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IFB Industries Ltd
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Ladies and gentlemen, good day, and welcome to the IFB Industries Limited Q4 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, Janice. Nirmal Bang Equities welcomes you to the 4Q FY '20 conference call of IFB Industries Limited. The management is represented by Mr. Prabir Chatterjee, Director and CFO; Mr. Raj Ray, CEO of Home Appliances 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 from participants. Over to you, sir.
Thank you, Chirag. Good afternoon, everyone. I welcome you all to the IFB Industries investors call for the fourth quarter ending March 2020. Hope everyone and your near and dear ones are safe and healthy. Joining me today are Mr. Rajshankar Ray, CEO of Home Appliance Division; and Mr. Arup Das, Head of Engineering Division.Taking into account the unprecedented and challenging phase that we are in now due to the COVID crisis, we are sharing our results. During this period, employees' health and safety was our top priority. And during the lockdown, we concentrated more on responding to the crisis and protecting the business continuity and also accelerating the recovery process. We are looking forward to handle the new normal which is going to emerge post the COVID-19 scenario.During this quarter, we witnessed steady growth during the first 15 days of March. Post that, lockdown impacted performance significant. And in a normal year, March sales is generally on the higher side. But disruption caused by COVID resulted in a weak performance. The company during the quarter has reported a total income of INR 490.05 crore, with a degrowth of 21%, 21.7% over the same quarter last year. This is mainly due to closure of factories on account of lockdown. EBITDA margin stood at 1.2% compared to 3.2% during the same quarter last year. For the year ended March 2020, the company reported a total income of INR 2,564.18 crores, with around 1% growth over corresponding period last year. EBITDA for the year was INR 131.7 crores, with a margin of 5.1%, which is marginally lower compared to last year. The major reason for the dent in the margin is due to COVID-19 and the market slowdown throughout the year.With this, I will request you to start the question-answer session, please.
[Operator Instructions] We take the first question from the line of Manoj Gori from Equirus Securities.
I just wanted to understand on a couple of things. First, what are we doing in the current scenario in terms of cost rationalizations? And secondly, like after COVID, like when we have seen that the stores have been opening since May, like how are we able to -- how are we seeing the scenario? What are the challenges that we are facing? And what is the demand and what are the sales that we are doing?
RSR, please answer.
Okay. Manoj, your first point was what are we -- have we been doing on the cost side. So from early April, we have taken this lockdown opportunity to do 2 things. One is to really relook at the material costs that we have and look at what are the cost reductions possible on 2 heads: one, looking at the present scenario reduction in demand at supplier end and what alternate sources and commercial negotiations we can do. So that, on a component to component basis, we have completed that. The second is that on many of our sourcing areas, the sourcing for the AC and the washer will become common. And as a result of both the volumes, there is a cost leverage that is coming out. So we have retained that and spoken to suppliers and initiated the process of reducing costs. So on the cost side, the material cost-related action has been the biggest one.And the second, equally important, has been our entire indirect cost rates, which is in terms of fixed costs like employee costs, the structures, simplification of them, delevering so that we can reduce the employee cost base. And also in areas like rentals, warehousing space, travel-related areas, how we have to restructure in the present situation and reduce costs, we have spent time on that. So we can use the delevering of that, and that is now in implementation from around 1st week of May. We hope to complete the implementation by end of August. Material cost, of course, will take some time. It will happen through the year. That is the time that we have spent on the cost side.On the post-COVID demand side, we got back to work in Goa on the 7th or 8th of May and the stores, let's say from mid-May onwards, have sort of slowly opened but some partially opened. So the last 2 weeks of May and June, on an average, about 74% to 75% of the counters have been open across India. We are tracking this on a daily basis. When I say open, it includes fully open and partially open. In whatever is open, the demand that we have seen in June and July have actually been quite healthy and some part of it is pent-up demand which didn't get purchased in March, April and May.Some part of it also, I think, is because people have just woken up and understood the importance of washing machines and dishwashers and dryers because they've spent a lot of time at home. If this sustains, then I think the demand will be significantly up. We have to, of course, wait for the markets to be more open and to see how the demand goes. Over the last 7, 10 days, the percentage openings have reduced because a lot of markets are again going into closure, so...
So sir, if we look at, say, over last 3 quarters now, obviously, March was impacted by [ closures ]. So we have seen like there has been a lot of pressure in terms of volumes that we have been facing. Now earlier, we were doing 15%, 17% growth on a yearly basis. But this has been a year which has been -- I think the revenues have been flat at company level, and this would be the slowest growth that we have witnessed for the last 10 -- more than 10 years. So are we facing any challenges from any of the competitors? Are we maintaining our market share or we are losing any market share? So that's the last question from my end.
So it -- I think in the previous call also, we spent some time on this. The -- some amount of the reduction in the beginning from us to the channel was because of a very large model range change that we made in end of second quarter and a lot in the third quarter of the previous year. So our inventory is reduced. So in fact, I think in the COVID lockdown time, we have probably the lowest inventory situation among all companies in the channel. So our data -- as per our data, we have not lost any share. There was a reduction in the billing, definitely, which was largely because of the model changeovers. There is no new pressure per se on revenue growth. So whatever sort of revenue figures we have normally been done, we don't see any problem in that.
[Operator Instructions] We take the next question from the line of Manish Agarwall from Edelweiss.
So sir, my question is on the EC, but basically, I've went through your presentation, and we are talking about -- so basically my first question is you are talking about some OEM -- being an OEM supplier to -- for the AC industry. So is this something like the likes of Amber industries -- Amber industries [indiscernible] currently? Is the reading correct?
Just to understand, are you saying, is our plan like Amber's? What exactly is the question, please?
Yes, sir. Is the plan to [indiscernible] someone like a player like an Amber Enterprises?
No, there is a difference in what we would like to do. One is that the plant has a capacity of 500,000 per shift right now at the start on a single shift basis per annum. And our idea is that, let's say, in the next 12 to 15 months' time frame, the domestic market, we see a figure of between 250,000 to 275,000 as the figure that we can do in terms of the IFB brand. And the remaining capacity, which is about 200,000 to 250,000 per annum, we would like to use up that capacity for OEM supplies. So we are talking to some people. This is not exactly a direct replacement of a supply from Amber because our product is different, and the positioning is at a higher price point. The OEM market per se in India is very large. We would just like to take about 200,000, 255,000 roughly. That is the discussion that is ongoing now. Both IFB and the OEMs put together, we would like to fill up capacity of 500,000 per annum. That's the internal mandate on which we are working.
500,000 per annum -- annually is what we are looking at.
Yes. That's right. That is the plant capacity, we'd like to fill it up using a combination of IFB and OEM.
Okay. Okay. And sir, one more thing on this. So basically since -- I mean, like the compressors are not yet made in India, so what portion of our entire AC parts which would be like imported?
