SJS Enterprises Ltd

NSE:SJS

Earnings Call Transcript 2024-Q1

[Operator]

Ladies and gentlemen, good day, and welcome to the SJS Enterprises 1Q FY '24 Earnings Conference Call hosted by JM Financial.As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. [Operator Instructions] Please note that this conference is being recorded.I now hand the conference over to Mr. Ronak Mehta from JM Financial. Thank you, and over to you, Mr. Mehta.

[Ronak Mehta, analyst]

[Technical Difficulty] Financial Institutional Securities, I welcome you all to 1Q FY '24 Earnings Call of SJS Enterprises.From the management team, we have with us today Mr. K.A. Joseph, Managing Director and Co-Founder; Mr. Sanjay Thapar, CEO and Executive Director; Mr. Mahendra Naredi, Chief Financial Officer; and Ms. Devanshi Dhruva, Head, Investor Relations.So as we do always, we will start the call with brief opening remarks from the management following Q&A session.With that, over to you, Devanshi. Thank you.

[Devanshi Dhruva, executive]

Thank you, Ronak. Good morning, ladies and gentlemen, and thank you for being with us over the call today. We appreciate it. Moving on, this is how we intend to take today's conference call forward. I will pass on the dial to Mr. K. A. Joseph, our MD and Co-Founder, who will make the opening remarks, and brief you all about our latest acquisition, Walter Pack India's performance. Then he will hand it over to Mr. Sanjay Thapar, our CEO and Executive Director, who will take you through some of the slides of our presentation that has been uploaded on the stock exchange as well as on our website. Sanjay will take you all through the industry view, our business performance and also give a strategic outlook for the future growth of the company at the end. And Mr. Mahendra Naredi, our CFO will update you on our financial highlights, post which we will open it up for Q&A.The duration of this call will be around 60 minutes, and we will try to wrap-up our comments in about 20 minutes, so that we leave enough time for you well to ask questions. If time is not enough, please feel free to reach out to us through e-mail, and I will try to answer all your questions to the best of my abilities.Thank you once again, and I will now hand it over to Mr. Joseph to make his opening comments. Over to you, Joe.

[Kannampadathil Joseph, executive]

Yeah. Thank you, Devanshi, for the introduction. Hello, and good morning, everyone. I trust you all had a chance to look at our investor presentation and the results published yesterday. While Sanjay and Mahendra will take you all through the presentation later, I'm happy to inform that we have completed the transformative acquisition of Walter Pack India within the set timeline. After the successful acquisition of Exotech and the robust performance we delivered there in the last 2 years, we have gained more confidence in our execution capabilities of acquiring and integrating companies that could take SJS to the next level of growth. We now strongly believe that to strengthen our market leadership in the aesthetic business, inorganic acquisitions will continue to be our growth strategy going forward. Walter Pack acquisition has opened up a plethora of new opportunities for us. With this acquisition, we have penetrated deeper in passenger vehicles and consumer appliances segment, thereby further reducing our 2-wheeler dependence. According to SJS's Q1 FY '24 pro forma numbers, which includes Walter Pack India, gives about 36% revenue contribution would be from 2-wheeler, 36% from passenger vehicles and 28% from consumer appliances and others. Both Exotech and Walter Pack acquisition have helped us to balance our portfolio consultation from a large 2-wheeler player to an overall automotive and consumer appliance supplier. With Walter Pack acquisition, we have not only acquired a very large growth and high-margin business at a good valuation, but at the same time, achieved many key strategic objectives in terms of addition of new and emerging technologies, new customers, manufacturing capabilities and increased management benefit.I would also like to highlight that Roy Mathew, one of the founders of Walter Pack India will continue to steer ahead Walter Pack with 10% stake. This will ensure seamless integration in the long-term, short-term and harnessing optimum revenue synergies in the medium term. I'm excited and even looking forward to see how SJS grows multifold in the future with all the synergies and cross-selling opportunities playing out amongst the 3 companies.We have seen a good start for Walter Pack this quarter. Walter Pack Q1 witnessed a strong revenue growth of 21% year-on-year and a robust margin performance with EBITDA margins around 31.5%. Please note that for FY '24, only 9 months financials of Walter Pack India will be consolidated with SJS financials.With that said, I would like to now hand over the call to Sanjay to take you all through some of the business and industry highlights for the quarter. Thank you, and over to you, Sanjay.

