Elgi Equipments Ltd
NSE:ELGIEQUIP
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Elgi Equipments Ltd
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Ladies and gentlemen, good day, and welcome to the Elgi Equipments' Q2 FY '23 Earnings Conference Call hosted by Asian Market Securities 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 involve risks and uncertainties that are difficult to predict. Actual results may differ from such expectations, projections, et cetera, whether expressed or implied. Participants are requested to exercise caution while referring to such statements and remarks.
[Operator Instructions] Please note that this conference is being recorded. I would now like to hand the conference over to Mr. Kamlesh Kotak from Asian Market Securities Limited. Thank you, and over to you, sir.
Thanks, Edna. Good evening, everybody. On behalf of Asian Markets, we welcome you all to the 2Q FY '23 Earnings Conference Call of Elgi Equipments Limited. We have with us today Mr. Jairam Varadaraj, Managing Director, representing the company.
I request Mr. Jairam to take us through an overview of the quarterly results. And then we will begin the Q&A session. Over to you, sir. Thank you.
Good evening, ladies and gentlemen. Thank you very much, Kamlesh, for hosting this call. Like we normally do, I will take you through, firstly, current quarter's performance with respect to in comparison to last year's same quarter. I'll give you a reconciliation of the EBITDA based on what it should have been and what it is.
So if we look at the growth in sales and the improvement in the contribution margin at a material cost level, our EBITDA should have been around INR 160 crores. Instead, it's about INR 110 crores. So there is close to a INR 50 crore difference between what it should have been and what it is. The biggest two things are the fixed costs that have gone up.
We have to keep in mind that cost during the same period last year was extremely subdued. And it was artificially subdued because of the COVID situation. So what we are seeing is basically the fixed costs coming back to normal levels. So nothing to be alarmed about, considering the fact that we are sustaining our improved margins in -- at the contribution level.
So I would not -- I would -- when I look at both employee cost and other fixed costs, there is no specific country or no specific event or incident that is causing it. It's just a general increase across all. And we should expect that it should be at these levels going forward because these are really the normal levels that have come back again.
Now going to the sales, I'll start like I normally do with Australia. Australia was better than last year. But that's not saying much because if you remember, Australia was particularly affected -- in fact, Australia and Southeast Asia were particularly more affected by COVID than the rest of the world. So we're coming back. But we are -- our expectations are that it would be far better than what it actually is.
It's the same situation with Southeast Asia. In fact, Southeast Asia is better than last year but still not as good as Australia's recovery has been. Coming to India. Again, if you look at India, we had a very strong last year, first 2 quarters on the back of orders for our oxygen requirement -- compressors for oxygen requirement, which is not there in this quarter. So we have grown compared to last year without the oxygen thing, so it's been good.
Moving forward towards Europe. Europe has had good growth, continues to grow well in spite of the problems that we are having with the Ukraine war and the energy prices. We are continuing to grow. We are going as per our plan, the overall strategic plan that we have made for Europe. It's still -- to put it in perspective, we are a very, very small player in a significantly large market, so we are continuing to grow there.
North America, particularly U.S., was very strong for us. We were able to -- the entire team, the back-end team, the operations team did a fantastic job of making sure products were available. They were able to manage the supply chain challenges far better, I believe, than the competition has. Because our lead times now all over the world have become very competitive and almost back -- not almost, it's even better than pre-COVID levels. So this is a good thing.
And those -- these kinds of things have helped us. Of course, it hits us on our cash flow in terms of inventory that we have to go through. But we are beginning to get that under control. So Brazil had a good performance as well. And Middle East, also doing well. So across the world, we have had good performance in all the geographies that we are participating in.
Our automotive equipment business also grew compared to last year. But last year, if you remember, the second -- the first quarter was almost awash for the automotive equipment business. It didn't have -- like the compressor business, which had the oxygen compressor, automotive didn't have a supplemental business. And it was a really bad first quarter. So the second quarter was a recovery for it. So to that extent, growing over a recovering quarter is a good thing, so they're also doing well. So overall, across the board, we have done well both on top line as well as the bottom line.
