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IFB Industries Ltd
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Ladies and gentlemen, good day, and welcome to the IFB Industries Limited Q3 FY '20 Earnings Conference call hosted by Nirmal Bang Equities Private Limited. [Operator Instructions] Please note that this conference is being recorded. I would now like to hand the conference over to Mr. Chirag Muchhala from Nirmal Bang Equities. Thank you, and over to you, sir.
Thank you. On behalf of Nirmal Bang Equities, we welcome you all to the Q3 FY '20 results conference call of IFB Industries Limited. The management is represented by Mr. Prabir Chatterjee, Director and CFO; Mr. Rajshankar Ray, CEO, Home Appliance Division; and Mr. Arup Das, Head, Marketing, Engineering Division. I now hand over the call to the management for their opening remarks, post which we can take questions. Over to you, sir.
Good afternoon, and thank you, Chirag. Good afternoon, everybody, and I welcome you all to our third quarter FY '20 results conference call. I will start -- I will start with the discussion about the highlights of the quarter. The company has reported a total income of INR 702.39 crores, a growth of 4.7% over the corresponding quarter of the previous year. The EBITDA margin stood at 6% during the third quarter of 2019-'20 as against 5.5% during the corresponding period of the previous year, which is mainly due to -- mainly due to an increase in gross margin when turnover was not as per our expectation. During the quarter and 9 months ending 31st December 2019, there is an exceptional gain of INR 12.9 crores, receivable from the group superannuation scheme for refund of surplus money as per the Deed of Variance, which is approved by the Income Tax authority. Also, our estimated loss of inventory due to fire amounting to INR 11.57 crores has been shown as exceptional loss. However, insurance claim for the same has been lodged. During the year-end December '19, the company has reported a total income of INR 2,074.13 crores, a growth of 7.8% over the corresponding period of the previous year. The EBITDA report exceptional gain. EBITDA margins stood at 6.1% during YTD December of 2019-'20, which is marginally higher compared to the same period of the previous year. This year, Engineering division revenue and margin was affected due to severe slowdown in the automotive sector. Similarly, were -- consumer goods also market was quite subdued, other than the festival month. With that, I would request you to start question-and-answer session.
[Operator Instructions] We take the first question from the line of Aditya Bhartia from Investec.
Sir, in the last quarter, you had mentioned that dealer destocking in the front-load washing machine had taken place as you wanted to clear inventory in the channel in order to pave way for new models to be entering the system. Intuitively, Q3 revenue growths have been not stronger as inventory in the system would have got replenished, but we haven't really seen that panning out. What has resulted in the same?
Yes. So Rajshankar here. The basic sales itself have been lower, specifically in November and December, where the market was very subdued. So there wasn't an issue in October, but there was definitely an issue in November and December of the quarter. So therefore the benefit that we would've got on up stock, that did not take place basically. So the stock position remains low in a market, which is similar to what it was at the end of quarter 3.
And this would be an industrial-level phenomena? Or it was -- IFB got hold for some particular reason?
No, our understanding is that, overall, the industry in November, December has been very subdued. For October, it was good overall for the industry. We don't have category-specific information per se, so I wouldn't be able to share that. But our understanding is that the problem was for everyone in November, December.
Understood, sir. And even in top load washing machines, sir, for the last 3 quarters, we haven't really been seeing any revenue growth coming through. Is intensifying competition playing a part over there? Or you would, again, attribute it to muted market growth?
Yes. So what is happening in the top loader, fully automatic segment is that our models are positioned at 6.5 kgs and above, with price point of INR 16,000 and above. And what has happened in the last few quarters are specifically gleaned from introductions from players like Whirlpool, Samsung, with models in the INR 13,000 to INR 14,000 -- INR 13,500 bracket, where they have generated a lot of volume. So there's been a 6 KG or if I take it as a price point between INR 13,000 to, let's say, INR 13,500 to INR 14,500 kind of a price point which is there. So hence we've not been able to generate volume, what we have done is that early this month, we have introduced a model at a lower price point, which we think will take away some of the volume from this low end segment category.
And this model is lower than 6.5 kg category, sir?