[Sanjay Thapar, executive]

Yeah. Thank you Joe for updating our investors and analysts on Walter Pack. Hello, good morning everyone.Starting with our Q1 highlights. We have seen a robust start to FY '24 financial year as we yet again outperformed the automotive industry for the 15th consecutive quarter. Our consolidated revenue that is SJS plus Exotech together grew by 13.6% Y-o-Y on the back of strong 18.6% Y-o-Y growth in the automotive segment for us. That is the 2-wheeler and passenger vehicles combined. The automotive segment has grown well for us both in the domestic market at 14.2% Y-o-Y, and exports market at about 120.7% Y-o-Y. Q1 FY '24, we generated INR 77.1 million in cash flows, taking total cash and cash equivalents to INR 2,497 million as of 30th of June. However, post the completion of our Walter Pack acquisition recently, our cash and cash equivalents stand at INR 461.7 million and the net debt stands at INR 539.8 million.We added 2 margin customers who are already large portfolio, Toyota Tsusho and Autoliv. Autoliv is the world's largest automotive safety supplier with sales to all major car manufacturers in the world, and we have bagged a large order of IML parts from them. SJS has been consistently growing ahead of the industry and this quarter is no different. In Q1, the 2-wheeler industry production grew 1.3% Y-o-Y, while SJS consolidated 2-wheeler sales grew by 15% Y-o-Y. The company witnessed passenger vehicle segment growth of 24.6% on a year-on-year basis, while the investing production volume grew by 7%. Automotive, that is 2-wheeler plus passenger vehicle industry production grew only 2.3% Y-o-Y, while SJS witnessed a robust growth of 18.6% Y-o-Y on account of new business wins and increasing share of business in the automotive segment.Overall consolidated SJS sales grew by 13.6% year-on-year, partially impacted on account of slow recovery in the consumer appliance segment and some degrowth in the farm equipment segment. However, I'm lighted to inform you that we are seeing improvement in the export markets and our export revenue almost doubled for the quarter compared to last year same quarter, which was impacted due to geopolitical issues in Europe and also macroeconomic slowdown in North America. The increase in export revenue this quarter is largely due to our winning new businesses with our existing customers in South America and EMEA. Our exports initiatives are playing out steadily, appointing sales agents in South America is helping us to strengthen our presence in entire region. We intend to hire such areas in North America and Europe as well to grow exports. We are seeing gradual pickup in demand in North America and Europe as well. The bounce-back in export revenue will definitely help us grow further and it reinstates our belief that exports will be one of the co-growth drivers for our company in the future.Apart from adding 2 new customers like Autoliv and Toyota Tsusho as I mentioned earlier, we continue to expand our wallet share by winning new businesses from key customers like Mahindra, TVS, Bajaj Auto, Continental, Honda Motorcycle scooters amongst others.Before I hand over to Mahendra, I would like to share one more update with you. On the CSR front, we've been supporting the paralympic climber, Mr. Manikandan since the past 7 years. And year after year, he has been winning medals and laurels in the field, making India proud. This quarter 2, we sponsored him for the IFSC Paraclimbing World Cup held in June 23 at Switzerland, and he won a bronze medal for our country. So we are very proud of him. We also extended coverage of Swachh Bharat Initiative for garbage clean-up to 5 more surrounding villages taking the total count to 12 villages. Our aim is to provide a cleaner and hygienic environment for people to live in. These initiatives makes us feel very proud that our CSR initiatives are bringing about a definitive change and creating a positive impact in the society, be it in health care and in sanitation, sports, education, rural development around the community.I would now like to hand over the call to Mahendra, our CFO, to update you on the SJS financial performance before I talk to you about the future growth. Over to you, Mahendra.