So if you look at, at start, which is as of, let's say, 1st of July, then roughly the import content is sitting at 65% by value. And by November of this year, with the localization that is planned, it will come down to 35%, basically. That is the plan.
Sir, that's a very high number. I mean, that's really commendable. How are we trying to do that, sir...
Yes. So there are 2, 3 big steps. One is the localization of the controller. For that, there is a very large Korean supplier who has invested in Goa, and we are setting up the electronics plant. That will be commissioned by end of next month. That project is both for washers as well as AC controllers. So that brings in the controller completely into India. The second is the -- a lot of the parts basically are getting localized into Goa itself, including things like heat exchangers manufacturing, et cetera, which we are completely doing in-house as part of the original plan. On the aspect of compressors, currently, our compressor sourcing is from China. And there is a plan for a company like GMCC to localize into Pune. And there is already a compressor manufacturer in Gujarat that we are working with on. So these are 2 options. Either way, by the end of the year, we would have localized the compressors as well into India.
Sir, how -- compressor itself, GMCC you said would be investing and...
And the other one is Highly in Gujarat.
So as I understand, if I'm not wrong, Highly actually uses it for just one player and exports the rest of the compressors, right?
Yes. So we are actually talking to the senior management in Highly for them to expand manufacturing within India. That is the discussion that is going on.
Okay. So sir, there is a 65% of content by value you said is for [indiscernible], right?
Yes. That's right. In the case of washers, our import content is much less. So that is there now.
We take the next question from the line of Rajat Jain from Principal Mutual Fund.
I had a question for post -- I mean post the lockdown, you have 75% of contact touch points are open. How do you see demand for durables, especially like relatively virgin durables like dishwashers, which is a relatively weak underpenetrated category in India? I don't know if you are into vacuum cleaners. But are you finding potentially newer sources of demand coming for these sort of durables?
So if you specifically take the example of dishwashers, I think it is quite publicly shared now that the demand has really gone through the roof. And that is true for us as well. In this specific category, I don't think that it is just a pent-up demand-related growth. The nature of customers who are buying dishwashers has significantly changed. So I would expect that the growth will remain. For us to address demand which is already booked and registered with us, I think it will take up till end of August to just catch up with whatever we need to deliver to the market and to customers who have prebooked the dishwashers. So I would expect the category to remain.We are not in vacuum cleaners, but yes, the data is also saying that there was significant demand in vacuum cleaners. On categories like washers, we are seeing -- we have seen a very healthy growth from mid-May onwards. Here also, I think that the nature of the understanding of the washing machine has significantly changed because everybody in the family has used it. Earlier, it was just the maid or just one person in the house. Through the last 90-odd days, I think everyone in the family has chipped in, and suddenly the washing machine is as important as electric generator. So from our own company point of view and my personal point of view, I think that the demand is here to remain. Have I answered your question, sir?
Yes. Yes. Yes, sir. But just curious, so vacuum cleaner is a category you're not in and others [indiscernible] such areas. So you'd potentially look at being in them in some point of time?
In the short term, I don't think we'll be looking at a category like vacuum cleaners, because if you look at where we are now, then between now and the next 12-odd months we have to get the air conditioning volumes and growth completely settled. So this season has been lost. So there will be some work that will be done, but the real test of the case is going to be from, let's say, December to June of the coming season. We've got a lot of work on our hands to get washing machine thing completely stabilized and spread across India with the large distribution network we created but we couldn't get returns from. So I would say that we would not be looking at any new category now for the next 12 to 15 months basically.
We take the next question from the line of Apurva Shah from PhillipCapital.
Sir, is it possible to say revenue from IFB Points and multi-branded outlets separately?
IFB Points are roughly about 15% of our sales. So you can just calculate that.
Okay. And sir, one point attached to it. Do you see any rejig in operation of IFB Points because of the ongoing situation, or that number will remain in the same band? And in terms of your expansion plans for IFB Points as well?
So we have 535 IFB Points as of now. And what has been happening since middle of May till now is we've actually seen almost a 50% growth in IFB Points even though about 75%, 76% only of them are open. The traffic to the IFB Points and the sales from the IFB Points has actually improved in the post-COVID scenario because most of them are stand-alone places on high streets and I think they are close to neighborhoods, so people are just walking in. We have to see whether this thing sustains. But our plans for IFB Points have not changed for the company in terms of marketing to our own customer base and showcasing all our products. They are as important today as they were earlier. In terms of numbers, our position last year, which is also for this year, is that our primary focus now is to make the IFB Points profitable for all the franchisees. We will continue with the focus for this year as well on that agenda. I would expect that between now and the end of the year, the numbers will go from about 535 to around 600, and then they will stabilize there.
Okay, sir. Great. That's very useful. And sir, one point on separate 2 businesses, so Fine Blank and the other appliances part. So can you say overall outlook in terms of mid- to long term, where we can, say, like Q1 is obviously will be impacted for both the divisions, but can we see some higher normalization in Fine Blanking from quarter 2 onwards? Or will you see -- how would you put it across the divisions?
Mr. Chatterjee, would you like to take this question?
Yes. Arup -- I will just do this very quick. This is Arup here, Arup Das. As far as the future outlook is concerned, as you rightly said, the first quarter, yes, it's a total washout, but what we are finding a silver lining is due to this pandemic, people have started moving in their own vehicle or trying to buy one because they don't want to commute in public vehicle or shared mobility. So as a result, what has happened is, there is a rise in demand for the 2-wheeler and lower end of the 4-wheeler segment. And this is already showing signs from the month of June. And we believe the coming 2 quarters will see some growth in this segment because another added this thing is the agricultural sector, there was a pent-up demand, which didn't materialize in the last year as a whole. I mean, you might have seen that the whole of last year, the whole automotive industry was very, very sluggish. So that demand plus this situational demand on account of the pandemic, we see a better second, third quarter.
Yes. Yes. Okay, sir.
Did I explain it to you?
Yes. Yes. Understood, sir. And sir, in terms of margins, if I look at last 5, 6 years numbers across division, so there has been high deviation across the divisions. So yes, there might be some early impact. But I think that moves in particular cycle, so maybe 1 year is good and second year is a bit low or maybe 2 years are good and 1 year is low. So is there any cyclicality or that is because of all external factors?
Mr. Chatterjee?
No, there is nothing cyclical actually typically that way. Last year, generally, the auto sector was not doing well. And towards the end of March, we lost quite a number of turnover because of the lockdown. But we don't have any such thing. It happens, if there is a generally total economy is affected. However, last 9 months, 1 year, auto was not doing well.
Okay. And sir, as the top management, how do you see sustainable margins in Appliance and Engineering segment, I mean EBIT margin?