Now looking forward into the quarter. During the last call, I had mentioned that we will have a good Q2, but we're not sure of Q3. Things seem to be okay for Q3 as well. At least I'm confident of the first 2 months. But I'm not sure beyond November what could happen. We've got to keep in mind what happened with commodity prices in a very short period in the month of December in 2020. So we -- the world has demonstrated that things can change quite rapidly, quite drastically.
So in keeping up in [ our thoughts ], so we still think that Q3 will be good. But we have to wait and see. So there's a bit of a caution on that. As far as our price realization, like I explained to you in the previous quarter call, we had done some price correction. The problem that we had in 2021/'22 was the runaway costs. I mean, the costs were increasing on a weekly basis and pretty significantly and no amount of price correction we were able to catch up with that.
So in February of this year, we decided even while the prices were still at very high levels, we decided we will forecast anticipated cost and then we'll set prices based on anticipated cost, which is what we did. We did struggle through those price increases in the first quarter. We started getting some traction. And you can see the result of that in the second quarter. We expect that to continue.
But in some areas, we may have to do some corrections. And this is something that we are analyzing so that we remain competitive. We are not going to give away prices which are based on cost increases. But if there are cost increases that we have overestimated, and to that extent, we have the need to correct prices, we will do so. So the idea is growth and back to profitability. So we will continue to manage that, watch that and do that well in the third quarter.
So coming back to, like I mentioned, our ability to make products available was one of the competitive advantages that we had in the first 2 quarters. And as a consequence of not being sure of shipping lead times, supply lead times, we have to take the worst case and plan our inventory based on that. So the consequence of that was that we had a huge increase in inventory to the extent of almost, I think, INR 150 crores, if I'm not mistaken.
So this was -- so that increase is being progressively handled now in all the regions as well as in the operations manufacturing unit. We are scaling down our inventory to reflect the latest lead times and the latest shipment plans. So we think it could be a 2- to 3-month transition period before we start seeing the results of it at the inventory level. But cash flow, of course, should start improving even the forecast.
So as a consequence of all that, as of Q2 end, our net closing debt was close to INR 155 crores when our closing debt in March was around INR 90 crores. So to that extent, our debt has increased by INR 65 crores, primarily -- well, not primarily, only because of the inventory. Because our receivables are remaining flat in spite of growth in sales. So we are confident that this will come down. I'm not able to predict exactly what the number would be at the end of the third quarter or at the end of the financial year. But it will be significantly lower than what it is now.
Coming to our CapEx. We had grand plans as always. We start with investing in machinery. But our total spend so far has been about INR 25 crores. And we believe we'll spend another probably INR 25 crores to INR 30 crores in the remaining year, so nothing significant there. We are working on a major CapEx plan to shift our city operations to our main campus outside the city. The detailing has been done. So once the numbers and the timings are ready, I will be able to share them with you.
So this is really a summary of our quarter performance and cash flow. Thank you very much. And we're happy to take your questions now. Thank you.
[Operator Instructions] Our first question comes from the line of Ravi Swaminathan from Spark Capital.
Sir, congrats on a good set of numbers. My first question is with respect to the growth in the domestic market. So basically, we had -- we are looking at some 7% growth during this quarter. Adjusted for the last year's sale of oxygen concentrators, who will be [ worked ] out in the kind of growth, what would have been kind of volume growth? And how do you see the domestic market panning out?
So the overall growth in our -- without the impact of O2 has been at a consolidated level close to 18%, right, whereas with O2, what we have reported is about 12%, right? So the difference really has been the contribution from India without O2, right? So that's really the summary of it, Ravi.
Okay. And what would have been the volume growth, sir, of India and your outlook on the growth for India going forward?
So the volume growth is about 8%. So as far as India outlook is concerned, very difficult to say. That is just -- I mean, there are -- there is a positive and a negative. The positive is that India is happening. It has been spoken about in all over the world. There is a China Plus One strategy. There is also the various schemes that the government is looking at into localized businesses. So these are all positives that are there.