[Mahendra Naredi, executive]

Thank you, Mr. Thapar. Good morning, everyone.Moving to Slide 12, which talks about our financial performance in detail. As you all know, consolidated revenue at INR 1,172.5 million has grown at 13.6% Y-o-Y on back of a strong growth in automotive segment and exports. On the domestic front, SJS witnessed 14.2% Y-o-Y growth in automotive segment, however, a de-growth of around 10% in consumer appliance and other segment, resulting in 8.4% Y-o-Y growth in domestic sales. Yet domestic sales out-performed the underlying automotive industry growth. Export growth during this quarter by 90.8% on a Y-o-Y basis on account of new business wins and gradual export market recovery. Export performance was due to a strong growth in the PV segment and some recovery in consumer appliance segment. Q1 FY '24 exports constitute 11% of consolidated sales compared to 6% of the sales last year. That was impacted due to external geopolitical and macro-economical factors. EBITDA at INR 313.8 million grew 12.8% Y-o-Y on a margin of 26.1%. This has impact on 30 bps on a Y-o-Y basis and that was due to a one-off expenses under other expenses to the tune of INR 8 million for interest on GST. PAT at INR 180 million, grew 11.1% Y-o-Y and PAT margins stood at 15.4%. Our ROCE during the quarter stand at 38.6% and ROE at 14.5%.As Mr. Thapar mentioned earlier, our cash and cash equivalents were at INR 2,849.7 million at the end of June 2023. However, post Walter Pack acquisition, it was at INR 461.7 million and our net debt post acquisition has increased to INR 539.8 million, and equity share capital has increased to INR 310.38 million for preferential allotment to our [indiscernible] Mr. Joseph. Now his overall shareholding has increased from 15.5% to 16.9%.Moving on to Slide 13, that shows the quarterly financial in a semester. I would like to bring to your notice that pro forma financial of SJS for quarter 1 FY '24 by including Walter Pack numbers for Q1, all the Walter Pack numbers are not reflected in the consolidated financials reported for this quarter, but from quarter 2 and onwards, Walter Pack financial will be consolidated with the SJS number, basis our 90.1% holding in Walter Pack India. As Mr. Joseph mentioned earlier, Walter Pack has kicked off the year with a great start in Q1 FY '24. Pro forma revenue for Q1 FY '21 would have been INR 1,528.7 million, a Y-o-Y growth of 48.2%. Pro forma EBITDA margin were at 27.3%, witnessing 120 bps margin expansion as compared to Q1 FY '24 reported margin. This would result in a PAT growth of 52.1% and EPS growth of 51.8% Y-o-Y. Even after considering the impact of lower other income and higher interest costs on loan take for Walter Pack acquisition, then also our pro forma EPS would have been 21% higher than reported Q1 FY '24 EPS, thereby highlighting the fact that Walter Pack India business will be EPS-accretive for us. And this reinforce our conviction in Walter Pack business, and we are confident of achieving our growth target in the medium term on back of various selling opportunities, synergies between all the 3 businesses and growing economics of scale.I would now like to hand over the call back to Mr. Thapar to talk about our future plans and growth outlook.

[Sanjay Thapar, executive]