Rajshankar here. I'll answer this for the Appliances side. The Appliances margin has [ lagged ] growth where we would like them to be at. And fix for them will come from 2 things. Our current solution is that we are not looking to fix margins to revenue. This year, the focus is on material cost and reduction of our fixed costs, and that is what we will fix the margins with. The growth, whatever comes, is on top of that. For Engineering, Mr. Das or Mr. Chatterjee can answer.
Yes. In continuation with what Mr. Ray had said, the top line, we do not expect that it will be a spurt in top line. But as far as the bottom line is concerned, we are working on different cost reductions for [indiscernible] activities so that we -- because a lower top line also we can make good margins. Plus the added one would be the additional revenue, which comes during the subsequent quarter. So it would be a 2-pronged attack. One is the increase with the top line, and the bottom line, I mean, also the reduction of the costs, which can also help increase the bottom line.
Okay. Understood, sir. Sir, my point was not for the current year, on a sustainable basis. So if I talk about Appliance, I think that has moved from 5% to low as 2% EBIT margin. So from that 5% to -- 2% to 5% blend, what should we expect? Whether that should be 4% on an average? Similarly for Engineering segment, it varies from 6% to 11% EBIT margin? So over the last 5 years, the difference is very wide. Is it clear, sir?
Yes, clear. Mr. Chatterjee, would you like to answer that?
You answer. Yes.
Okay. So as far as the appliances are concerned, this EBIT margin is definitely not okay. And we have shared that at the EBITDA level, we would like to be more than a double-digit margin. And there were 2 things that we have discussed previously on that, which is the realization of revenues from the network that we created. However, that has changed now. And what we have done in the period of April and May is that we have completely re-detailed the material costs and fixed costs that we had. It was actually a good opportunity during the lockdown to do that. And in this year, we will work on the margin side, clearly based from a cost point of view and -- not from a revenue point of view, whatever happens on the revenue side is over and above this. So what we have shared earlier as well, which still remains what we need to deliver, is the double-digit margin on the EBITDA level.
Okay. And sir, lastly, from my point, okay, what was CapEx for FY '20? And what will be the total CapEx across division we will be looking for FY '21 and '22?
Last year we spent around INR 211 crore and there was another in CWIP -- means capital work in progress -- another INR 8 crores is there and advance around INR 47 crores because some part of which we could not be completed because of the March end, there is some material for Engineering division lying in the pool which could not be cleared. So whatever remaining is there is what will complete, because this is mostly our CapEx cycle is over. After that, whatever little we'll have [indiscernible] CapEx...
[Operator Instructions] Next question is from the line of Veenit Pasad from Investec Capital.
So just continuing with the question from the previous participant, how should we look at margins from -- over next -- how should they evolve over the next few quarters or maybe from FY '22 point of view? And what other levers apart from, obviously, gross margin expansion, that should drive the same?
This is Rajshankar Ray. I'll answer this and then Mr. Chatterjee or Mr. Das can add. If you look at our gross margin expansion, that over the last 2 years has been quite sustained. And I think at the gross margin level, we are quite healthy. What was not working for us was the cost structure. And what we have tried in the last 2 fiscals is to look at our revenue side to basically streamline the cost structure, which we have now changed from April onwards, and we are going after the cost structure as it is to reducing it in line with for the same level revenues. And then when the revenues go up, that is the additional benefit that we will get.Over and above this, there is a significant amount of reduction that we've targeted on the material cost now because there is an opportunity that the environment has provided. And there is a very large opportunity which has come because of the AC-related material purchase, which will be from a common supply chain to the washers. So just to give you a simple example, if you are buying one particular capacitor for our controllers on the washer, its revenues are more than doubling with the addition of the air conditioner. So for the purchase team, they are now looking at doubling revenues of many of the suppliers. And there is a very large opportunity here, coupled with the present environment situation. So the margin work that we are doing now is purely on the cost side, not on the revenue side. And the end goal of this remains what we have said earlier, but we have still to deliver, which is to be able to get the double-digit EBITDA margin, let's say. Mr. Chatterjee or Mr. Das, would you like to add to what I just said?
No, I think you have covered most of it. I will just say that once the top line also increases, its overhead -- keeping the overhead in the same line, I think the margin side will automatically see an increase.
And also even in engineering, we were trying to reduce the fixed costs substantially, am I right? So together with top line and the reduction of fixed costs, margin is supposed to go better.
Okay. Okay. Sir, just one another thing. If we look at the depreciation on a sequential basis, that has increased uplift from INR 17 crores to more than INR 40 crores. I understand...
Depreciation, actually, if you see last year total, year before was INR 54 crore, it has now become INR 89 crores, okay? Out of that, depreciation element is INR 62 crores, pure depreciation. And there is another part is Ind AS 116, where rate now you have to treat it as a -- the -- as a item of use for which there's separate cash of INR 27 crores has come, okay? You will see in our investor present -- SEBI presentation we have given a separate note on that. Actual depreciation has gone up INR 8 crores. And balance has come from the [ rent ], which was earlier charged to operating expense. Now it has come out of that, okay?
So in Q4, all of this INR 27 crores was charged to depreciation?
Yes, because that's the -- effect was given there. But if you see that, it is given in the note, in the note #4, where we said decrease in operating other expenses is around INR 28 crores. Increase in depreciation is INR 27 crores, INR 27.03 crores and increase in finance cost is INR 58 crores.
Okay. So from next quarter onward, roughly 20...
Next quarter you'd see that the effect of the Capex, which has been added during this year and maybe a little bit of [ effect of rent ], which would be margin.
Okay. So that should be roughly around INR 25 crores at max, right, depreciation expenses?
Yes. Right.
Okay. Including the rent...
One minute. See, the next year onwards, for example, now per quarter depreciation is around INR 15 crores, okay, is where we ended up. So it will go up by another, let's say, INR 3 crores to INR 4 crores [ per quarter ].
Okay. Okay. Perfect. Perfect. That's helpful. And sir, just on the tax rate, should we assume 25% as normal tax rate going forward?
We are now in -- this year, we are in MAT now, okay, which is around 22%. That is one. In the new tax regime that -- there, if we go to that, we'll use a MAT credit of INR 18 crores we have as of now. The rule is once you go to new regime, you cannot come back. So we'll see and decide. As of now, we are in MAT, and we are paying on the basis of 22%. As we still have around MAT credit of around INR 18.04 crore, once you use that, then we'll decide. Otherwise, it is not beneficial for us.
We take the next question from the line of Sumit Jain from ASK Investment.
I just wanted to check what are the trends in consumer financing side on our consumer durable business, especially in the month of May and June versus what it is typically that you see?
We haven't noticed -- Rajshankar here. We haven't noticed any significant change in the month of June. There are 2 things happening here. Some of the finance companies had very large channel limits to retailers. And for ensuring that they got their money back, so they ceased basically those limits, wanting the channel retailers to first clear that. And in those counters, the financing reduced a little bit. As far as our own stores, IFB Points, are concerned, we've sort of seen similar level of finance uptick in the month of June. In online, there is a slight increase as far as financing is concerned. But overall, I think it is very early to make a judgment on the trend. I think you'll have to wait for August, and we'll get a clear picture whether financing has increased or not.
