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Amber Enterprises India Ltd
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Ladies and gentlemen, good day and welcome to the Q4 and FY '22 Earnings Conference Call of Amber Enterprises India Limited.
This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions and expectations of the company, as on date of this call. These statements are not the guarantees of future performance and involves risks and uncertainties that are difficult to predict.
[Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr. Jasbir Singh, Chairman and CEO of Amber Enterprises India Limited. Thank you, and over to you, Mr. Singh.
Hello, and good evening, everyone. First and foremost, I hope you all are keeping safe and healthy. On the call, I am joined by Mr. Daljit Singh, Managing Director; Mr. Sudhir Goyal, CFO; Mr. Sanjay Arora, CEO Electronics Division; Mr. Sachin Gupta, CEO RAC & CAC Division; and SGA, our Investor Relation Advisors. We have uploaded our results on the exchanges, and I hope everybody had an opportunity to go through the same.
In the past 2 years, the growth in the consumer durables was impacted due to COVID-19 induced lockdown in peak summer season. Now with weakening of COVID-19 intensity, coupled with the hard summer season across India, consumer durables are experiencing a robust demand. The summer season is a critical period for growth of appliances, like AC. Almost 60% plus of the annual demand is met during the 5-month period, that is from mid of January till almost June, July.
Demand from B2B segment has improved in last couple of months, led by a reopening demand from schools, colleges and institutions. This trend is expected to continue for near to medium term. March to April have seen good momentum in urban, as well as rural areas which has further strengthened the demand environment.
As the economy was recovering from COVID-related impacts, the geopolitical tension created due to war between Russia and Ukraine has led to inflationary pressure on commodity prices, including the crude oil. Further, COVID-induced lockdowns in China has led to supply chain disruption, which has further added to the pain of the economy and availability of raw material for the components. However, we have been able to pass on majority of the price increases and been able to largely maintain our profitability.
Another event which is being closely watched is BEE table revision, which is going to be implemented by 1 July 2022. The customers are cautiously planning on volumes. We at Amber are fully geared up to address this table revision. All our model lineup is ready and expect a smooth transition to new table providing more energy-efficient products to the markets.
I'm pleased to report that company had generated record sales of almost about INR 4,200 crores. This is achieved highest ever revenue for the full year. After 2 years of slowdown, we are witnessing a robust demand come back. Pre-COVID industry was at 7 million sets in 2020, which fell to 5.2 million sets and in the financial year gone by, it has risen again to 6.4 million sets.
Looking into strong demand due to peak summer, we expect industry will demonstrate nearly 30% plus growth trajectory. We at Amber are excited to see this jump in demand and are confident of outgrowing the industry.
At our best estimates basis, total size in the value terms of industry is about to be INR 17,000 crore. However, the manufacturing contribution is about INR 12,000 crores. Looking into our wide offering of components to the industry, our value contribution in RAC sector for both finished goods and components is around 26.5% as of today. As the component contribution with our customer is expanding, along with CKD and SKG offerings, it's more relevant to look at value-based contribution from here on. Company is providing very comprehensive and integrated solutions in component space and finished good space. We are glad to share that our revenue spread today stands at almost 50-50 percent level in respect of RAC and components and other businesses. Earlier this level was 76:24 in 2018 at the time of our listing.
Another important update during the quarter was on acquisition of 60% stake upfront in the equity share capital of Pravartaka Tooling Services Private Limited, which is engaged in the business of injection mold, tool manufacturing and injection molding components for various applications. This acquisition will help our company to have in-house capability of injection molding tools, manufacturing and grow its component segment with focus on providing more diversified solution of injection molded components for industries such as automotive, electronics and consumer durables.
Now moving on to the divisional performance. RAC division, we were able to convert few customers from the first phase of gas filling to offering completely built units, CBUs, for RAC, which began this fiscal year. New customers have been added in this division.
On the commercial RAC side, we have added entire product line up of commercial ductable ACs, as well as Cassette ACs, which we have started to offer to our existing customers.
In the motor division, we have increased our product offerings to our customers by adding new models for both the domestic and international markets. Very strong order book due to addition in new products, customers and geographies. Our electronics division, which comprises of IL Jin and Ever, we have added new customers and have started supplies for new-age applications of smart wearables and hearables. Furthermore, as the market is moving rapidly towards inverter ACs, we are confident of growing our revenue share from electronics division going forward.
On the components division, we are adding new products, new customers and new geographies. And our recent acquisition of Amber Pee Aar and Pravartaka Tooling is also part of this division. We are witnessing good business traction and integration is happening smoothly.