Thank you, Mahendra. Moving ahead, we are absolutely on track in executing our organic growth strategy by addressing the aesthetic requirements of multiple end-industry segments, increasing our global presence, introduction of new technology and building mega customer accounts. This is consistently helping us outperform the underlying industry growth rates.On the Exotech capacity expansion front, we would like to upgrade everyone, that post the Walter Pack acquisition, we see many synergies between the 2 companies, Exotech and Walter Pack. Both plants have engrossed close proximity at Ranjangaon in Pune and the company has deferred its chrome-plating capacity expansion CapEx plan by a year to calendar year '24. We are inviting their expansion plans to align more effectively with the evolving business requirements of both Walter Pack and Exotech. This reverse aims to create a more conducive study that can accommodate the changing needs and demand for both companies. In the interim, we have charted out an alternate plan so that Exotech growth does not get hampered in the short run. We are increasing the capacity at Exotech by debottlenecking, utilizing our under-utilized capacities in painting, et cetera. We have recently bagged a large order for painting as well as at Exotech from a large passenger vehicle OEM. Simultaneously, we are also partnering with external chrome-plating suppliers to utilize the excess capacity, creating a win-win situation for both parties. Hence for the period FY '24 to '26, we maintain our stance of a 20% to 25% organic growth. As a company, we've always focused on introduction of new premium products and technologies that are complex to manufacture and that will enable us to increase our addressable market quite significantly. It is our consistent focus on innovation that has enabled us to stay ahead of the curve and be a preferred supplier to most of our customers.SJS has already started activating its efforts to increase get value in both 2-wheeler passenger vehicle and consumer segments and the addition of new technology premium products. We can see that growth playing out with the addition of chrome-plated part to Exotech, IML, IMD and IMF parts through the recent Walter Pack acquisition. SJS is also working on a few new age products like optical, plastics, cover-glass which will further drive up the kit value that we supply to customers. Our organic and inorganic strategy has helped us make SJS a significant player in the automotive interior space. We are confident that even in the future, any acquisition we do will open-up a new opportunity for us to achieve higher business growth and will be complementary or an extension to our existing businesses. Hence, we believe we will continue to outperform the underlying industry growth, recovering the consumer sector and the export markets will help us accelerate this momentum of our growth trajectory even further.On the inorganic growth through Walter Pack will be over and above the 20%, 25% organic growth that we have guided. SJs has continued to deliver on its robust financial and operational guidance of 2024 with 50% Y-o-Y growth in the SJS consolidated revenues and a consolidated PAT growth of about 40% Y-o-Y with the addition of Walter Pack revenues and a robust margin proprietary in our existing businesses. This of course will be post consolidating a 90.1% stake in Walter Pack for a nine-month period in this financial year.With that said, I come to an end about my quarterly updates. Thank you, and we are now open to answer any questions that you would have.

[Operator]

Thank you very much. We will now begin the question-and-answer session. [Operator Instructions] Our first question is from the line of Amit Hiranandani from SMIFS LIMITED.

[Amit Hiranandani, analyst]

Sir, my first question is basically, what was the contribution from new products in the consolidated revenue? And what was it in FY '23?

[Sanjay Thapar, executive]

So Amit, good question and our contribution for this quarter was around 10%, and it was around the same in the last year.

[Amit Hiranandani, analyst]

Okay. And sir, we understand that Exotech margins on Q-on-Q has slightly dropped. Possibly, we understand due to the new product development, trial runs and et cetera. So wanted to understand what could be the sustainable annual margin? And where do you see it in the next 3 years?

[Sanjay Thapar, executive]

So Amit, as we already guided in the past, this small plays in this quarter. But however, Exotech will continue to perform 14% to 15% sustainable margin.

[Amit Hiranandani, analyst]

And sir, where do you see it in the next 3 years, any chance to improve it further?

[Sanjay Thapar, executive]

So as I have said earlier in our earlier calls, we had inherited a legacy of existing customers. So the margins that are there are largely what are relieved with Exotech in the past and in the future, we hope to increase our exposure to the export customers and margin would be higher. But to be conservative, we are still maintaining our guidance at about 14%, 15% EBITDA margin on a sustainable basis for the next 2, 3 years. Beyond that, of course, we feel that this could improve.

[Devanshi Dhruva, executive]

So see, definitely, in the last 2 years, as you know, once we've acquired it, this business was actually traditionally doing margins of around 11%,12%. And in the last 3 years itself, because of the operational efficiency, economies of scale and all the efforts that we have put in, we've already improved margins by around 300 bps and last year, it was around 15%. We hope to continue this and 14% to 15% right now we feel it would be sustainable margins for the next -- at least in the medium term.

[Amit Hiranandani, analyst]

Okay. And just next on the Exotech's new plant capacity expansion. I just missed the initial comment. Can you please brief me a little more on this thing because what we're expecting is by FY '24-end the plan should be ready, but I think it is delayed by 1 year you are saying?