What is the typically the finance portion within our revenues?
Sorry?
What is the typical finance portion?
Around 25% in the normal time. Not now, last year is what I am saying. And those are during the festival season.
Sure. So even June is tracking about roughly around 25%?
June, I am not able to tell as of now actually. We are yet to get the details. But I will not say it is in the same level as of now.
June would have been lesser than 25%.
We take the next question from the line of [ Saket Kapoor from Kapoor & Company ].
Sir, firstly, if you could explain us the rationale for our investment, the 2 investments which we have done in this quarter, 1 in the motor business and other in the stamping business. And what are the benefits that we are going to derive? And what is our shareholding currently in the automotive private company, IFB Automotive, with this acquisition?
The motor division, we have to purchase totally from automotive. This is automotive motor part, basically which has synergies with our business. So because we have motor division which we are earlier making only motor for the washing machine business. So we have expertise there. So we decided to take the motor -- only motor to automotive motor from the Automotive division. We have taken the entire thing on a [indiscernible] basis.
And for the stamping business part, sir?
Stamping, Rajshankar will explain to you.
So the stamping business was acquired because the engineering business that we have has the same set of clients to whom they can actually sell the stamping-related output as well. So the marketing was synergistic. It's the same client to whom our teams are going. And also the stamping business has a lot of output requirement for the consumer durables business, which is parts for our washing machines, front loads, top loads, et cetera. So the idea was that the stamping division external business is better handled by basically the Engineering division. And also, it will service basically the internal requirements. And in that sense, it is an outsourced business being brought in-house, and it will add to the margin structure. In the previous investor reports that we have released on both the stamping and the motor business, the complete logic and the rationale was actually explained in the investor report. If you could separately give Mr. Chatterjee your e-mail ID, he can actually send it you as well.
In the last investor report I'll go through the same, sir. Sorry.
Yes, it is the old logic based on which both these acquisitions were done and both expanded.
Okay. So I'll go to that same, sir. For the air conditioner part, sir, I just missed your earlier comment. It is 11,500 units of air conditioner that we are expecting in totality, when -- I just missed the figure which you were explaining earlier.
The plant capacity is 500,000 per annum on a single shift basis. And our internal target is that the sales under the IFB brand will be roughly about 250,000 in the next 12 to 15 months. And the remaining capacity is what we would like to fill up with OEM [ players ].
Okay. And then that will be a co-branding one...
No, no, no. Clearly OEM, not co-branding.
Okay, sir. And sir, just if you could give, sir, the import proportion of our raw materials basket, sir, how much is -- the entirety -- in the total entirety of IFB...
In washers, our import by value is 25% to 26%. That's a stable value. It will remain at around these levels. As far as air conditioners is concerned, currently, it is at 65%. It will reduce to around 30% to 35% by November of this calendar year.
And which countries, sir, it is -- the sourcing is for the washer and the air conditioner?
So this is spread across all countries. It is from Singapore, it is from China, Korea, Italy. It is spread across [ the countries ].
Turkey.
Turkey, yes.
Correct, sir. And sir, so how much is the after sales market in the AMC market for us, sir? What is the value proportionate that is attributed to the sales from the AMC vertical, sir?
Mr. Chatterjee, would you like to answer that?
AMC, basically is on that -- we -- what we call is product sale basically, that -- AMC, we sell around 15,000 numbers per month. It is around 200,000 because around INR 50 crores, let's say...
I didn't get you. Come again, sir?
Around INR 50 crores, I said.
INR 50 crores?
In a year.
In a year?
Yes.
Right, sir. And lastly, sir, if we take the minimum ticket size in the dryer as well as the washing machine segment, both for the top and the front load, what is the entry ticket size, sir? And if we compare it with our peers, how well are our products placed, sir?
You are talking washing machines or specific category?
Both.
Yes. So if you look at front load and top load put together, then typical entry level, top load, the pricing from IFB today will be about INR 15,000 for a 6.5 kg top loader. That's, let's say, the entry point, starting point. In terms of features, value, size, et cetera, it is well positioned against competition. If you look at the front loader, for example, then the entry-level pricing would be roughly about INR 20,000 to INR 20,500. And that is again well positioned. So is that what you are asking, please? If you look at washing machines overall, of course the entry prices are much lesser. The semi-automatic machines, smaller top-loading fully automatic machines are priced much lesser.
We take the next question from the line of Rahul Ranade from Goldman Sachs.
I just wanted a clarification on one of the earlier questions where you said that we will be different from Amber Enterprises in terms of OEM manufacturer for ACs. So I understand the scale is completely different. We will be doing only 200,000, 250,000 versus Amber will be bigger than us. But apart from that, like, is there any difference between us and Amber?
The product is totally different. And the Amber business model is purely OEM based. Our business model is geared towards the IFB brand positioning. And there is some surplus capacity that we are using for OEMs. So that's the difference between the 2. Is there something specific that you want to know?
Yes. No, no. So yes, for just for the surplus capacity, is it like we will be catering to a certain segment of customers a certain set of products which Amber does not currently, or something like that? Why are we calling it different? That's my only question.
Yes. I thought the earlier question was, is the business model going to be the same? So I said, no, the business model is different. But both are OEM sales in that sense. It's just that we will be targeting a different set of customers, basically, or product price points.
Okay. Okay. And have we kind of tied up with any customers on capacity? Or are we still in negotiations, how is that?
These are still ongoing discussions, and we would expect closure between August and September.
Okay. Okay. And the price points for the -- even the OEM sales will be similar to what the IFB brand [indiscernible]? Is that understanding correct?
Correct. Correct. That's an interesting question because one of the things that we need is at -- the end products need some degree of price parity in terms of value and price. So we are doing it in a manner where there is no inherent end market conflict that comes up. That's a very important parameter for us.
Okay. Understood. And with this whole new thing of China plus [indiscernible] manufacturing of ACs in India will be the next big thing and even kind of government moving in that direction, do we think that we will also kind of ramp up our capacity for just this OEM strategy, or will it be a byproduct of what IFB does as a brand?
That is an interesting question, but I think it will take some time for this to sort of play out fully. The position that the government is taking will definitely have a very immediate impact on localization of air conditioner production into India. What will happen in terms of IFB's own OEM business, we have to see. If we need to ramp up capacity of this factory, that can be done because the second shift is open. Supplier capacity, tooling-related investments can be done in a short time frame. But we just have to wait and see. Right now, we are focusing on ensuring that whatever capacity we have created, that we rapidly scale up and utilize to the full. That's the target we have.