But the negative, of course, is the overall world economic order. There are constant conversations of inflation, impending unemployment, recession, interest rates, the war. There's nothing positive outside of India. So we need to look at what is the net-net impact of this, right? So can't make any conclusive statements on that.
Got it, sir. And you have seen very good expansion in the gross margin, especially at a stand-alone level, has risen in spite of the fact that I think the input costs would have gone up during the second quarter, I mean -- or rather, the inventory would have been higher input cost. What is the reason behind this gross margin expansion?
So like I explained, we did a price correction in February, March based on the anticipated cost increases because we were not able to catch up with cost increases in the prior year. So that was the model that we took and we implemented it. We had various -- there was a long gestation in different markets in terms of realizing it. There was old inventory that was there as well. So all that came into fruition in this quarter. So that's the result.
Our next question is from the line of Renjith Sivaram from Mahindra Mutual Fund.
A good set of numbers to start with. And sir, was there any positive impact of the currency? Because we have a lot of exports and rupee was depreciating. So what was that impact -- cost impact because of that?
So for us, currency was only a 1% impact. Because you have to understand we have dollar on one side, we have also euro on the other side, right? And we have significant presence in both these countries. So while the dollar was a favorable improvement, euro was an unfavorable improvement, right, unfavorable development. So net-net, we got only about 1%.
Okay. And sir, these price increases you have taken, now that these raw materials have come down, our competition will also start to reduce prices. So what kind of price correction in our end products which we have to take in the next 2 to 3 months?
We are still analyzing that one. We need to figure out what is the current cost, what is the -- we don't want to get into a situation where again volatile changes happen to raw materials and we again get left behind. We want to learn from the past, make sure that we have a detailed analytical view of the future, based on that, review of our prices and see if there is a need for us to make changes.
Okay. And sir, just one thing, just my understanding on a few things. I have also visited a lot of these typical [ carrying ] machine kind of a facility, where there is a lot of impact as from the one we are seeing a lot of CapEx happening. But I haven't seen any Elgi compressor use too many of these chip manufacturing or ASMT manufacturing because it is largely some other imported or some other foreign brand. So are we -- do we have an offering or are we looking at that? Because that's going to be huge...
I don't know which factory you visited in India. Because the PLI scheme for semiconductors, we know that very few factories have been converted into actual factories the projects are on. And in many of the projects, we have got the orders.
Okay. So we have an offering there?
Of course. And of course, and outside of India, some of the leading brands -- I can't mention names because of confidentiality, some of the leading brands in semiconductors are our customers.
Okay. Because [indiscernible] clearly said ASM is one of the largest machine manufacturing here. So because of this German thing, does he have a tie-up with the German compressor? And are we losing out on that or nothing like that exists?
Sorry, I didn't understand your question.
ASM is one of the largest machine manufacturing for chips. So because he's of German lineage, does he support mostly German compressors? Or is it like nothing kind of...
I don't think so. [indiscernible] is a customer of ours.
Okay, okay. So you don't see any major impact because of that?
No.
Okay, that's great. And sir, this textile, we have seen kind of a slowdown or -- [indiscernible]. Otherwise, you can at least give some perspective, like what about the growth markets for the first half and the second half of the group? Because we are seeing some slowdown in textiles, which used to be a big market for us.
Textiles was never a big market for us. It was not disproportionately higher. As I've maintained, one of the benefits of this business is that it doesn't depend on any one industry vertical. It rides on all industries. But in a given year, there may be one or two industries by virtue of their own endemic problems, they may be struggling, like textiles right now. It was steel a few years ago because of the COVID. And there was a -- demand was not there.
But again, steel came back with a vengeance. So those cyclicity -- cyclical patterns exist in the industry. But we are not dependent on any one industry in any significant way. So textiles, yes, it's almost a year that they have been having challenges because of cotton prices. But now cotton prices have dropped. Mills are again back into the market buying cotton, so it should start up.