So on the mobility application, which comprises of Sidwal, we have onboarded new customers who are global leaders in this segment. We are progressing well with new product developments for various business segments. Recently we added products to cater to the data centers in this division. Our order book today, in mobility division, is very high [Technical Difficulty]
Members of the management, we cannot hear you at the moment. Members of the management please confirm. Ladies and gentlemen, we would request you to please stay connected while we check the line for the management. Ladies and gentlemen, please hold while we check the line for the management. Ladies and gentlemen, thank you for patiently waiting. We have the management line reconnected. Over to you, sir.
Thank you and apologies for this disruption. I will now take you through the consolidated financial highlights. On the revenue side, our Q4 FY '22 revenue stood at INR 1,937 crores versus INR 1,598 crores in Q4 FY '21. FY '22 revenue stood at INR 4,206 crores versus INR 3,031 crores in FY '21. On operating EBITDA side, Q4 FY '22 operating EBITDA stood at INR 133 crores versus INR 147 crores in Q4 FY '21. FY '22 operating EBITDA stood at INR 296 crores versus INR 229 crores in FY '21.
Operating EBITDA margins for Q4 and FY '22 stood at 6.9% and 7% respectively. Q4 FY '22 and FY '22 operating EBITDA does not include ESOP expense of INR 4.08 crore and INR 15.67 crores respectively. On the PAT, Q4 FY '22 PAT stood at INR 59 crores versus INR 76 crores in Q4 FY '21. FY '22 PAT stood at INR 111 crores versus INR 83 crores in FY '21.
All divisions are ready to take advantage of multiple opportunities. Our goal is to capture the bulk of room AC, HVAC and component market share. We feel that this opportunity will boost our position in the domestic market, while also providing a solid foundation for export markets going forward.
That's all from my side. Happy to take Q&A from here.
[Operator Instructions] The first question is from the line of Ravi Swaminathan from Spark Capital Advisors.
Sir, my first question is with respect to the mix of room air conditioners and components. How much was it during the financial year '21-'22, if you can give a broad breakup?
Mix of room AC and RAC components or room AC and only components, all together?
So the components and the kit. I mean the entire kit. So basically if you can give the breakup?
No, actually what happens is when customer asks us to put -- give them the semi knockdown condition or CKD condition, that becomes a component for us. That doesn't go in for the finished goods categories. Finished good is very different. But if I talk about is -- full year RAC, room AC is INR 1,975 crores. And components have jumped to INR 2,231 crores including mobility applications.
Including the mobility applications?
Yes. So if you reduce mobility application, which is INR 289 crores. So almost about one similar size -- so almost about similar size of RAC is the components now.
Okay. Got it, sir. And with respect to the say the price increase that we would have taken over the past 12 months, what would have been the magnitude of that? And are there -- further price increases are there on the cards given the fact that demand for the summer is likely to be good. So how is the price increase likely to be going forward and the kind of magnitude of increase which are likely to be associated with the BEE norm change also if you can talk about that?
Ladies and gentlemen, we lost the line for the management. Request you to please hold while we join them back. Ladies and gentlemen, thank you for patiently waiting. We have the management line reconnected, and I would request Mr. Ravi Swaminathan to please repeat your second question.
Yes. My next question is with respect to the price increase of past 12 months. What kind of price increase that we would have taken? And is there any further price increase that is likely to be there on cards, given the fact that demand that's being good? And what kind of price increase likely to happen across products during the -- due to BEE norm change.
So Ravi, on the price increase because of the commodity increases in various quarters, we have been able to pass on to our customer on quarterly lag basis. So as of now, if I see in last 3 quarters, I think in totality, of course, it will vary from model to model. But on an average somewhere between 8% to 9% is the price increases which has happened.
And on the BEE front, which is going to be implemented from 1st of July, every model will have a different kind of a price increase when the new table gets implemented, but somewhere we should expect finished goods getting expensive by at least INR 1,000 to INR 1,200 rupees on a model-to-model basis.
[Operator Instructions] The next question is from the line of Naval Seth from Emkay Global.
I have 2 questions. First, the clarification. Actually, the revenue what you stated about RAC seems like a 3% decline on Y-o-Y basis. So is my calculation correct and if yes, what was the volume number for 4Q?
No, no, no. In fact, Naval, basically, there is almost about 22% jump in the RAC complete numbers. As I explained that it is INR 1,975 crores. Last year, it was INR 1,621 crores, just the RAC.
No, no. Sir, I'm talking about quarter. Because I mean -- I had deducted 3 quarters from your annual and 4Q, I'm talking about.
4Q, I think, we will come back to you because this -- we have to just evaluate exactly. Because we need to still strip down the components and the kits front, plus the finished goods stock category.
I understood. But any volume number you can share for 4Q?
4Q, yes. I mean we've done about 1.5 million numbers as a finished goods is concerned. Kits and semi knockdown conditions are other. There has been that.