Okay. Okay. Understood. And just 1 last clarification on the dishwashers. So your capacity for IFB brand is kind of completely booked till the end of August, that is the kind of demand you are seeing in the market. Is it?
Yes. That is the demand. Actual demand is probably more. But in terms of people who've taken the decision to pay a deposit in advance and book, that to service us will take till end of August. There would be many more people, I would expect we would work with, but not currently booked.
We take the next question from the line of Riddhima Chandak from Roha Asset Management.
Is it audible, sir?
Yes, yes.
Sir, my question is regarding top-load washing machines. So prior to COVID, what was our monthly sales volume, if you can share?
Mr. Chatterjee, would you like to answer that?
No, answer it.
So our run rate prior to COVID was in the range of 22,000 to 25,000 per month.
Okay. Okay. And sir, like -- as you said in the quarter 3 call, like our top-load category, the volume was not much, just that is because of our price point was INR 16,000 and the price of our competitors like Samsung and Whirlpool was approx. INR 13,000. So how's the situation as of now in the 6.5 kg top load washing machine, sir? How is the situation?
So we actually introduced a product for a lower price point and that happened in the -- in end of February. And in that product, we are reducing the gap to the lower end, but that couldn't really be tested because the lockdown happened. So the impact of that model on volumes, we will now begin to see from July onwards.
Okay. Okay. Okay. And how much is our e-commerce revenue share?
Our e-commerce revenue share is between 14% to 15%.
Okay. Okay. And sir, I missed the CapEx part. Can you please come again for this?
The total CapEx you're asking?
CapEx you did in FY '20 and plan for FY '21 and '22?
FY '20, actually, we have capitalized around INR 211 crores. And we have in capital work in progress around INR 8 crores and capital advance of INR 47 crores, because some of the part we could not complete because the lockdown toward the end. And over the last year -- and we said, our CapEx cycle to a large extent is over. So after that, we'll be doing whatever routine CapEx required depending upon the request.
Okay. So for FY '21, it would be approx. INR 50 crores to INR 55 crores. Is that...
I could not see even INR 50 crores will go. We have not presented yet. Mostly we are done, we'll finish whatever is remaining. And then we do whatever the routine requirement will come.
Okay. Okay. And my next question is like, in the employee expenses like -- it's just clarity question. So the AC project costs have included in the P&L or...
No, AC -- into the AC, when it started, AC project, then again it will come from the AC only.
So it will come in quarter 1, we can say?
Some part it came because even in March 17, we started the AC projects, okay? After that, lockdown started. There would be some -- in this quarter, there were some expenses of the AC was there. But major revenue will start coming from the first quarter.
Okay. Okay. And in the microwave side, as it constitutes around 8% to 10% of total revenue. And -- so how much is the import part from China in this basically?
It is totally imported.
Okay. So is there any plan to locally outsource for the microwave category?
Well, currently, there is no plan to locally outsource the microwaves. But in terms of looking at options for other sources, et cetera, that work is ongoing.
We take the next question from the line of [ Lakshmi Narayan ] from ICICI Prudential AMC.
See, couple of questions. Now you mentioned in the previous question that the monthly sales volume is 22,000 to 25,000. This is for the top load or the front load, sir?
It is the top load.
And what would be the number for front load?
I will tell you the numbers separately, please, you call me, I'll tell you.
Okay. Okay. Sir, another question which I had is that, if I look at your products, right, and what kind of margins we actually make on the manufactured product, right? And what kind of margins you make in terms of the traded goods...?
I will answer you because, see, normally we don't give any figure on margin as such. But we will only say that the margin in the manufacturing side is more than the trading products.
Okay. Okay. Okay. Because if I go back to your previous annual reports, like with FY '19, FY '18, et cetera, and if I just look at your trading margins and manufactured margins, and then there is also the money we make out of the sale of services and others, right? Looks like that our margins in the manufacturing seems to be lower, if I actually remove the sale of services and others and -- because they are usually higher-margin things, right, scrap sales or other things. So that's the reason for asking this question. Maybe I will check with you separately on this.
Yes, please.
Now, the second -- yes, the second thing is that, if I just take your employee cost of -- across all the business, which is around 2,000 employees we have, and if I just use the declared employee cost, which is around INR 288 crores, right, it comes to almost...
That number -- you can say that's 2,322 workers as of the end of March.
Okay. So if I look at the entire thing and the employee cost comes to almost -- just taking a simple average, it comes to around INR 12.4 lakh cost per employee, right? That seems to be slightly on the higher rating given our factory locations, et cetera, and also the way in which we remunerate senior people. So can you just explain as to what is that -- is there a way in which we can say the average cost of employees in the consumer durables division is x and how much it is for the non-consumer durables? If you look at -- how do I split between the employees, because you're operating out of Goa, and it is -- I understand the business cost of operations is lower. So...
RSR, you explain, please.
Yes. So the cost base doesn't have anything to do with Goa, per se. It's not a location thing, because we have employees all across India. As far as the employee cost as a percentage to sales is concerned, then we have been higher, and that is because, over the last, let's say, 3 to 4 years, we have invested very heavily in areas of R&D. We've invested into sales, to ensure that the network that we enhanced will cover this properly. And let's say, till February or March, the internal target was basically to ensure that we got the right revenues out of the employee cost base that we had, including the revenues after the investments we've made in areas like R&D. What we have done post the lockdown, and that was a change in the approach that we had, and we've used the 2 months lockdown period to do this, is we have gone and relooked at the employee cost line by line. So for example, in the area of sales, we have relooked at the way we are covering currently, and we have redone the complete sales structure and reduced money, but to deliver the same level of output. Similarly, we have looked at the cost structures everywhere else. And now what we are saying is that while the agenda on the revenue still remains, but we are redoing the employee cost structure to basically bring it more in line with the right levels at the same run rate of revenues. After that, with the increase in revenue is an added bonus. So that is a change that we have made in the April and in the May period.
Got it. Got it. And if I look at your -- the unallocable expenses in the segment itself, right, it was around INR 96.2 crores for the last year and it is now at around INR 30 crores, right? So -- and is this -- can you just explain as to how this particular thing has come down? Is it that you have changed your allocation policy across the 2 segments?
Which one you are talking of? Can you just repeat the question?
I'm going through the stand-alone revenues. And I'm just looking at the segment-wise numbers where you take the segment EBIT and there is -- then it translates into PBT, right? So the unallocable expenses has actually -- has changed significantly if I look at in terms of category #3, which is other unallocable expenditure, et cetera, right? So any major change in the way in which you're costing now or when compared to the earlier times?
Yes. Only change is in terms of the delay, this is this. You are talking about the -- which one you're talking? 3 is assets, no? You're talking about assets?
So now I'm looking at the segment, right, stand-alone revenue, refunds, assets and liabilities, where you actually mentioned your segment refers to just EBIT and then there is -- you reduce the certain things which are allocated to both the heads, right?