Okay. And in terms of the industry, sir, one or two, three industries which you can pick up which is actually giving a positive outlook?
I think all of them are talking about -- if you look at our inquiry levels, it cuts across all industries. Question is, are they all going to convert into finalizing orders and when? That's the question, yes.
Our next question is from the line of Harshit Patel from Equirus Securities.
Sir, you have mentioned that we are progressing as per our plan in the European expansion. So I think the plan was to break even in FY '24 and to start making money from FY '25 onwards. Sir, could you explain to us as to what were the losses that we have incurred so far in the first half of FY '23? And what should be the full year losses for us?
So Harshit, one of the things is, yes, the plan was FY '24 before COVID. But in COVID, we lost a year. So the breakeven actually happens in FY '25, right? So that is point number one. Point number two is I don't want to go into the specifics of losses in a given year. Our earlier plan was to invest EUR 20 million as -- through losses, right? So that's about INR 160 crores. So we are well below that. So that's all I can -- I would like to say. I don't want to go into the specifics of what it was in a given year. I would like to say that and then say whatever we are doing today is better than plan.
Understood. And all the major hiring on the employees front on the sales, marketing and administration front in Europe, is that done already? Or we are still hiring all that? So I'm trying to go as to how much increase would be there in our employee expenses going ahead.
The bulk of it has been done. Any additional increase will be purely revenue-generating increase. So if there is an increase, unless there is an associated revenue that is justified by the cost of the person, it will not be done, yes? So right now, we have covered all our basic overhead required for the plan already in place.
Understood. A second question is on the motors front. Sir, when are -- the last time you had mentioned that by the end of 2022, we will get that critical machine which is needed for the production. And by the end of FY '23, so the March quarter, we will stabilize the production of motors. So where are we on that plan as of now?
Yes. So if you remember, I had also mentioned in the same call that we had a problem with the vendor. And we were talking to them because they were delaying things, and they were not meeting our specifications. Now what we have done in the meantime is revoked -- or invoked the bank guarantee that they had given for the advanced money that we have paid. And we have canceled the order and we have gone with another vendor. And we hope that the delivery of that machine will happen by the fourth quarter of this financial year. And therefore, next year, we will have full capacity for the plant.
Understood. And sir, just a last small clarification, that 18% like-for-like growth that you mentioned, excluding the oxygen compressors, so what rates for our consolidated sales or just the India revenues?
Consolidated.
Understood.
We'll take our next question from the line of [ Vinodh Shastri ] from Instanomic Ventures.
Congratulations on the good numbers. Sir, my question would be on a stand-alone basis, we've made INR 448 crores and the PBT was around INR 95 crores. And on a consolidated basis, we have made INR 738 crores and liquidity was INR 104 crores. Just wanted to know which business is underperforming, and when do we expect a turnaround in that business?
So I don't want to get into the specifics of each business. That would be too competitive an information for me to share. But you know that Europe is the one that is losing money. And that's a deliberate plan, right? And that's the reason why the consolidated number does not move proportionate to the standalone number.
Okay. Sir, the follow-up question would be the operating profit margin for the quarter was somewhere around 15.2 percentage. Is there any scope of improvement, or we are somewhere around the peak?
At the current level of pricing, we are probably at the peak. But the growth -- the idea of increasing the bottom line or the operating profit margin is through volume, not necessarily through margin.
Okay. Then there was some CapEx that was done on the Sauer thing, ELGI Sauer thing. Is that started -- the commencement has started? Or can you see any material impact towards that?
No, we don't have any -- ELGI Sauer, we have not made any investment into ELGI Sauer.
There were some kind of CapEx for somewhere around INR 50 crores over there.
But that is by the subsidiary company, it's not by the parent company. They're doing it on the sense of their own balance sheet.
Okay. Then we just had a news on the VRF scheme. How much the wage cost reduction is expected if that goes through successfully, sir?