Understood. And second question on your gross margin. So if I look at your standalone gross margins have kind of compressed to 10.5%, which is kind of lowest since the time you have got listed. So as you stated that large part of the cost increase has been kind of done with, so is it fair to assume that 4Q, there was a lag and hence there is a pressure in 4Q margins or this is something where -- which will continue as a new normal going forward?
No, no. Naval, we need to see that last 3 quarters, on a quarter lag basis, we have taken increases of about 8% to 9%. But the last quarter, which has just finished, that number will be implemented in this quarter. So there is a lag of one quarter. So one quarter is missing. So I think this trend -- if the commodity keep on increasing in the similar fashion, this will continue, but if the commodity is stabilized, then we will come back over normal position that -- over a period of 4 quarters.
[Operator Instructions] The next question is from the line of Bhoomika Nair from DAM Capital.
Sir, just to continuing the previous question in terms of price hikes. You mentioned 8% to 9% increases so far. Do you know what would have been the cost increase and what further price increases are required to pay back our margin trajectory to an 8% level, which is what it used to be historically yet?
If you see on a yearly basis, Bhoomika, we are at 7% now. And if I add up the quarter lag, which is one quarter difference, we should be somewhere about the same percentage. So getting back to the similar portion, of course, as I explained to Naval that, in case the commodities keep ongoing northwards, we will always have a quarter lag. There will be one quarter where we will not be able to pass, but once this commodity cycle stops, then of course, we will come back to our normal position exactly.
Sure. Sir, right now, what is the pricing lag of that one quarter, which is yet to be passed on?
So in this, I think close to about 2 percentage to 3 percentage is the total overall basis. Because, yearly, if I see there is a total upwardly movement of close to about 11% to 12%.
Okay. Sir, the other question is on the subsidiaries. We've seen a fairly strong performance and we are looking at export opportunities as well for PICL has also from UC perspective, if you can just give some more color on where we are on that entire export growth soon?
So in motors, we've actually demonstrated almost about 81% of increase in revenue and the bottom line is also now very healthy, as guided earlier, we have achieve that from INR 131 crores, we've already touched INR 236 crores and exports is moving fine. We've been able to do almost about close to about 1.5 lakh motors export to Middle East and to U.S. market and we expect this numbers volume to double in the coming financial year -- in the current financial year.
So export is going very well. There will be 100% jump in value and volume in the motors as far as the export is concerned. Because now we are raising our share of business with the customers, where we were earlier just having a put in the door.
The next question is from the line of Renu Baid from IIFL. Renu Baid from IIFL, your line has been unmuted. Please go ahead with your question. Request you to unmute yourself from your handset and proceed with your question.
Due to no response, we'll move to the next question, which is from the line of Sonali Salgaonkar from Jefferies.
Sir, my first question is regarding the volumes. Could you help us with the volume numbers for RAC for FY '22 versus FY '21 and the industry as well? Sir, also an extension to this, what would be our guidance for volumes or even for the margins considering that you have mentioned that the price hikes that we have taken in Q4 is set to benefit us in the next quarter?
Yes. So basically, as explained that industry was at 7 million, then fell to 5.2 million and now as per our best estimates industry has closed at 6.4 million, so from that perspective, we see, I think I will hand over to answer. Sachin is going to answer this question as far as the volumes are concerned for the complete division of RAC and how the trajectory is going to be. Sachin over to you.
Yes. So as we disclosed in line to the industry, like estimate is around 6.4 million. So the same number for Amber stands towards of like 2.6 million, so we had our estimate of somewhere around 2.8 million to 2.9 million when the order book was almost there in place. But as we know that there were a lot of supply chain issues from China. So there are lot of customers who couldn't supply us the compressors and controllers on time, so that was the lag that may be reflecting in the next quarter.
Second thing is that, if you see the BEE energy rating table was scheduled to be implemented from 1st January 2022. So line to that we have seen that the window as a category has come down. So for us, if I see that indoor contribution has increased and the outdoor structurally has changed, so there are a lot of customers who are asking us in a modulated from. So that is why it has moved from finished goods to the component category and that is why you can see the split could have stand at 50:50. This is on the number side.
On the guidance side?
Sorry?
Guidance, sir, if any?
Guidance probably somewhere close to like industry talking up 30% growth. So it should be landing somewhere around 8 million to 8.2 million, industry size.
Sonali, what we have done recently is because of this larger shifted structurally into more components business for us, we have started looking at our market share from a value perspective. That is more relevant now because components is playing a big role. And if you see RAC, room AC and the room AC only components, I am taking out all the other businesses. I'm not considering refrigerator, washing machine, microwave or mobility applications, only RAC and RAC business, that today holds on. We have a strong market share of 26.5% and I think we should be able to add at least 100 bps into this market share going forward because our component strategy is moving very, very strong.
Got it, sir. Sir, my second question is, any update on PLI you would like to share? And also our CapEx numbers?