Yes.
There is no change because you have reduced that unallocable to almost 1/3. Just to get a sense of that.
See, other -- in other unallocable expenditure, which one? The point #3 you're saying?
Yes, yes. For example, that has reduced from almost INR 22 crores, INR 21.14 crores, to almost INR 7.5 crores.
No changes there. But the last year, for some reason, expenditures were high in the corporate, which is not yet reflected.
Got it. Sir, 1 last question. What is the employee cost split between both your units in terms of the non-consumer durables and consumer durables out of INR 288 crores?
Yes. That depends on the number that we have actually. The...
No, sir, what is the...
Cost is slightly higher because R&D technology has lifted. And the numbers are also more.
Okay. So is it 50% each? Or is it like 60% in consumer durables?
Engineering division costs will be around 16% to 18% of the total.
16% to 18%, okay.
Yes.
And the balance is in the consumer durables, 80%.
Yes, the corporate.
Okay, okay. And 1 last question in terms of the market share for you in terms of front load and top load. What has been your market share?
So market share figures are not publicly shared and some of the available data bases miss out a lot of volume. Our internal estimate based on imports and the data from suppliers, et cetera, is that front load, we are at about 40% and in top loads...
40%?
40%. In top loads, we are at about 9%, for fully automatic top loads as a whole. In the segment in which we compete, which is minus the 6 kg, we are at 18%. In microwaves, we are at 22%.
Okay. What is that you mentioned at 18%, sir, which is...
In top loads, we don't cover the 6 kg segment. We cover 6.5 kg and above. In that, we're 18%. Overall, on fully automatic top load, we are at about 8% and 9%.
Got it. Got it. And what revenues come from the CSD probably for us.
CSD?
CSD and...
CSD, we have now around 1% of revenue.
Okay. Okay. Can you give -- looks like the e-commerce numbers have actually done extremely well, for almost like 15% for us now. What led to this increased growth? Could you say something different or that the market itself picked up?
No, but we have been both focused and comfortable with e-commerce for many years now. So we've done well in e-commerce. And we've focused in terms of the right models, the right price, the relationships, the marketing. It's not a sudden increase. E-commerce has been a good, healthy percentage for us for at least 3 years now.
We take the next question from the line of Jason Soans from Monarch Networth.
Sir, just wanted to have an overview in, basically, what's the demand been in June, July as compared to April, May, which were lockdown months, in terms of your main products such as front loaders, top loaders, microwaves? So just wanted to have a sense -- like a comparison sort of like how has it picked up in terms of numbers, if possible.
April was 0, and everything was under lockdown.
Right.
The opening has sort of started from mid-June. So I'm leaving May for a moment. If I look at June and now in July, and I compare it to months like January, February, which would be, let's say, non-season months, and the most recent months, then for categories like washers, et cetera, the demand as of now is in excess of 50% up. A category like dishwasher is an outlier because it's difficult to assess demand because everything is out of stock.
Okay. Okay.
Does that answer your question?
No, actually -- so, for example, if [ January ], February was, say, 100%, and we count that as pre-COVID level. What is the demand in June, July?
So about 150% plus. 150% plus on a category like washers.
Okay. So for washing machines around 150% as compared to Jan, February?
Yes, or maybe a little higher than 150%, but 150% as a bare minimum.
Okay. 150% as a bare minimum. Okay. Sir, I know that this is on a repetition thing. Sir, just wanted some clarification on this OEM business because compared to Amber -- so I believe that Amber does this -- it's an outsourced model where they manufacture the ACs for their customers, which are OEM customers. Do we have a similar business? What is the proportion of that -- if there is?
The approach that we have is that there is a part of the plant capacity that is going to be available.
Okay.
And for somebody who wants to position a similar sort of product, not necessarily at entry level pricing, but at a pricing that doesn't conflict or, say, with the way the IFB brand itself will be positioned, then to that extent, the [indiscernible] plant capacity we would like to basically have a OEM tie-up so that the plant is fully utilized.
Okay. Sure. And what proportion would that be in terms of your total capacity?
So that would be about less of than 50% of the plant. For 500,000, 250,000 for IFB in the next 12 to 15 months and 250,000 for OEMs.
Okay. It's 250,000 for in-house IFB and 250,000 for an outsourced OEM.
Yes. No, they -- now, see, this is a tentative sort of breakup. And this is sort of the kind of model that we are working with, basically.
Sure, sir. And sir, just would want you to repeat this market share figures, if possible? Sorry for making your repeat this, but, sir, the market share...
Our internal assessment is that we are at about 40% on front loaders. On top loaders as a complete category, we are at about 8% to 9%. In the segment in which we are competing, we are at 18%. In the microwave, we are at 22% to 23%.
We take the next question from the line of [ Disha Seth ] from Anvil.
Sir, am I audible?
Yes, yes, you're audible.
Sir, just wanted to check, when you mentioned about the reduction in material costs, is it because we have now localized our AC factory and everything, that will reduce the material cost? Or if you can elaborate on that, please?
Yes. So the material cost, the reduction will come from 2 heads. The first head is that given the present situation and the fact that demand of supplier in many areas and sectors is down, there is an opportunity to renegotiate pricing and also to look at alternate sources available where we might get better pricing. I will call this basically a commercial [ seller ] negotiation. This is a very large chunk of reduction that we have seen and which has been detailed in the month of April and May, and now we are implementing. This is part one. Part two is that, for most of our suppliers, the combined purchase of the air conditioners as well as the washer is offering a scale to the supplier, and that scale will lead to better pricing. So when we have done the supply chain planning for the air conditioners, we have put it on all common suppliers for an electronic component or for the plastic source or a sheet metal source. And now what we are doing is we are consolidating all of that. And that consolidation of the air conditioner and washer purchase will lead to a price benefit.
Okay. Okay. Now -- yes, I got it.
So 2 heads on the material cost front.
Sir, the volume will help us to get a better price benefit from suppliers?
Yes. Correct. Because for many of the suppliers, the actual -- let's say, billing to IFB will potentially more than double in the next 12 months.
Okay. Okay. And one more thing, with AC being in-house now, so how much would be the outsource and traded -- I mean outsourced and own manufactured products?
Sorry, can you just repeat that question?
Now since we manufacture AC on our own, in our Goa factory, how much would be the outsourced to in-house on our finished goods?
We'll not import anymore, actually. We'll -- yes, other than the stock we had, everything we have purchased, that is from the factory only. We are not buying anymore.
Okay. Okay. And sir, at what utilization are we running for -- since the demand for washers have been 150% and more, what utilization on front and top loading?
We have more than 100% now.
We are fully utilized right now?
Yes, yes, we are fully utilized. And in fact, currently, the plant has still not reached what it can do because of the social distancing norms and we are producing at a slower rate. But we are more than booked for whatever we can produce.
Both for washers -- I mean, for washers basically?