It's a 6.5 kg only. But it is basically configured to be priced at a lower price point by around INR 1,000, INR 1,200. So it will be at the higher end of the lower end, if I can use a term like that.
Sure. And sir, earlier, our intention was to introduce models in categories lower than 6.5 kgs. But somehow, it seems that we have shelved those plans. Why has that taken place?
So we had initially identified an introduction of a 6.2 kg. But it did not look good from a profitability point of view, hence we've shelved that plan. The new introduction, which is a 6.5 kg, but at a lower price point, is with a healthy margin for the company.
Understood. And lastly, sir, if you could run us through your strategy on the room AC side, what's really happening on the manufacturing facility that we are putting up? And how do you see your fortunes changing post that?
So the manufacturing facility is almost ready. Our target dates for production starting was 14th of February and commercial introduction from 1st of March. The -- right now, the situation is that from 28th or 29th of January till about now, we have this issue in China because of which the final teams, et cetera, for validations, final raw material, et cetera, we have a problem. There is no clarity as yet. We are expecting around 9th or 10th of February for some clarity on when people can come for the final validations, et cetera. I would realistically expect a delay of at least a month in terms of the introduction of the new range in the market. So once the new range is introduced, we would have covered the complete span in terms of model mix, various price points. We were -- wanted to introduce some air conditioner, which could be having feature which are high end, all that has been done. And the kind of volume targets that we had originally in the project report will remain intact, which will be for the next fiscal year.
[Operator Instructions] We take the next question from the line of [ Sanjay Banerjee ] from Credence Capital.
Actually, I just want to understand why the related-party transaction what you have published on the BSE. So I just want to understand what kind of transaction is it?
Sorry, related party in AC?
Related-party transaction. You have published in BSE, where you said I have -- heard that from BSE website that there is a huge amount of related-party transaction in IFB Industries. So I just want to understand what kind of transaction is it?
Explain you, please. Hello? Can you hear me?
Yes, yes. I can hear you.
See, actually, the IFB Industries Engineering division have purchased a stamping division of automotive division because till now engineering, there is a lot of synergy in business and in auto component manufacturers, we are designing only fine blanking components. Now there are lot of normal conventional blanking requirements are there. We thought we will be able to give better products, our product varieties will be much more. So we decided to take it over. We have decided to take it over and already it has started giving result to us. Arup, will you add something?
Yes, other than this, even Trishan Metals supplies raw material to the Engineering division. Now Trishan Metals is another subsidiary company of IFB. So the raw material supply -- manufactured by Trishan and then supplied to these 2 companies.
We take the next question from the line of Pavan Kumar from Ratna Traya Capital.
Sir, can you just elaborate on the CapEx plan, CapEx plans from here in the sense of the Engineering and your home appliances CapEx plan separately? And what has been executed...
Tell later on, please?
Hello?
You call me separately, I'll give you the details.
Sir, does that answer your question, Mr. Kumar?
Yes. Yes.
Mr. Kumar, this is Rajshankar here. I will just add to what Mr. Chatterjee said. In our investor report in some of the major heads, the CapEx plans are already mentioned. So you can also refer that in terms of, for example, what is the air conditioner CapEx plan. So that, along with Mr. Chatterjee, I think you should be able to clarify.
Yes, I can tell you. See we have in the home appliances division around INR 150 crores for the AC project. And the routine CapEx, then the existing plan would be around INR 50 crores. Engineering division is around INR 60 crores. And Ramsons, which we have taken over, is around INR 6 crore. These are the main CapEx for this thing.And as I said, we have invested in stamping project, INR 35 crore, and automotive motors this thing. Altogether, if you take, it comes to around INR 384 crore. Out of that, till 31st December, we have done around INR 200 crores. And in fourth quarter would be another INR 100 crores and balance should be rolled over to the next year.
Okay, okay. And the cost escalation that you have talked about in the AC project from INR 148 crores to INR 192 crores is because of taking over the stamping company. Is it?
No, no, no. I'll just clarify, Rajshankar here. The movement from INR 140 crore to INR 180 crore is actually not a cost escalation. But from the original project report, we added sheet metal activities inside this new facility that we are building. So all the sheet metal work of the washing machine requirements and the clothes dryer requirements and the AC requirements, we are internalizing everything as a part of this project. And the total cost that is about INR 40 crore. So the total is now INR 180 crore. The stamping division takeover is a separate thing.