So on PLI we've been already approved for INR 400 crores and INR 100 crores in IL JIN and INR 300 crores in Amber, the first financial year investment threshold has already been up -- achieved by us. Now current financial year, we will have to bring incremental sale on which we will start getting 6% benefit by next year. So next year will be the first year when we'll start getting incentives from the government bank.
And on the CapEx front and on the complete console basis in the whole group, we have done INR 415 crores CapEx including all our subsidiaries. This includes maintenance CapEx, as well as R&D in spend, plus the new Greenfield facilities which are coming up. That is the CapEx which we have done.
Sir, and then FY '23, what CapEx do you expect?
So, our CCGT plant is now almost under completion so that CapEx, some part has gone last year, completely now this year. So we will -- from if I talk about all 6 subsidiaries plus Amber put together including everything, including the Greenfield facility of subsidy, which is there, which is going to be completed this year, we should be closing somewhere about INR 350 crores to INR 400 crores on the CapEx spend this year -- this current year.
The next question is from the line of Renu Baid from IIFL.
Sir, the first question is, you did mention that on the commercial side, you've recently launched some solutions for the data center market. So what kind of solutions are we providing? Because if I understand most of them are large size high cooling chillers which are there. So what are our solutions in the segment, if you could elaborate? And who are the customers with whom we are working?
So these are not the chillers part, which is -- this is a basically machine cooling solutions which we have developed and we have awarded -- all the customers are multinationals in this case. I'll not be able to name them because we have a NDA signed with them. But we are glad to share that the first PO has come and this is going to be a decent business contribution in Sidwal moving forward.
Okay. And what would be as in -- just to ask from a perspective, what would be the average ticket size of opportunity for us in a typical say 5 megawatt or a 10 megawatt kind of data center capacity?
See, this is -- this goes into the series of the racking system where this is purely a position air conditioning which goes into the complete server racks. This is not the building data centers…
Yes, yes. I understand. Yes.
For building data centers, you would need chillers kind of a thing. But for the same thing…
I understand the product now.
Yes, these are the products. These products are in various kilowatt capacities from 12-kilowatt ranging from -- it goes from further down also, 8-kilowatt to maybe 14 kilowatt, 15 kilowatts depending on the rack size. So the normal ticket size of this is about INR 4 lakh to INR 5 lakh.
Okay. And related to this, just one follow-up. So this we are doing as an ODM solution or largely, we are doing it for a couple of MNCs who are earlier importing and we are doing it as a local sourcing arrangement for them?
No. We have developed ODM solutions and as a import substitute also.
Got it. Sir, the second question is, if I think your comments did mention about targeting diverse end markets now, while earlier we were looking across components, more focus around HVAC solutions. Some of the acquisitions on the automotive side are increasing the presence and other initiatives that you've mentioned. So what is the business strategy on the components? Especially, if we see the EMS space across multiple sectors, industrial, automotive, we see the market opening up in a big way. So what are our plans for the electronics business and the components to focus on the core HVAC business or actually go big on the overall EMS market in terms of the opportunities unlocking? And any plan on this side?
Renu, we are very comprehensive integrated B2B solution provider. And now since the divisional concept has come in the company, every division, be it room AC, be it motor division, electronics division, components or mobility, they are growing on a very simple 4 pillar strategy. They are bringing up new products for different applications, not necessarily for AC application or room AC applications, but for different applications and plus, they are increasing geographies, they are increasing wallet share within the customers and bringing new blood. So these are the 4-pillar strategy which every division is following up.
Like electronics, now they have diversified into wearables and hearables and they have started giving it to Boat as a first customer. They're adding some new more customers into that category, plus they are also now getting to fan industry. Plus motor is now almost finalized at the last leg of giving solutions to e-rikshaw motors and chimney motors. I think this current year, we will see some small business happening, but next year, again a big number will come up.
And then the component space, now since we have a wide variety of components too offer. So we are not restricted to only HVAC space. We can give it in the refrigeration space. We can give it -- solution in automobile sector, industrial sector, whatever sector it comes. So that is what every division is doing and expanding in different ways. So you will see a very different number from now on. When we got listed, as I told that, the spread was very different, 76% contribution was from purely room AC as a finished goods and company was half the size of what it is today, but now we have successfully done 50:50. And going forward if we talk, I think RAC and RAC sector as a whole will come down to less than 50%. So that's our strategy moving forward.
[Operator Instructions] The next question is from the line of Ankur Sharma from HDFC Standard Life Insurance.
So just going back to the earlier question on volumes. So as you said, right, 2.6 million is what you did for the full year which, if I'm right, is about 24% growth Y-o-Y and broadly in line with the industry growth going about 22% to 6.4 million. So probably, our market share is broadly the same as last year. Just trying to understand what kind of volumes would be due in '23. You did say the industry volumes go up by 30% and I'm assuming you obviously will do much better given as you said, while these customers who are doing on the gas side they now move into complete solutions with you and you also, I believe, have a lot of capacity also coming in, right, over the next year or so. So any guidance on volumes where can we see those going '23 all the -- whichever number you could share.