For washers, yes. The air conditioning plant has just started, and it has entered at a time when normally the demand goes down a little bit. So whatever it is producing in any case is getting absorbed. But this is not the test. The test will come from December onwards.
Okay. Okay. Yes, sir. Sir, that's it from my side. And sir, on fine blanking division, can you some -- throw some light on the revenues and the margins? What are we looking for revenues and margins, growth wise?
Mr. Chatterjee, I will take this question. Arup here. As far as the top line is concerned, actually, we have discussed about the outlook in one of the answers. So I will read for you. April, May, June was, as we say, a total washout, little bit in June. We are seeing some signs of recovery as far as 2-wheelers and lower segment of the 4-wheeler are concerned. So some recovery will be there. And next 2 quarters, definitely, there would be an improvement. But that -- it is very difficult to predict the numbers because it's very uncertain time. But the numbers will be better than first -- or fourth quarter of first year as much we can say.
Okay.
As far as margins are concerned, the top line, once it [ exceeds ] this, it will definitely improve the bottom line, plus the cost reduction activity which has been taken during this COVID period, so that will also see some results. And both put together, we'll be better off.
We take the next question from the line of Pritesh Chheda from Lucky Investment.
Yes, sir, I missed on the activity level. So you mentioned the 150% is the washer activity. This is currently for the month of July is what your -- July, August, based on the bookings and the current activities, what you are indicating at, right?
Yes. This is what we saw in June. It's continuing in July. And we expect it to continue in August as well, but we'll have to see.
Okay. And you are -- in June, it was a -- so you could see -- support the activity via the inventory that you had in the system? Or even there, it is dependent on the production...
Yes. So since end of May, we have now been production-dependent because we have not been able to fulfill the complete demand, primarily because the supply chain in all the containment areas and our own plant, we did the social distancing. Currently, we are not being able to produce to the full level that we can. So the supply chain currently is stressed, yes.
So sir, just a clarification here. So the 150% number then depends upon -- is linked to the bookings number?
No, 150% is what we are seeing as demand which we fulfilled.
Okay. 150% is demand which is fulfilled.
Yes, it can be more basically. But now we are production-dependent, basically.
Okay. And for the 150% number, the supply is managed. So the supply is...
No, no, currently it's stressed. Currently, it's stressed.
Okay. Okay.
And we were more or less, [ as of the end ] of last week, 10 days with everything locking down in the second phase, et cetera, it's making things very difficult on the supply chain side.
And where -- so this demand is largely coming from the non-metro parts?
Yes. So a bulk of it is coming out of non-metro, because most of the metros have been partial or full lockdown for quite some time now. So the rise is coming from the non-metro areas. The metro areas, I think, are still to be tested, because they really haven't opened properly as yet.
Okay. And lastly of the dishwasher side, so there the -- what is 150% for washer, what it would be for dishwasher?
It's a difficult assessment because I think it is at least 2.5x to 3.5x more. But currently, it's a bit of a theoretical number because there are no stocks. And so you really don't know what the real demand level is. But if you ask me to give you a number right now, it would be 2.5x to 3.5x more.
And how much of washer sales or value we did in FY '20?
Could you take that separately from Mr. Chatterjee?
Okay, okay, no problem. Okay. Okay.
We take the next question from the line of [ Sanjay Jain ], individual investor.
Can you hear me? Better now?
Yes, yes.
Okay. Sir, I'm like -- want to get some sense from you how you're looking at this company 3, 4 years down the line, because IFB is a very strong brand, but when I see your -- analyze your company, I see that like you are also into things which are not exactly consumer products, like you're in fine blanking, you are making motors for somebody else. You are also into trying to invest more in capacity and then you're trying to do -- even manufacture products for other brands. So like I'm somehow not really getting a sense of which direction you are trying to grow. And I see, IFB as a very strong brand in consumer and home appliances. And there is a very strong market for it, and like somehow we get a [indiscernible] you're not being able to really leverage it. You said some part of your capital is getting [ divest ] into activities which I'm not sure is the right approach. I mean, I may be wrong in this, but this is my impression. So I just want to understand from you how things -- this company will evolve over the next 3 to 4, 5 years period?
So this is Rajshankar here. I will try and answer this to you, and you can tell me if you want more clarification. IFB Industries Limited as a whole, and if you're looking at a 3- to 5-year horizon, we will have essentially 3 areas of basically growth. The first is the consumer space. And in the consumer space, if you see the way we are positioned, we are very deeply now manufacturing-wise integrated, in terms of capabilities on washers, now capabilities on air conditioners, capabilities on industrial products. So on the consumer side, there is a growth that will come out of these investments. Also on the consumer side, that is the very large service reach that we have, which we are working on, which from a pure profitability point of view is very good for the company. So the big part one, consumer space, which is the products and the services. So the next 3 to 5 years, this is one growth story. The second growth story is this engineering business that we have. And this engineering business has investments in engineering components to an automotive industry, to a 4-wheeler, 2-wheeler and also to a non-automotive industry. And there is a very large growth potential there as a supplier into the automotive and nonautomotive sectors. In addition, the engineering business also has scope in terms of drives. By that I mean motors and other related assemblies. Because if you look at it, simply put, in India, motor manufacturing capacity is zero. There was only 1 manufacturer, Crompton, and that has been largely inactive for the last couple of years. Everything is imported from outside the country and motors are essential to any kind of mechanical movement. So there is a lot of growth that can come from that. So these are 2 independent, basically, areas of growth. And what you will see from IFB Industries is a combination of these 2. So internally, we don't really see basically an issue of working capital or the consumer space not getting enough resources to grow. Because to IFB Industries Limited, actually, the engineering business is very [ comfortable ] to the company in terms of profitability, in terms of reach into institutions. Does that answer your question, or would you like to get something more?
Yes, I'm getting that answer, but I'm really not very -- and see, the point is that as an investor, if I'm looking for a play on consumer space, I'm really not -- I'm just in little bit of confusion from point of view of an investor that you are an engineering company, you are a consumer company, because that's -- it's a totally different -- from the marketing point of view, this is a totally different [ kind ] of energy in this. So that's little confusing from the investors' point of view. Maybe you know your business better, so you don't want to proceed further on this. But this is like -- then on maybe you can take this as a feedback for me.Second question that I had was on balance sheet. I suddenly see a spike in the borrowings, like last year was INR 31 crores and we have INR 348 crores. At the same time, you also have cash influence going up. So like why are we setting the borrowings in the -- so much of cash?