This is a small number. I don't think there is anything significant. By law, we are supposed to get a resolution passed by the Board whenever we do a VRF. We do this on an ongoing basis. If you see in the past few years, we keep doing it. This is primarily to assist employees who have challenges that prevent them from working. But at the same time, they're not so unwell that they cannot work. So we are trying to work that, too. So there's nothing significant that can be expected.
Okay. So the last question would be there is big CapEx that is going on into the railways team. Now do we see any big order flows that is coming into the company, sir?
Railways are going to make an investment. But unlike the past, where the locomotives were manufactured by government-owned companies, like Chittaranjan Locomotives or Diesel Locomotive Works, increasingly they are looking at private locomotives -- I mean, manufacturers to manufacture these high-capacity, high-horsepower locomotives. We will be participating in these opportunities. But it's going to be a new landscape, completely different from the past. So it's difficult to say whether there will be a linear kind of growth for these kinds of opportunities, but they are there.
Our next question is from the line of [ Govind Raju ], an individual investor.
Sir, congrats on a good set of numbers. And my question is we are shifting these manufacturing units to outskirts of the city. Where will we [indiscernible] laborers? Because most of the laborers will be men around the country.
No, we are already running our factory there. And we are having people there. And we transport our people there. So it's all good.
Is this a strategic issue? Or because of the plant being inside the city, a lot of future plans is to have -- is bringing our [indiscernible] into the outskirts, sir?
Sorry, I didn't understand your question.
Sir, you are shifting the factory to the outskirts. Do you have already future plans for this [ city per city ]?
No, we will utilize that for our automotive equipment business as well as other supply businesses that we have, like pressure vessels and motors and all that.
Okay. So some parts of the [indiscernible] will be shifting outskirts. Is that right, sir?
The main production units will go there. These ancillary and supply units will probably remain here.
Our next question is from the line of [ Navin ] from [ NS Capital ].
From your customer perspective, sir, are you seeing any positive impact of the China Plus One, Europe Plus One and the Indian manufacturing resurgence schemes? Are we adding clients from niche areas in sectors which we have not seen in the past? Some commentary on those lines would be helpful, sir.
So we don't -- we are not a component supplier or not doing white label for other manufacturers. So therefore, for us, this China Plus One strategy doesn't affect our business because we are not competing with the Chinese companies or private labeling for others, right? So the China Plus One strategy really helps those companies who are sourcing points for the big consumers in Europe and the U.S. So we're not them.
In terms of customers wanting to buy non-Chinese products either in India or in Europe or in America, we don't see anything. At the end of the day, business doesn't get -- doesn't behave in a biased manner. Business is based in a rational manner. And if there is a Chinese company that is making good quality products and is enable to give a good price, nobody is going to say, "I don't want to buy Chinese and therefore I will not buy." I mean, you see a lot of Indian companies who buy a lot of Chinese products.
In our own business, I mean, there are so many small Indian compressor companies that got incubated because of the huge demand for compressors for producing oxygen, none of the organized players could suddenly supply that quantity. There was a huge influx of Chinese compressors that were represented or branded in the names of Indian companies, small Indian companies. They made a huge amount of business during that time.
And now that the oxygen business is gone, they have to sustain their business through other means. So they're continuing to import from China. And they're supplying to the industry. So industry is buying. So I don't think that China Plus One strategy is -- it's a good rhetoric and emotion at a certain political level. But at the economic level, it is a rational behavior.
And on the operating front for this quarter, it has come at 15%. How do you see this going forward, sir? What would have to happen to take this a few notches up? Is it possible with the current product line? Or do you have to make investments and collaborations in R&D, et cetera?
I think our cost-to-price ratio is pretty much at a level of synchronized levels. Maybe there is some opportunity to review it, which is what I referred to in the earlier part of my conversation. In order for us to move margins, operating margins or EBITDA in any significant way, it has to come from the top line, right, which is really what we are trying to do through all our global expansion.
Our next question is from the line of Bhavin Vithlani from SBI Mutual Funds.