So Ankur, basically, we expect that the industry will demonstrate a robust growth of plus 30%. But what we are now looking at internally is a value-driven proposition rather than a value driven proposition. I'll state the reason why I'm saying so. Because the moment customer demands that we need to supply them kits or we need to supply them knockdown conditions, aggregate the components together minus the compressor, it becomes a component strategy for us. It is no more of finished goods.
So we are seeing lot of the customers. So what we are now looking it as is that if hundred air conditioners are manufactured in India. Of course, you know, preferably all those hundreds should come from us, but today whatever percentage 23 odd percentage is being catered by us in terms of volume, we would like this to go up, but the other part which we are not catering, the 76%, which are being manufactured by other brands, those number of ACs should have something of Amber in it.
So what we are looking at is that, what is the value proposition number is bringing on the table in RAC and RAC components. It should not matter to us, whether they want minus gas, minus compressors, minus cross-flow fan or they want semi knockdown condition, they half air conditioners, they want full air conditioners, so we have started looking into a value proposition from point of view. And today from our estimate, we are at 26.5% as an industry -- as a complete RAC industry, both in component and this space and we expect that this number can go up in tune to or maybe more than tune to the industry growth. So we will out value the markets again in coming financial year as we go ahead.
Okay. So I think if you could also share for your subsidiaries, the sales and EBITDA numbers for Q4 as also for FY '22, the subs?
Yes. So PICL, I think I've already told. But I can repeat it. So we have done INR 236 crores of revenue. In Electronics, we have done total INR 650 crores of revenue, both IL JIN and Ever put together. Mobility application has done INR 289 crores of revenue and Pravartaka and this -- because we have just added them in last quarter. So, Pravartaka has -- Pee Aar has done INR 51 crores and Pravartaka has done INR 25 crores -- INR 26 crores, actually INR 25.9 crores. So that's the revenue.
And this EBITDA number, either absolute or percentage?
To PICL it's INR 24.63 crores. Electronic is INR 25.95 crores. Sidwal is INR 67.25 crores and Pee Aar is INR 7.06 crores, Pravartaka is INR 2.97 crores.
The next question is from the line of Praveen Sahay from Edelweiss Financial.
The first question is related to the RAC. If I look at for the last couple of years [indiscernible]
Sorry to interrupt you, Mr. Sahay, your voice is breaking up. It's not very clear.
Am I audible now?
I would request you to move to a better reception area and repeat your question, please.
Yes. Is it fine?
No. It's not clear, sir. May I request you to check your phone line and rejoin the queue?
You can check now, it's fine?
Okay. At the moment it is. We'll let you know if it gets bad.
Yes. Yes. So my question is, sir. In the last couple of years, correct me if I'm wrong, we are seeing the realization going down for the RAC segment. So is there some change in the product mix. What exactly this -- in this segment is going on?
So there is a big change in the product mix in the way that we are supplying more of indoor units and window as a category has gone down, specifically after the commodity price increases, the delta between window and split has shun. So it's more like a product mix change than anything else to put together. And also there is a shift towards like all these online players. They are largely into the 1-ton category. So, that 1-ton category has a lesser realizations.
Okay. Okay. And as growth path you had given for a 30% odd for the industry. So do you believe this -- the numbers like a lower ton is and this -- the online [indiscernible]
Your voice is not audible. Can you please repeat your question? We couldn't hear you clearly.
Sorry about that. So am I audible now?
Yes, you are audible.
Yes, so I just -- follow up on that, like you are seeing this trend to continue and you will see a further decline in the realization as online selling is increasing or 1-ton sales is on a higher side because on the volume side, you had given a 30% plus for the industry and also the increase in market share for you. So is it fair to assume this realization to go down from here further?
Yes. So Sachin this side. So probably the realization is to be monitored for next one or 2 years. The reason is that. So this is a major shift in the country. So country has witnessed almost 5 energy table revisions. So now the fifth one is happening and because of that the fixed speed as a category getting out. So it's not getting to our status of nil, but what is the contribution for fixed speed as a category stands 50% percent for the industry. So it is coming down to 20%. So the inverter market share we grow up.
Secondly, the window category shall come down, so the realization of the industry will move in tandem to how the inverter category in the industry -- in the country pick. We expect 5-star contribution to increase in the product segment, so the realization is to be monitored for at least next 1 or 2 year how would like the inverter category sched in the country and for sure, we are seeing some demand for the lower tonnage ACs. Like normally, in India, 8,000 Btu ACs were not sold earlier, but now we are seeing the demand for those kind of ACs as well. So I would say that it's next 1 or 2 years of journey where we need to monitor this part.