I will tell you. See the last year, actually, we took around INR 242 crores of loan, okay, which was not there. Before that, all our CapEx was largely used to be done from the internal accrual. But this AC plant alone, our requirement is -- was around INR 150 crores and we took INR 141 crores -- INR 141.4 crores from [indiscernible] as ECB loan because these are from the long-term projects, actually. Similarly, in the engineering division, there was a requirement in both Bangalore and Calcutta engineering. So we took the -- this thing. Out of INR 242 crores that we took, we have used up -- almost INR 211 crores we have capitalized. There was some part we could not do towards the end because of the lockdown, okay? And the other INR 20 crores, INR 20 crores was there, which is [indiscernible] which we used for the normal purchase and other things, probably would have paid it before March had it been open. But because of the closedown, that was there. But the subsequent to that, actually, the -- even during the closer period or whatever it is, we could not pay all the creditors that point of time, and whatever cash was there, it was on the -- that was kept more for the working capital and our short-term requirements.But you can see over the period of time that mostly we are debt-free.
Right. So basically, the reason I asked this question is, how will this balance sheet look 1 year down the line? Like are we able to reduce debt, sir, debt will remain like this?
One year, the problem -- the issue is that our payment -- repayment cycle will start from end of next year, mostly. So after that, gradually, the loan side will come down, okay? And this is a definite period of time for which we have taken the loan and we'll pay as per the payment term after the moratorium. Moratorium has nothing to do with our interest moratorium because every project, whenever you take, there is a pending and then some moratorium, after that you pay the amount. We'll pay as per the -- this thing. So gradually, this will come down. And the -- if we do the top line and the number of states that Mr. Ray and Mr. Das explained regarding the cost reduction and the top line, the situation would be even better in terms of liquidity.
Sir, Arup here. Mr. Ray -- but when answering your question whether you consider IFB as a consumer durable company or an engineering company, I will give you one example. Bosch is a company, global company, which is into both consumer products as well as engineering products. Siemens, it is also into -- so this is company, part of its activity is in engineering, and slowly diversified into home appliance. So the initial technology, whatever was brought in India was in fine blanking, and that's the engineering division which was created. Subsequently, home appliance was created. So it's a coexistence of both.
We take the last question from the line of V.P. Rajesh from Banyan Capital.
Just a quick question on the supply side. If you can just comment on your current capacity transition or is there any constraints on that?
No. Rajshankar here. There were no constraints on capacity per se, both on the washer as well as the air conditioner and also in products like microwaves. It is -- the current scenario during this lockdown phase and containment zones across the country where we are troubling with the supply chain, because [indiscernible] supplier end has gone to 70% or 50% levels, areas being shut down and so people aren't being able to run factories. Internally, we have also had lesser manpower in the plant because of social distancing, et cetera. So the current situation is tight. But otherwise, there is no capacity constraint.
So in terms of, let's say, on the demand side, you were explaining how the demand is compared to pre-COVID. How would you say your supply is on -- currently in terms of what it was pre-COVID level?
So our supply, net delivery is currently lesser than pre-COVID levels because of the reasons that I explained. Demand is in excess of supply as on date. It's very difficult to predict what will happen, but my own personal take is that the situation is not going to stabilize till September at least. So we will just have to do the best we can in this sort of a situation.
I see. And earlier you were describing that your motor business has synergies with the consumer business. So if you can just elaborate a little bit on that, that would be helpful.
So if you look at the motor business unit, which was a part of IFB Industries Limited earlier, makes motors produced by our Goa plant for the front loading washing machines. When it has acquired the motor business, which was the automotive motor business, now what happens is that the entire motor business for IFB is in 1 business unit under IFB Industries Limited. How is the synergy is that, for example, if you see brushless DC is a technology that our motor division is investing in for the requirements at Goa. Now that technology, once invested, has actually application on small motors by motors for fans, it has application for motors for air conditioners, it has application for motors for top loaders, it also has application for motors for the automotive electric vehicle structures. So what has happened now is that whatever technology development in motors IFB does, it opens up a complete market within India. Of course supply is not just to the Goa operations but to all other buyers. Now the buyers could be in the consumer durable space. For example, today, all air conditioner motors are imported out of China. Tomorrow, those motors would also be available from our premises in Bangalore. It also opens up the possibility of supplies to sectors like fans and other type electrical sectors. So what I meant by synergy is that, that the technology investments actually apply to many sectors, including the requirements for washers and air conditioners, which are produced by IFB.
Right, sir. And how would you describe the synergies between your blanking -- fine blanking division and the rest of the businesses?
So if you look at it, specific to motors, what you asked, for example, now today, a person from the engineering business in the marketing team goes to a particular automotive or a nonautomotive buyer, now that buyer actually buys everything. He would buy the fine blanking part through a tier supply arrangement, that person would be buying basically stamping requirements if they are outsourced by that particular buyer. And the person would also have probably requirements on motors. So the marketing for all 3 becomes the same. So from a pure engineering business point of view, also there is synergy. So the automotive motor business, from a marketing point of view, can be now represented by just one person.
So in a way, you have 3 product lines, if you -- if I would be able to think about your business, and 2 different type of businesses, one consumer facing and B2B. And you have your fine blanking, you have your consumer durables and you have your auto business -- sorry, your motor business. Is that the way to understand?
Yes. Yes. It's -- in essence, that is -- you have captured it correctly. Remember in the consumer space also, we have 2 types of reaches. One is through the product side and the other is through the service side. So products and services on the consumer side and B2B on the engineering side.
Right. And I think you also have a B2B in consumer durable also given that half of the capacity is third party production.
Yes, yes. We -- when we made that acquisition of the industrial laundry unit in Bangalore, and it is by far India's best industrial laundry unit, we have a significant play actually in commercial dish washing and in commercial laundry, which is also B2B. And currently, we are India's largest player in that.
I see. So if you were to look at your revenues in terms of B2B versus B2C, what will be the proportion between the 2?
As on date?
Yes, whatever Q4 numbers or...
Mr. Chatterjee, would you like to answer that, please?
Can you repeat that question, please?
Yes. My question is, sir, if you look at your revenues, in terms of B2B where you are selling to other businesses versus B2C where the product is -- or the services ultimately going to a consumer, how would you split your revenues between the 2?
See, the engineering is around 15% to 16%, which is mostly OEM, okay?
Right.
And the appliance is going to consumer, mainly.
Okay. But I thought you were doing consumer for third-party in that space.
Yes. No, consumer third-party, currently we are not going. It is a plan for the air conditioner. I think sort of a broad answer to your question would probably be 80-20, in terms of revenues.
80% [indiscernible]
Yes, roughly.
Well, ladies and gentlemen, that was the last question for today. I would now like to hand the conference over to Mr. Chirag Muchhala for closing comments.
Yes. We thank the management for taking time out and sharing their valuable impacts on this call, and we also thank all the participants for their presence. Sir, do you have any closing remarks to make?
Yes, thank you, everybody, and I will expect everybody to remain safe and healthy.
Thank you, sir. That concludes the call.
Thank you. On behalf of Nirmal Bang Equities, we conclude today's conference. Thank you for joining. You may now disconnect your lines.