Congratulations for good numbers.
Thank you.
So on the -- when we look at standalone growth of about 8% and you mentioned, on a consolidated basis, the growth could have been 18% instead of 12%. But if you could help us, what could have been the growth in India had the oxygen concentrators not been there? That's part one. Second, which are the end-user industries that we are seeing positive traction and maybe a couple of them where we are seeing a negative traction?
Sorry. Can you repeat your second question, Bhavin?
So I mean, ex of the oxygen demand and when you look at the end-user segment, where that we are seeing positive growth momentum? And where are we seeing a negative growth momentum?
So let me answer your first -- second question first. I mean, we see positive growth across all industry verticals except probably textile, right? And that's -- the reason for that is pretty obvious. So all the sectors have grown. But the question that we really need to ask ourselves is are all these sectors going to grow in the future? Now there is a certain tentative, where there are still inquiries that are coming through.
But are they all going to get converted in the same velocity as they used to get converters in the past? This is a question that we don't have a clear answer for, right? So we have to wait and see and watch this very intently, right? To answer your first question, our volume growth was about 8% in India without oxygen. This oxygen is around is about 2%, 2% to 3%.
All right, that's helpful. The second part is you mentioned that we took some corrective pricing actions early part of the calendar year. And when we look at the competitive positioning amongst the large players, what would be our pricing ladders? I mean, historically, we have observed that there was a 7% to 10% differential versus Copco and maybe 1% or 2% versus an Ingersoll. Now how do we see -- as you have mentioned that we have moved ourselves significantly up on the quality curve and there is an acceptance towards our brand, so it will be useful to understand the pricing ladders.
That's a million-dollar question. If I had an answer for that, then I'll be at a different level. So if you ask our sales guys, they will say that we are far, far higher than Atlas and Ingersoll Rand, which is not true, right? But having done the price corrections and having tried to extract the pricing behavior of our competitors from their published reports, we believe that we have done a far more aggressive price correction than our competitors, right? I think our competitors were challenged by supply chain issues, which probably didn't handle it as well as we did. And probably because of supply chain challenges and long lead times, they've had to also be a little sluggish on their price correction. So this is still early days. We have to wait and see, yes?
So to answer your question in the ladder, probably we have moved one or two rungs, but I can't put a percentage, yes? Are we higher than Atlas and higher than Ingersoll Rand? Definitely not. I think that's our sales guys' fantasy and imagination. But that's something that we are not there, yes. And let me tell you, even if our quality -- and I know our quality is far better than these competitors. I know our performance in many machines are far better than these competitors. But we are dealing with Indian customers who still like something that's foreign, yes? We haven't shaken ourselves out of the colonial thoughts, right? We still have that complex. We will build it over a period of time, yes.
Yes. No, we understand that. Just the last question from my side is, I mean, you had given a target of 14.5%, 15% margins on a 3-, 4-year trajectory, and you've achieved it maybe in a year's time now. Do you see further upsides to the trajectory that we had put in for a 4-, 5-year horizon?
So Bhavin, we had said 16% by 2025/'26 is what we had said. And right now, we are at around 14.5% or something like that. Now like I said, this quarter has realized our prices and costs have not increased as we anticipated. So it's the time to review our position. Because I said that priority is growth, profitable. Not profitable flat performance, yes? So we need to review that.
So to answer your question, can we remain the same level of top line and achieve 16%? That is a no. And I would -- actually, I would actively discourage that. Because then you're just dropping up, you're extracting margins from the market, you're just making it. You're not growing it, right? So it's a good situation to be in but not a situation where you can celebrate and say, "Now we can keep extracting from the market."
Our next question is from the line of Manish Goyal, an individual investor.
Sir, very hearty congratulations on crossing INR 100 crores PBT. You are quite commendable, sir.
Thanks, Manish.
