02:26only happen in FY26.
02:28You want to tell me what went wrong here and what is the growth trajectory?
02:31Will we see a big swing on the railway vertical?
02:34Because if you're firing from all cylinders, this is what you need, right?
02:38Well, Samina, on the railway applications, you know, we are very bullish.
02:43We've added a new product portfolio.
02:45We've added, apart from air conditioners offering, we have now added doors and gangways and we've
02:51added pantry systems.
02:52Plus, we have done joint venture with Eugene of South Korea for gear couplers and pantographs.
02:58But all this is basically now getting built.
03:01The factories are under construction.
03:03The new factories will be up and running by next year.
03:05And we expect from quarter four FY26 onwards, we see a J curve in railway division.
03:12So there's a big slowdown on the Vande Bharat order book because of the changes in the formation
03:18of the coaches.
03:20And there's a delay in one of the metro projects also.
03:23But nothing, you know, changes on the outlook of Ambar Enterprise's railway division.
03:28So we are very bullish.
03:29We have guided, I would like to reiterate my guidance, we will be able to double the
03:34revenues in next three years.
03:36And we see a very positive growth of railways coming in.
03:38And we are also endeavouring our offering in the export markets in the Europe and US
03:44market, which will be also reflected in coming years to come.
03:48You know, Mr. Singh, I want to talk about how fantastic it's been, right?
03:51And of course, it's so good to hear that you're giving us such an optimistic guidance.
03:56And also the margin front, right?
03:57You do have, you've maintained that you will, you're expecting margins to only improve from
04:02current levels.
04:03Where is that going to come from?
04:04Is it going to be on better portfolio makes?
04:07Is it going to be operational efficiency?
04:09Is it going to be the fact that exports will increase and that may contribute to your margins?
04:13And also in the EMS segment, you've specifically said that margins there too will double by
04:17F530.
04:18You want to tell me and give me a colour, throw some colour, give me a sense of timeline.
04:24And of course, where blended margins could stand by say F526.
04:29I'll speak to you about the three divisions on the margin front.
04:33In consumer durable, we've added more components, which has increased our margins.
04:39And we are adding some new product categories, which is a better margin product category.
04:43On electronics, when we acquired Elgin Electronics, when we started actually electronic vertical
04:48in 2018, this was a small 300 crore business with about 2.8% EBITDA margins.
04:54And we are seeing, we've already, you know, touched 7.75% now, and we are expecting further
05:00improvement in the margins.
05:02Because of the reason that we have added applications, we started our applications
05:06from consumer durable, then we added a wearable and then we added telecom and smart meters.
05:11And now we've added auto customers and now we've just got the first orders from the defence
05:15electronics as our first order.
05:18And on the backward integration side, we added PCB, which is a better margin business for
05:23us as in circuits.
05:25And recently we have done a JV with Korea circuits, which will also expand our margin
05:30because that is a very technology savvy HDI boards, which we are going to bring in India.
05:37It is complete import substitution.
05:39And on the railway application, we are already maintaining 22% of EBITDA.
05:43So all blended basis is giving us this growth on the margin side.
05:48So do you have two Korean JVs, the Korean circuit and Amber group have announced the
05:54JV this quarter.
05:55Is there something else as well on the railway side?
05:58Sorry.
05:59So one is Korea circuit, which has been signed recently in the electronics division, where
06:06we are bringing up high density PCB boards and semiconductor substrates and flex PCBs.
06:12We already were doing single layer, double layer and multi-layer PCBs in SM circuit.
06:16So we will become a single company in India, which will offer the full stack of PCB applications.
06:22And secondly, on the railway front, we have done a joint venture with Eugene Korea for
06:27the gear coupler and pantographs.
06:30This is adding the, you know, bill of material offerings in the one passenger car.
06:36So we were earlier offering only the air conditioners in the railway applications by adding, we
06:42did a TOT last year, technology transfer with the ultimate group of Austria for doors and
06:47gangways.
06:48We developed pantry system on our own and we have done this JV with Eugene Korea.
06:52So earlier we were offering just three to 4% of a passenger car business.
06:56Now we will be able to offer 15% of the passenger car business.
07:00So we have increased the total addressable market by four to five times within the existing
07:05customers.
07:06Sir, I want to understand from you a little bit more about the PCB manufacturing business
07:10as well.
07:11You've added a new plant in Hosar, where is capacity utilization there at, when is it
07:16going to, and when do you see it at full scale operations?
07:19And also in one of your commentaries, you indicated that you stand to gain from the
07:23government policies related to PCB.
07:25So what is the growth trajectory on PCB specifically and where do you see that contribution reaching
07:32to your top line?