So ultimately, that project should also help in the expansion of gross margins, right, sir?
Yes, yes, yes.
Gross margins and EBITDA margins?
Yes. Because the value is, of course, the internalization of the margin. The second is that currently, as the volumes are rising, we are having a lot of sheet metal which is coming in from places like Bangalore, Pune, et cetera. And there is a significant amount of rate element attached to that. So with this project, the entire sheet metal will be inside and in Goa. So that is the benefit.
[Operator Instructions] We take the next question from Abhilasha Satale from Dalal & Broacha.
Sir, my -- this question is from -- on this AC manufacturing facilities, what kind of products we will be introducing? Will it be mass market products or the premium segment product? What kind of that -- in terms of tonnage and star rating, if you could just elaborate? And secondly, the second question is like what -- how much integration we have in our AC facility? So we will be manufacturing from IDOs, ODOs to the finished goods. And what are the components which will be imported or sourced locally? And will there be any impact because of this coronavirus this on your overall sourcing?
Okay. So the first part of your question was, what sort of the product range we will be picking up? And the product range is a mass premium product range. So the air conditioners will be in 3 ranges, which we are calling as silver, gold and platinum. And between the key vendors, we will basically be spanning the entire spectrum up to, let's say, air conditioner equivalence to, let's say, a brand like Fujitsu, for example, or Mitsubishi.And the silver range will be where we will be going after volumes in the market. These are all 100% inverter ACs and they are feature loaded. So that is the question as far as the -- as far as what will be produced. As far as the factory is concerned, the complete indoor and outdoor unit work is inside the plant, heat exchangers, painting. We have a very special nanotechnology coating on the air conditioner we follow that is in-house. Sheet metal, like I just shared previously, it will be in-house.From the supplier base, we didn't go up. We will be getting all the plastics. And we are also having a supplier who is coming in from Korea who is setting up an electronics console and manufacturing facility in Goa. So the electronics will also be produced out of Goa. At the beginning of the project, items like electronics, controllers, the heat exchanger coil, these are all imports. Over a period of 1 year, that is from the, say, now till December '20, the electronics will be totally in Goa, like I shared. The compressor manufacturing, we are expecting a plant of a company, called GMCC, to start manufacturing in Pune by about May or June this year, so that will become local. Some parts of raw material, like the coils, et cetera, for which currently, there isn't a supply base in India, these will remain imported from markets like Thailand, Malaysia and China. As far as the third part of your question, which is on the coronavirus, I have just shared previously that yes, there is an impact. Currently, what should have started, which is the final date of validation, final equipment calibrations, et cetera, which were expected to start on 29th of January, currently, is on hold because people are not being able to come from China. We are expecting clarity on the 9th of February, when all the companies open in China in terms of what the government policy will be on the movement of people from China. We will just have to wait for that to be really able to get a fix on what will happen.
Okay. So as of now, how much is our dependency is on China, like how much sourcing we are doing from China?
So if you look at washers, our dependence is low. It is on some components for which we also have alternate sources in places like Korea, Thailand, et cetera. So as far as the washer business is concerned, which is effectively a very low extent. As far as the air conditioner manufacturing business is concerned, right now it will be heavily dependent for the initial imports from China on the component and raw material side. After a year, the dependencies will reduce significantly.
We take the next question from the line of Pavan Kumar from Ratna Traya Capital.
Sir, how do you quality -- qualitatively assess the market situation as of now in home appliances as compared to the quarter that has just gone by? Has anything on ground changed or improved? Or what are we looking at as of now?
So if I look at December -- November and December, when compared to that, January was a slight improvement. If I look at February to January, it's too early to say. But if I look at a period of, let's say, September, October, then compare to that, December -- November, December, January, all have been subdued.
Okay, okay. But -- so overall, if I had to assess the scene, that in the past we had always grown by around 15%, at least on the revenue side. Going forward, do we have any such targets? Or -- how do we actually -- I mean how do we set our targets? Is it in terms of volumes, revenues? Or how do we work with?