Sir, couple of questions just on -- probably on the gross margins again to probably get a better perspective. As to -- as the revenue mix change, also like in terms of higher aftermarket sales or more exports from India and backward integration, what we have been doing gradually, also helping us very well in this quarter or probably we see this kind of revenue mix continue. If you can give that perspective, like how are aftermarkets doing? And in exports also, what I saw last year in the annual report is that exports from India, standalone was up 69% to INR 421 crores. And it's now 17% of the revenue. And it's driven by both sales to the subsidiaries and direct exports, I believe. So that is the first set of questions, sir.
Yes. So let me try and answer what I've understood, Manish. You can correct me. Now let's talk backward integration. The backward integration, which we expected us to -- which expected -- which we expected to contribute to the bottom line was the motor project, right? Now it has certainly contributed, but nowhere near the levels of significance that needs to get called out in this quarter's percentage for the simple reason, our motor production volumes are still quite low because of that machinery that we did not get. So I wouldn't -- this profitability is not because of backward integration.
Coming to mix, our aftermarket as a percentage of revenue has remained at the same level, maybe marginally it's grown. I would not say that is the main reason. So overall, I would say we have pushed through price increases across all products. And it took us -- and across all geographies. It took us a little bit of time to make it stick in some products and make it stick in certain geographies. And that's why it took us almost 6 months to get to where we are today, right? So this is my understanding of the question. Is there something that I missed?
No. That is what I was trying to say that -- there has been some significant shift or move in the revenue mix, which would probably would have helped us on the better gross margins along with the price increases that we have taken.
No. So I wouldn't attribute this to mix. It would be on our pricing, yes?
And given that exports will continue to do well because our international subsidiaries are also doing well and...
And sir, are we -- like in India, have we started seeing traction on the inquiries on the project side, which was quite subdued of late?
Inquiries, it's all at the inquiry level. For instance, flue gas desulfurization, a lot of inquiries. Steel mills are talking. Steel -- again, they are talking. Now they seem to be saying, "Wait a minute, let's wait and see." The same thing with cement. Cement started and now they are saying, "let's wait and see," yes?
Okay. And a couple of data points, like we have seen a jump in our other income. So I believe it's always like in Q2, we have dividend income from the subsidiary. So if you can share the number, what was the flow-through of dividend income in the quarter, that would be helpful.
There is no dividend income really in this quarter, Manish. The main thing in other income is the exchange -- restated exchange, mark-to-market kind of a thing.
And how much was that, sir, roughly? Because even standalone has seen a jump, so I was just wondering that.
The stand-alone other income is INR 26 crores...
[indiscernible] according to the subsidiaries, right?
Right, okay. So what was the ForEx gain, sir?
It's not a gain. It's just restatement of our receivables.
Okay. Got it, sir. And last question, sir, on -- so when we're talking about Q3, so like probably last con call, we did mention about a bit uncertainty on the growth assets. So now basically, we are saying that we probably continue to see the growth momentum that we have seen in the recent past. That is what we should infer, like when you said first 2 months seems to be quite okay? So when we say this, we are referring to the growth part?
Yes, correct. First 2 months seem to be okay on the top line. I mean, they seem to -- I wouldn't say they're better than Q2, but they are continuing down that path, yes? So -- but we'll have to wait and see beyond Q3.
Our next question is from the line of Rahul Gajare from Haitong Securities.
I got two questions. Now within the confines in the European region with respect to manufacturing and energy costs, et cetera, is there a gauge for you to see more manufacturing happening in India and [indiscernible] Europe for ultimately building it, benefiting from [indiscernible] and also gauge opportunities in India? That's the first question.
You mean manufacturing for Elgi to be moving to India? Or you're saying generally European companies will move to India for manufacturing?
There's a trend that we seem to be gathering. Given the energy cost and so on, there are more and more inquiries for manufacturing coming to India. So in case of Elgi, it could be essentially from the own subsidiaries and from [ ultimately clients of the company ].