[Operator Instructions] The next question is from the line of Rahul Gajare from Haitong Securities.
Sir, can you give us a sense on distribution of the volume across the 4 regions. And if you are noticing faster depletion of inventory…
Sorry to interrupt you, Rahul. May I request you to speak on the handset mode. There is an echo from your line. I think you are on speaker.
Yes. Okay. So I wanted to understand, if you can give us sense on the distribution of volume across the region. And if you're noticing a faster depletion in a particular region with the chance of stock out? So that's the first question.
Well, I think, because we are into B2B space, brands will be able to answer this question in a better form. But what we -- as per our data, North contributes to almost about 35% to 40% and South have started contributing most about 30% to 32% and West and East contributes remaining portion of that. But as far as the inventory liquidation is concerned today because of peak summers, there are many customers who have completely run out of the inventory, but doesn't mean that they don't have any inventory at all. So they do have inventories of some models and they don't have inventories of few models. So it is -- the situation is varying from brand to brand. But we are aggregator of demand and what we are seeing is a good uptake and very good summer this time after about 2 years.
Yes. So we -- our channel checks indicated that there is a shortage of 2-ton air conditioners in the south market. So that is the reason why I was talking about stock-outs.
It could be a possibility that the 2-ton is a shortage, because as Sachin explained that compressor availability due to China situation, container not available is really right now disrupting few models supply chain. And also looking into 2 bad seasons and the commodity increase impacts, many of the customers they planned in very conservative manner. Nobody was anticipating such a high jump. Despite of commodities increases, there is a shortage in the material. So you can imagine what kind of demand is there for this kind of a product.
Right. Sir, my second question is on the compressor. Now GMCC supposed to start manufacturing very soon and highly will set up unit with Voltas. Can you indicate the kind of benefit that the industry will derive from moving away from imports to local sourcing? I mean besides the longer time period, how much cost will be a factor of local over imports?
So first of all, it's a really a good step that this critical component will be available from India itself. And we are seeing GMCC highly as you rightly said, Daikin is putting up facilities. So right now only 16% of air conditioners demand was being catered -- compressor demand was catered within the country. Remaining 84% was imported, and we expect that within next 2 years, 80% to 85% of compressors availability will start happening in India. So one, it will help us to reduce our inventory turns, inventory position, because we don't need to keep high inventory levels as far as the import is concerned and the dependability on the currency flotation exchangers. that will also reduce. And of course, once this product start getting manufactured here and the economies of scale come, there should be some good benefit of at least 3 to 4 percentage points on development.
The next question is from the line of Sandeep Tulsiyan from JM Financial.
Yes. Very good evening. Sir, first question is pertaining to this entire movement from RAC to components what you highlighted is going to happen consistently. Just wanted to understand, with these kinds of investments coming under PLI, do you think there can be a major share shift to insourcing versus outsourcing, which was currently driving in our favor? I see over the next 5 years, how do you witness, the overall share between insourcing and outsourcing, give it your thoughts over that because investments are committed by all the larger brands and all of that is on component side.
Basically what our business model is if you closely monitor numbers business model, we have mitigated to risks largely. One is brands changing the strategies of outsourcing to insourcing or insourcing to outsourcing. That's purely not in our hand. What is in our hand is to offer them very comprehensive solutions. If they want to insource, we are happy to serve them in components space, because if you see what are they going to -- if they are putting up facilities any brand, which already has the facilities today, out-of-17 manufacturing companies in India, which manufacturer air conditioners almost 11 are brands and we are supplying them components. So if brands are shifting their strategies to insourcing, they have already asked us to be ready to supply critical components, like cross-flow fan or like motors, nobody is putting up motors, nobody is putting up cross-flow fan, nobody is putting up inverter PCB boards and few of them are getting into heat exchangers. But heat exchangers, we are not supplying in large quantities to the customers. So this is going to help us as a value-based proposition.
Second mitigation in our business model is brands extending market share. We have seen in past from 2004 to 2011, LG used to be undisputed leader of the markets having about 26%, 27%. But then -- and Samsung used to be having the large shares, but then it started reducing because of many other players came in. So brands can exchange market shares and in future also. So we have tagalong our solutions to the industry and we have seen that in past also when brands have exchanged the market shares, Amber has been able to demonstrate a very strong growth because we have been able to either supply finished good or supply components in anyway.
Understood. And if you look at the overall revenue share that you mentioned 26.5% of this INR 12,000 crores, so broadly that comes to about INR 3,200 crores of which you mentioned INR 1,975 is RAC, so balance INR 1,200 crores is the component is that the right way to look at it out of and the revenue would be non-RAC component for the company, is that the right way to look at it?
Yes. That's the right way to look at it.