So if you look at our internal targets, then we should be growing 15% to 20% with actions that we have to take, irrespective of the market, okay. So you bias that, for example, that November and December was not good, there are many things that we could have done that we need to do better. And those are in the areas of extraction from the channel, getting more from products, like top loaders, like we just discussed a little, the impact. The air conditioning revenue is a complete incremental because if you look at this year, we'll do about 120,000 by March. But definitely, our potential is much more, especially with the plant and the new range now coming up. So for us, logically, 20% revenue growth year-on-year is something that we should definitely be having, which currently we don't have.
Okay, okay. On that -- our target of reaching a double-digit margin, so as of now, we -- I mean, how much -- what should be the time period we should be targeting back here?
See, so what we have indicated in the previous call, is that our margins are something that we're very unhappy with as far as the appliances business is concerned. And one of the issues that we have is, further structural costs that we have in terms of the people, all the people in the field. While we have much better margins as far as, say, manufacturing products, on segments, which are manufactured like, let's say, the washers and the dryers, we have been having a very serious problem on margin because the AC has been sucking out the margin. So once the AC factory is live, what we have said earlier is that the gross contribution increase from the AC product vertical is actually what will help us to deliver this -- had this agenda of a double-digit margin, which we have spoken about in many calls, but we are still to deliver.
Okay. Okay. And at least, what are the kind of capacity utilization targets we are looking at in the AC plant in the first year, sir?
So the air conditioner factory is -- has a capacity of 450,000 per annum, which is upgradable to 600,000 per annum, with small incremental additions in terms of money. Our target, which we have also put in the investor communication, is to sell 300,000 in the first year as far as the IFB brand sales gross. And we are working to get about 300,000 from supplies to others, for which discussions are going on. So our immediate target -- immediate target in the first year will be to get this 300,000 IFB brands sales and to get as much as possible out of the 300,000, which is under discussion as far as OEM, or its exclusive sales are concerned.
Okay. So you said branded sales, what was the target, sir, 1 lakh, 2 lakh?
I said 300,000 IFB sales.
200,000 (sic) [ 300,000 ]. Okay. Okay. Okay. And sir, what I understood was, actually, even regarding the microwave, I thought a lot of components are actually imported from China. So is there any -- going to be any import of those companies because of this particular situation right now in China?
Yes, so the -- yes, I have mentioned this in the question that was just previous to yours, the microwaves are completely imported from China, built up. So as of now, we have stocks for, let's say, up to mid-March to end March. Now the rest will depend on what happens in China when factory reopen on the 10th of Feb. So it's very difficult to forecast anything now. We will just have to wait and see.
Okay, okay, okay. Just one more question, sir. On the placement of AC, see when I go around and see a lot of retail stores, especially the cities, then I mean the visibility of an IFB machine is not that much. But if we are talking about reaching a level of 2 lakh machines next year, do you think it is a -- I mean with this kind of placement, is it possible to achieve that target as of now?
Yes. So if you look at the breakout, when -- we will do about 120,000 this year. And let's say, our placements across India are in roughly about 900 to 1,000 accounts. So if you look at this year, the total number of accounts which have done business with us on AC comes to about 1,450-odd accounts. So from the accounts where we are only present, there will be an incremental growth. And for the remaining growth, we are -- we are basically talking to all the other accounts where IFB ACs are currently not available. So let's say, the major accounts that we would have visited currently in the market, very few of them actually keep IFB ACs. But now that we have a proper range, there is a proper product definition, which will stand out in the market, now with these players, all the discussions are going on in terms of placement of the IFB ACs. So we have to take 2 actions to get to that 300,000.
So from what I understood, it is like 1.2 lakh machines, we already are selling at the current moment.
Yes, we are already selling.
Okay. So we intend to do 80 lakhs extra in the next year. And then we need to further scale that up?
Yes. And our agenda is on 2 things. One is to do that 80,000 extra as far as IFB is concerned. And the remaining is there are discussions happening with lots of people in terms of our supply to them. And we would like to target a chunk of that 300,000 in the next year itself from these sales.
We take the next question from the line of [ Abdul ] from HDFC Securities. [Operator Instructions]
Could you highlight regarding the order book pipeline in the modular kitchen? And also, you're going to add 5 to 7 more stores in the modular kitchen segment. So in which region you are looking for?