07:34Well, you know, in PCB we are very bullish on this sector because if I take you through
07:41seven years journey, what India has witnessed seven years back, India was consuming $32
07:46billion of electronics.
07:48Last year, India ended up consuming $115 billion of electronics.
07:53And this is as a business as usual is going to about $300 billion by FY2030.
07:58And on a PCB side, three and a half to 4% is a thumb rule on the electronics getting
08:03consumed.
08:04So today India consumes about 32,000 crore worth of PCBs, but unfortunately only 3000
08:11crore worth of PCBs are getting manufactured in India.
08:14And looking into this, I think government of India gave the anti-dumping duty notification
08:19recently up to six layers.
08:23And that's the reason why we want to expand the portfolio in India.
08:27This is an import substitution.
08:28It's a domestic story completely.
08:30We are not banking on orders from outside.
08:33It is a good leeway and the Hosur plant of PCB in the SN circuit, we are bringing up
08:40new capacities for multi-layer, single layer and double layer.
08:44On the incentive side, it has been supported by Ministry of Electronics IT spec scheme,
08:50which is funding about 25% of capital subsidy on the plant and machinery.
08:55And we have also been able to receive good incentives from Tamil Nadu government for
09:01the PCBs as this is identified as the sunrise sector by them.
09:06So in all overall, there's an incentive scheme of almost about 50% for the PCBs.
09:12That's why we are getting very aggressive and we want to be a company which completely
09:17import substitutes this PCBs for India.
09:21And we are very bullish for the PCB sector moving ahead.
09:25So Mr. Singh, I heard you mention that you are reasonably confident of doubling your
09:30revenues from FY24 revenues by FY27, if I'm not wrong.
09:36Is that what you said?
09:37And will this happen at consistent or better operational metrics and return ratios?
09:45Or could there be over that three year period, a bit of a dip as you move to execute and
09:51garner top line?
09:54Our guidance of doubling the revenue is for the railway division by FY27.
09:59That is what we are looking forward.
10:01Our guidance for the consumer division is that this year we expect to outnumber the
10:07industry percentage growth.
10:10If industries, we expect that industry will grow by about 25 to 30% and number will outnumber
10:15that number in a consumer durable.
10:17In electronics, we have guided that we will be growing by 45% and I think I can revise
10:22my guidance that we are looking forward for at least 50% plus growth in the electronic
10:27sector this year.
10:28Sir, just one quick question.
10:30You have talked about very aggressive expansion plans upward of 5 billion rupees over the
10:35next couple of years.
10:37Like you've indicated, you're adding capacity and that's the way you're going to grow, right?
10:42You've also talked about reducing debt and improving your debt to equity ratio.
10:47Should we be expecting fundraising plans from your quarters?
10:49Because if you're going to try and do both those things, you're going to need some equity
10:52coming in.
10:53Right now, we have guided for the apex of about 375 crore this year.
10:59We are not going to raise any money for that.
11:02But yes, since we have announced Korea Circuit JV, we are waiting for Ministry of IT to roll
11:12out the incentive schemes.
11:13Post that, we will come out with the CAPEX numbers and if we want to be bold and brave
11:19in launching the PCB sector completely for the electronic division and looking into that
11:26in case we need, then we'll be raising funds.
11:28But otherwise, as of now, there is no plans for raising funds.
11:31Okay.
11:32Mr. Singh, any other highlight as per what you've done in the first half that we should
11:41take note of?
11:42We've gotten a great sense from you about the business.
11:46Anything else that you would like to highlight before we wrap up?
11:49I think Amber has transformed into a very unique B2B company.
11:53We started as a room air conditioner play when we got listed in 2018.
11:58Today, we have, apart from room air conditioners, we are into components of room air conditioners,
12:04non-room air conditioner components.
12:06We've added washing machines to our portfolio, commercial air conditioners.
12:10Then we built up this whole electronic vertical, which has been built up very beautifully and
12:15very strong vertical, which has been built, which is number 2.0 story.
12:19And in railway, we started in 2019 with just supplying air conditioners for Indian railways.
12:24Then we graduated into metro space.
12:27Now we have added a bus air conditioning system, some defense applications on the air conditioning
12:31side.
12:32And now we are going for deep into the penetration of the passenger car bill of material.
12:38So all of this put together, all the three divisions are looking very positive.
12:42I think we have increased the total addressable market into multi-billion dollar opportunities
12:46for each divisions.
12:48So we are very optimistic for next five to 10 year story.
12:51I think it's a complete India domestic story.
12:54And of course, exports will be all bonus points from here on.
12:57Mr. Singh, great having you.
13:00Thanks so much for taking the time out and being with us.
13:02Really appreciate your time.
13:03Congratulations on a strong quarter.
13:04Thank you very much for having me on the show.
13:06Have a good day.