So you can -- can you give us a comparable numbers for last year just to see how these numbers have changed and second part to that would be on your central air conditioning you had given some guidance, that it will start contributing to revenue from FY '23, so how much numbers can you expect on that side? Those are 2 questions.
Yes. I think Sachin will answer your CAC question, especially the commercial AC and ductable question.
Yes. So on the commercial side, as we discussed, we started with the offering of the light commercial in terms of cassette and ready ductable. So this is the first year being ready in terms of offering to on the customers. So it was a contribution from the CAC somewhere around 2 or tune of like INR 20 crores to INR 25 crores, which we expect to go down to -- go up like by somewhere around INR 100 crores in next 2 years.
To review on the commercial side and coming to your previous question of the contribution from the component versus RAC, so just hold on, because we need to aggregate that. So probably -- it would be better that we can come back to you later.
I'll connect separately on it. No problem.
The next question is from the line of Nikunj Gala from Sundaram AMC.
Sir, my first question is with respect to our complete built unit of RAC. The number for the year INR 2,000 crore, which you have mentioned, over the last year, if I look at that growth, revenue growth would be 20%, even if I subtract the first 9 months and look at the only Q4 RAC revenue growth, that number is flattish. So can you just help us with the what is the volume here and the value growth as you mentioned, 8% to 9% is the realization growth, excluding the component part, I'm asking, sir. What is the complete built unit volume we have done?
So in complete built units, we have grown in terms of revenue by 22%. Last year, it was INR 1,600 odd crores and this year it is INR 1,975 crores. And on volume side, we've already done close to about 2.6 million, whereas last year, we were at about 2.2 million that is the broad numbers. But as I explained in the previous Q&A, that there is a structural shift, window has come down and ODUs have shifted to kits form or CKD form. So largely these are indoor units, which we have done.
Sir, just to clarify. You're saying $2.2 million to we have gone to $2.6 million, which is 19% growth. Then, in that case, the realization growth is very miniscule right, as compared to the inflation, which we have seen?
You are looking at a realization, you are picking up revenue and dividing by number. That is not the correct way of looking at realization. You have to look from model perspective. Now if I'm supplying the indoor products, that is a product ranging from INR 5,000 to INR 6,500. If I'm supplying window, that is a product of almost INR 17,000, INR 18,000. If I'm supplying outdoor units, that is the product of close to about INR 11,000 to INR 12,000. So it will keep on varying. This is not in our hand. Whatever customer demands, we have to fulfill it. If customer wants in indoors, we have to give indoors. If customer wants semi knockdown kits, we supply that.
So what -- that's what I'm explaining to all of you that what we need to see from Amber perspective today is that how on a value-based proposition we are -- what we are contributing, that number is very strong. That number is 26.5%. This will keep on changing, why, I don't know volume whether -- now, I have no idea. If window start selling again, the realization number will up go again. So that is totally not in our hand. What is in our hand is to give complete solutions to customers as and when, wherever they require.
[Operator Instructions] The next question is from the line of Pulkit Patni from Goldman Sachs.
Most are answered. Just one question in terms of your employee cost. We've seen it on a year-on-year basis increased from INR 100 crores to INR 150 crores. You mentioned something on ESOPs, which I did not understand. If you could elaborate does this include the ESOPs? And directionally how should we see this cost for the next couple of years? Should we see similar kinds of increases?
So Pulkit, can you just repeat INR 100 crores to INR 100 crores what you have referred?
Sir employee cost from FY '21 to FY '22 has increased by about INR 50 crores overall.
Yes.
Gone from INR 102 crores to INR 150 crores. So my first question is, this is almost a 50% jump. How should we look at this cost for the next couple of years? And second, what is the component of ESOP that you mentioned which is included in this cost?
So first I'll answer you the ESOP. So ESOP contribution in the full financial year is INR 15.67 crores. And in the Q4, it is INR 4.08 crores. And on the employee cost. So this INR 15.67 crores is included in the employee cost for the complete financial year and balance is a inflationary impact. One is because of the volume increase and the value of turnover increase and increment, which we have provided to both sides staff as well as wages because of the minimum has increased.
Yes. So that's what I was trying to understand that for the next couple of years, should we assume from a percentage perspective similar magnitude, I mean, are we hiring a lot more people et cetera, or now this will normalize in terms of growth? Something like…
It will get normalized, since we are adding new Greenfield facilities and we have to hire some people in advance, so that value is being added in the employee cost and going forward, it will normalize over the period.
And anything exceptional here that is been paid to senior management of Pravartaka or Pee Aar as part of acquisition, is that also included here?
No, no, no. There is no exceptional thing which we have paid to anyone. So all are in normal category and there is no exceptional item in this. And we have not paid anything extra too for the acquisition as well.
The next question is from the line of Madhav Marda from Fidelity International.