Yes. So the immediate addition to the modular kitchen stores, we are doing in Bangalore and in Mumbai, which will be, let's say, in the next 2 to 4 months. And after that, we have to evaluate other markets. The order book pipeline currently on the 3 stores that we have in Goa, Bangalore and Kolkata is roughly about INR 4.5 crores.
Okay. INR 4.5 crores.
Does that answer your question, sir?
Yes.
[Operator Instructions] Next question is from Srinath from Bellwether PMS.
Just wanted to find out if this March inventory filling in the ACs will be from -- completely from the new plant? Or would we have some import ACs also? And have we completely kind of exited our old inventories in the AC business?
So our existing inventory of ACs will take us to roughly about the second week of March. And after that, it is empty. The requirement of the new air conditioners is from, let's say, the first week of March onwards ideally, which was the original plan. Now we have to wait and see what happens. The existing inventories will go to 0 by March, April.
Okay. And our production capacities are ready to meet that demand -- mid-March demand?
Yes. So the production capacities are ready, but what we were supposed to start on second of March is now not going to happen, so we have a problem there, because we needed roughly about 15, 16 days of final work on the plan. And currently, we just have to wait and see.
Okay, okay. And even the compressors we will be acquiring from the Gujarat vendor -- Gujarat-based vendor, right? Or is it going to be imported from China?
No currently, the compressors are imported from China from a company called GMCC.
Okay. So we will continue to be importing the compressors from China, even post March 15?
That's right. That's right.
Okay. And any update on the 6 kg washing machine product?
You are talking about the top loader, right?
Yes.
Yes. So here, like I just shared a little while back, 6.2 kgs is what we had originally thought of, which we dropped, because it was not viable in terms of margin. So what we have just introduced early -- early this month is 6.5 kg, which is considered at a lower price point.
[Operator Instructions] We take the next question from the line of Chirag Muchhala from Nirmal Bang.
Sir, first question is actually on the tax rate. So if we see both in Q3 and 9 months, we are actually paying the full tax rate, it's 37 we are only 9 months...
No. We are in the same tax rate actually.
Yes. So sir, no plans of co-opting to the new tax regime?
That is why because we have around INR 16.5 crores of MAT credit. The benefit if we shift is much lower. So we thought we'll just have this MAT credit utilized, then we'll shift to that.
Okay. So maybe from next year onwards, you could be planning?
Maybe next year.
Yes. Sir, the next question is actually on gross margins. And one interesting observation is that both in Q3 as well as 9 months, we have had a very healthy gross margin. And this is actually despite a bit of inferior revenue mix in home appliances, because the growth is largely, I mean, driven by ACs, whereas washing machines contribution to total sales has gone down. So sir, your thoughts on that? I mean what kind of gross margin outlook do you see going forward?
Yes. So this is Rajshankar here. It's a right observation. Actually, with the new models of washers which were introduced, the margin profile is much better than before. On the microwaves, as we have shared earlier, we have made the price increases to ensure that the margin that we lost as a result of the custom duty hike are recovered.It is -- also with the new microwave models which were introduced. So actually, what -- the area that we have a problem is to get the revenue growth that we -- the margin structure is actually much heavier than before as far as gross margins are concerned. What will happen with the AC is that the gross margin will further increase because the manufacturers, the ACs will have a much better margin profile as compared to the imports. But what is required is essentially the revenue. That is the most important element now. Have I been able to answer your question?
Yes. So basically, next year, if one assumes that the washing machine segment gets back to the normalized growth path that you generally target, then this 43% gross margin will have even further upside to it. Is that right?
Yes, yes, because the ACs will be much heavier than before. So whatever is the negative impact of the air conditioner will be accretive to this gross margin performance.
Okay. And sir, the last question on the Motor business. So from this quarter, we have reported as a segment -- separate business segment. So sir, just to understand the -- from basic. So in motor, does that product also go in our home appliances as a component? Or how do we look at that going forward? And also, if you can share any kind of top line, bottom line outlook for the same because in this quarter, it was negative at EBIT level.
Mr. Chatterjee, would you like to answer that, please?
Yes, I will because, Chirag, what I will request see, we have given a separate note in investors presentation on the Motor Division. Okay?