So right now, our manufacturing -- our entire global markets are supplied out of our manufacturing in India. So we don't manufacture the industrial compressors anywhere else. We do manufacture portable compressors in our factory in Italy. But that's a very, very small operation. Now are European companies going to set up operations in India? I don't know. I don't see that big kind of exodus happening. You have to keep in mind that after the China sourcing experience for the whole world, every country, just like India, is looking at insourcing manufacturing, right?
So part of our -- I believe the demand for our products in the U.S. is driven by investments by American companies to insource manufacturing. So if everyone is behaving -- all countries are behaving in a very protective manner, I mean, so is India. So I don't think -- I don't -- I mean, China Plus One strategy, like I said, is for sourcing points. We are not a sourcing company. We don't -- we are not a source for anybody. But such of those businesses that are sources or other brands, they will definitely have a benefit.
Okay. Sir, my second question is our total sales, particularly how much of this comes from orders from the new factory? And how much would be existing demand? Is there a new -- do you track this?
We do track it, but I don't have the number in front of me, yes.
Okay, I can take that offline.
Our next question is from the line of [ Vipul Shah ] from [ Sumangal Investments ].
Congratulations for great set of numbers. So my question is what is our aftermarket revenue, including service [indiscernible] percentage of revenue last quarter and where we intend to take it in 2, 3 years' time, sir?
Our aftermarket -- our service revenue is very small because we don't do service. Most of our service, at least in India, is done by our distributors. So for us, bulk of our aftermarket is just parts revenue. In total, at a global consolidated level, our aftermarket would be around 22%, 23%. And in terms of for the next 2 to 3 years, I can't predict where it's going to be. I can only say it's a strategic priority for us, right, in all markets, not just in specific markets. But from an opportunity point of view, it could be as high as 35%.
Okay. And so naturally, sir, it must be a high-margin business as compared to new compression business, right, sir?
Yes.
Our next question is from the line of [ Govind Dhiraj ] from -- an individual investor.
Sir, how much of exports in the quarter consolidated, sir?
Sorry, I didn't hear you.
How much is the export, sir, during the quarter?
See, our business is done by our subsidiaries, right? So our international business hardly has any export. It goes all through our subsidiaries and subsidiaries sell. So we're not like other companies that do domestic and export, yes?
Okay. And the promoter stake is 31% to 32%. Any [indiscernible], sir?
If you can give me some money, I will certainly [indiscernible].
Our next question is from the line of Manish Goyal, an individual investor.
Sir, can you give us a breakup of revenue between international and domestic for the current quarter and a competitive number as well?
Competitive?
No. Sorry, revenue breakup between international and domestic for the current quarter and the half year?
For the half year. So they're roughly the same at around 40%, 42%, India. And the rest of it is the rest of the world, right? We are actually -- we are maintaining that same thing. Last year was about 55%, domestic, 45% was the rest of the world.
Okay. And for the half year also, it would be somewhat similar?
Yes, same, yes.
And sir, like have we -- we're kind of having a large outstanding borrowing on one side to the tune of INR 600 crores-plus, and on other side, large cash of INR 450 crores. So are we -- like are we seeing some arbitrage -- interest arbitrage [ in the interest rate ], number one? Or there is an issue on the contribution of cash utilization?
So if you look at the debt, it is primarily in the overseas subsidiaries, which is a bulk of it -- big one is in Europe. The next big one is in the America. And the third big one is Australia, right? So these are the three areas. The India business is generating cash. And as a consequence, we are using packing credit, which we are getting at a very low rate of interest. And we borrow that and put it into deposits as a means to -- on little bit of a margin there and keep it safe, yes? So there is a bit of an arbitrage in India.
Thank you. Ladies and gentlemen, that was the last question. I now hand the floor back to the management for closing comments. Over to you, sir.
Thank you, Edna. Thank you, ladies and gentlemen. It was a pleasure to be with you this evening. We thank you for your continued support and your continued curiosity about our performance. So we look forward to talking to you at the end of the next quarter. Thank you very much.
Thank you very much, sir. Ladies and gentlemen, on behalf of Asian Markets Securities Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.