Yes. I just wanted to check that just continuing with the previous question. The ESOP of INR 16 crores that doesn't continue into FY '23, right? Like that will go away or that's a recurring item?
No, no. Since we have recently announced a second level of ESOP as well in the today's meeting. So that will -- a little bit increase will be there in the financial year '23.
Okay. Okay. And also if I can request you to give us basically across our various kinds of subsidiaries and the standalone business components part of it, which we do for non-RAC, this is that we do? Could you give us a sense in terms of how the growth could be for the next couple of years? So basically across motors, PCB, Sidwal and also components for non-RAC segment.
Yes. I can talk about the divisional part like motors is growing closely about 25% to 50% CAGR and also mobility application is growing by 20% CAGR. We are seeing a very robust growth in HVAC solutions, which we are providing to metros and also to railways and Indian Railways have also come up with the new strategy. They want more air condition trains. So that business is increasing very well for us and that will continue to grow at least 20% CAGR kind of a thing.
In electronics, we are seeing a more than a multiple jump, I would say exponential jump. We should expect in fact, at least 50% to 60% jump in electronics division in the current year itself. But of course, subject to orders getting formalized with the customers. But as of now, the order book is very strong. So we should be able to demonstrate a very strong growth in electronics division as well. And both the Pravartaka and Pioneer, we should expect the growth of 25% to 30% year-on-year basis.
Good. And for the part of the components, is this where we -- the non-RAC component, which we do, like there was…
Non-RAC component as far as refrigerators is concerned washing machine, microwave, water purifier component, fan industries and others also, so it keep on varying from customer to customer and year-to-year. But what needs to be seen is that when almost about 7, 8 years back, this non-room AC category was almost negligible in the balance sheet, which is today almost about 25% in our balance sheet. So we have traveled this journey from 0 to 25% in 5, 6 years and this is growing very well and it's margin accretive businesses for us.
[Operator Instructions] The next question is from the line of care Keyur Haresh Pandya from ICICI Prudential Life Insurance.
Okay. So that we lost some volumes due to unavailability of system components or compressor, so should we assume that this quarter will offset for that and probably there will be a flow-through of when you improve it?
Sir, I'm really sorry. Sir, can you repeat your question?
I think that as you mentioned that due to unavailability of a compressor, we couldn't produce what we planned. So, should that flow through in quarter one of the financial year?
Yes, understood. So sir, we are expecting the growth, but the only challenge is that. So if you see the real quarter related impact, so we had a issue of the container, because the port congestion that China. But now since March, you must be aware, there are lot of cities in the China, which are under lockdown, so still the physical supply chain is not stable still. So we are facing some challenge. The demand is good, but the challenge remains same. So what we are expecting is that so the demand should move towards July and August as well. Plus there is a major issue -- I'll not say a major issue, there is a major challenge for the industry the BEE is getting revised on 1st July, so all the brands are precautionary on the debt side. So the current models everyone wants to consume say maybe 15 or 20 June and then from 10th July we want to get into the new models. So what we see is that the demand rather than continuing to the quarter, it should go till like in August and September. This is what we are expecting. We are expecting the hectic season to be good this time.
But isn't it for the function of the temperatures, I mean Q2, Q3 and/or does it move to the next summer only?
Yes. But if you see now with the e-com being dominating so strongly and if you see now in the August there is Independence Day sale by through all these retails, like Croma, Reliance and E-com. Then you know on the side, by the month of the September, we have Pongal. So last year we were empathizing a good growth, but obviously because of COVID it couldn't happen. So this year the forecast or the discussions that we are happening with the brand, so we are expecting -- obviously, the curve is getting flattened. So we are expecting the demand to be spread across in the second half as well. So earlier like it was spread in the just 5 or 6 months. So this time, you're expecting it to get flat from 8 to 9 months, at least.
Okay. Understood. The last and second question is, can you give some growth guidance for the [indiscernible] stand-alone business estimates as well as [indiscernible]
Your voice is not audible. Can you please repeat the question?
Can you give some guidance for standalone business, as well as for each component as you see more bullish on the component segments? And then can you give some idea of how should we grow 40 component business as well as for the full AC business?
The only guidance which we can give is that whatever industry does, we will now out value the industry in terms of percentage. So if industry is growing by 30%, I think Amber should be able to demonstrate in value terms more than 30% growth, which means we'll be adding some market shares.
Okay.
Your voice is not audible.
Thank you. Ladies and gentlemen, due to time constraints, it was the last question for today. I now hand the conference over to Mr. Jasbir Singh for closing comments.
Thank you, everyone, for sparing your valuable time and being present for this call. I hope we've been able to answer most of your queries and if you have any further clarifications, you can please reach out to us or our Strategic Growth Advisors, SGA. We'll be happy to address your queries. Thank you very much and have a nice weekend ahead.
Thank you. On behalf of Amber Enterprises India Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.