You will see on Page 8 of the investor presentation there's a...
Page 8, there you will see we have given appliance motor as well as automotive, which we have just taken over. Going forward, you will see we have mentioned that it is expected by June 2020 we'll have around 10% of PBDIT.
Next question is from the line of Srinath V. from Bellwether PMS.
Just wanted to find out post the price hike we took in microwaves, have you been able to hold share or has Samsung been discounting in the category? If you could just give a broad kind of understanding.
Sorry, there was a slight disruption in the line. Could you just repeat that question?
Yes. So we had got a new set of microwave range and post that our gross margins have improved. In a way, we have taken a price hike. So I just wanted to understand how our market shares in microwave is panning out? And is there a kind of price war being waged by Samsung in the category even now?
Yes. So in microwave, we have lost shares this fiscal year because we focused on the margin. And Samsung has gained market share. But what we took as a decision was that in this fiscal year, actually no one increased microwave pricing in spite of the fact that there was an import discount, but we took the call to change the pricing. So now that the pricing has stabilized, now our attempt will be to get back the shares that we have lost. But YTD, this fiscal year, we have lost shares in microwaves.
Okay. And housekeeping questions. Could you share revenue contribution from -- on e-commerce as a percentage and IFB Points as a percentage of sale?
So e-commerce is currently about 15% of our revenues and IFB Points are 15% of the revenue. So the 2 of them put together are 30% of company revenues.
We take the next question from the line of Saurabh Ginodia from Stewart & Mackertich.
Sir, I just wanted to understand how many counters' representatives have we added this year? And what is the planned addition for next year?
In terms of number of counters?
Yes.
Yes. So the number of counters in this year -- the additions are quite small because our focus was to get more business out of existing counters. Till date, we are presenting roughly about 13,500 to 14,500 counters across the country.
Okay. And how many counters' representatives do we employ currently?
Sorry, could you just repeat?
How many counters' representatives are we currently employing?
I am sorry. The -- there is a signal problem.
The number for counters' representatives.
We are present in 13,500 counters.
No, no. He's asking how many CSRs we have.
Oh, we have 3,500 representatives in the individual counters across the country.
Okay. And what is the planned addition for next year?
So there will not be too much of addition. There will be about another 400 to 500 counter representatives added. So that will take the figure to roughly about 3,000. We will not be having more than that.
Okay. And another housekeeping question is, in the quarter 3 P&L, does it include the start-up cost for the new AC plant in terms of employee costs and other expenditures?
It is part of the AC project cost.
No. Why I'm asking you this question because employee cost on a year-on-year basis in quarter 3 has gone up by about 14%, so I just want to understand whether this increase is on account of the new AC plant?
I will tell you. You see, it has gone up by around INR 3.5 crores compared to the last quarter, the major reason being we've taken over the Stamping Division and the Motor Division, automotive motor. Effect of that for the quarter is around INR 2 crores, okay? Besides that, in Engineering and other areas, some additions are there, but this is not inclusive of the AC project. AC project is absolutely different.
Okay, okay. So that will possibly hit the P&L in quarter 1 of FY '21?
Yes, once we start producing.
We take the next question from the line of Ashish Kacholia from Lucky Investment.
Yes. My question -- I have 2 questions. The first question is, what is the efforts that we are making towards getting more shelf space for our air conditioners when we introduce them from the new plant?
So the effort that we are making to get shelf space is on 2 counts. The first is that we have a very large number of accounts, which do business with us in all the existing products line, which is washer, microwaves, et cetera. About, let's say, 1,400 accounts from them already do air conditioner. So we will just strengthen our presence in these 1,400-odd accounts. As far as the remaining is concerned, the effort is to bundle up all our products and present a business case to the channel partner for IFB product, inclusive of air conditioner. So this is the first count. And the second count is the differentiation of the product and the marketing pitch around the product, is the second area that we are preparing for in terms of basically generating customer feel for this product, much higher than what we have today. Have I been able to answer the question, please?
Yes. And my second question, sir, is we have always been a high gross margin company. Gross margins are pretty high. But we are never able to transform that into the EBITDA margin level. So do you think we need to kind of re-strategize our above-the-line and below-the-line marketing spends and our efforts, so that we can translate more of the gross margin into EBITDA margin?
Yes. So this is a very good question. And for the air conditioners, specifically, there will be more use of ATL as compared to BTL. And this point about us getting much more extraction in terms of revenue is also correct. We have to do a much better job as far as the existing channel is concerned for extraction. But to your specific point on ATL versus BTL, in air conditioner, there will be much more ATL as compared to BTL.
Okay. What are the kind of spends that we are looking towards building our IFB brand in the air conditioner space?
We are still detailing that. So if you give us maybe another month or so, we'll be ready with the final thing, maybe by end of February.
Okay. And what is the response from the retailers when you are kind of presenting them the full portfolio mix as a way of getting shelf space in the air conditioner business?
So if you want an answer to that, wherever we have made presentations of the product, the fact that the product is a good product and it has features, which are differentiated in the market, has been universally accepted. This is also accompanied by a basic question on whether IFB will be able to generate the customer pull after getting the shelf space, because currently we have a particular volume presence, and we want to increase it significantly. So there is a degree of what is the word to use -- there's a degree of wonder whether IFB will be able to pull off the volumes or not. So, we have to handle the second part, but as far as the product is concerned, it is universally being positively received.
And so -- the dealers like the products -- the product features that you're offering, is it?
Yes, yes. Dealers like the product. I think the thing is that will IFB be able to sell, that is the question, basically, as far as the planning is concerned.
Yes. So the question is whether you can generate the pull, customer pull, is the question?
Correct. Correct. Because if you see in air conditioners, till now, we have played a very low key game. We had placements, and there were particular set of customers we've appealed to, and hence, we've sold is 120,000. But now the game that we are playing is a much bigger volume game. So there will be a marketing backup to it, and we will just have to be able to get many more customers than today. And I think the channel sales will doubt that how is IFB going to do that, which is what we have to address.
We take the next question from the line of [ Sanjay Banerjee ] from Credence Capital.
Sir, can you break up the expenditure on other services in related party transactions H1, INR 41.15 crore?
Can you repeat the question, please?
INR 41.15 core related party transaction in H1, shown as expenditure on other services. So I just want to -- the breakup of this INR 41.15 crores?
I will give you separately. After this call, you call me, I'll give you details.
Okay, sir. Okay, sir. One another question. What kind of transaction you do with the IFB appliances?
IFB appliances, they provide us the sales actually. Outer sales representative.
Does that answer your question?
Yes.
Next question is from the line of Kunal Bhatia from Dalal & Broacha.
Sir, I just missed out on the part of, sir, in terms of CapEx, if we look at it in terms of the breakup, Q3 -- Q2, you had mentioned we had done a YTD of INR 26 crores. Now in Q3 FY '20, we did an additional INR 45 crores towards purchasing these 2 business. So what is the one, overall figure, which one should look out for the entire year because...
Yes, like I said, we will be doing around INR 212 crores.
INR 212 crores.
That's Ind AS actually. There are 3 parts. Like the -- overall, it is in 3 parts. Till you put them into use, it's in half part, you have spend. Some you have capitalized, some in CWIP, some is in capital advance. So when you end, you will probably end the year at INR 300 crore. Out of that, INR 35 crores is used for the Bangalore Stamping Division and INR 10 crores for the Automotive Motor Division.
Okay. So the Stamping Division and the Motor Division was a part of the INR 300 crores, that is what I want?
Yes.
Hello?
Yes.
Okay, okay. So the entire CapEx, which you mentioned in Q2, was about INR 300 crore, that stands still?
Yes. Because it's done in stages. The capitalization will be over only when they're put to use.
Correct. Okay.
Well, ladies and gentlemen, that seemed to be the last question for today. I would now like to hand the conference over to Mr. Chirag Muchhala for his closing comments. Over to you.
Yes, thanks. I would like to thank the management for giving us the opportunity to host this call and to all the participants for your presence. Sir, would you like to make any closing comments?
Thank you, Chirag, and thank you, everybody, for joining.
Sure. Thank you very much. On behalf of Nirmal Bang Equities Private Limited, we conclude today's conference. Thank you all for joining. You may now disconnect your lines. Thank you.