[Sanjay Thapar, executive]

No, it's not delayed. It's a conscious decision on our part because when we guided you on expansion, so we see a very robust demand coming in by cross-selling our products to Exotech products to existing SJS customers. And to meet that demand, we planned a CapEx. Now what we found is a more innovative frugal way to increase capacity by debottlenecking. Now when Walter Pack was acquired, there's a lot of synergy between Walter Pack and Exotech in terms of injection molding, for example, amongst other things. And these parts are -- now we are planning a comprehensive plan, which would iterate the needs of both these plants. So we've just deferred that investment by 1 year, as I said in my commentary, and we will now try and grow this. In the short term, we'll be using capacity of our suppliers and debottlenecking as I said, our paint same shop at Exotech was underutilized, which we are now using and we've also won businesses. So that will increase sales without the need for chrome-plating capacity specifically at Exotech.

[Devanshi Dhruva, executive]

Just basically, we just want to be more effective and will not be very frugal with our investment. If this investment can actually help both the businesses, then it would be better to chart-out a new plan for us, so that both Exotech and WPI requirements are met.

[Amit Hiranandani, analyst]

Then, sir, you must be having some revised CapEx guidance, right, for Exotech and stand-alone separately?

[Sanjay Thapar, executive]

Yeah.

[Devanshi Dhruva, executive]

Yes. So SJS for this year for FY '24, SJS would be somewhere around INR 10 crores to INR 12 crores and Exotech would be another INR 10 crores to INR 12 crores. And Walter Pack for the next 9 months would be around INR 10 crores. So overall CapEx for this year would be somewhere around INR 34 crores, INR 35 crores.

[Operator]

Our next question is from the line of Joseph George from IIFL.

[Joseph George, analyst]

Just one question on the postponement of the Exotech capacity. You mentioned that in the interim, you would be using chrome-plating capacity of your suppliers. So when you take that service from a third-party, how do we see the margins of Exotech moving in the coming year or so? Because if you're outsourcing a process, it will be negative for margins?

[Sanjay Thapar, executive]

Yeah, Mr. Joseph. We believe that it will not impact to our margins. Yes, in a outsourcing model, the raw material cost is going up. But at the same time, the manufacturing and the admin and ample cost will not increase and that has a effect. So overall EBITDA level, we believe that it will not have any impact. And in fact, at the PAT level, we believe that our PAT will go up because we will not have a depreciation.

[Mahendra Naredi, executive]

And just to add to this. So it is not that we are postponing the CapEx. We are only doing it more intelligently to make sure that our investments are as frugal as possible to make sure that we extract maximum ROCE from this business.

[Devanshi Dhruva, executive]

Moreover, if you look at it, at a consolidated basis, we will try and maintain 25% to 27% margin that we have guided for, and that will not get impacted.

[Joseph George, analyst]

Understood. And the second question was when you say that the CapEx has been postponed, our old understanding was that compared to the current revenues of, I mean, last year's revenue of INR 130 crores in Exotech, with the new capacity, the potential for revenues would have been closer to INR 300 crores or so. So in terms of the scale of capacity expansion, are those numbers still holding even though it's postponed by a year or is the scale of revenue and CapEx also likely to be changed?

[Sanjay Thapar, executive]

No, nothing. So absolutely, we are on track. We are still holding those numbers. It is only a smarter way of doing things. And we already have a very, very strong trajectory of customer demand for Exotech. So everything goes as per plan, and we are very, very bullish on growth at Exotech.

[Operator]

Our next question is from the line of Piyush Parag from Nuvama Wealth.

[Piyush Parag, analyst]

So my question would be more on the WPI level. If you can just throw some light in terms of the actual performance of the WPI in the quarter and how is it expected to over the next couple of years, debt cash positions of the business, more outlook on the revenue and EBITDA for this particular company? And what is the capacity currently and how is the revenue potential? And how do we expect it to grow? So if you kind of throw some light on WPI?

[Sanjay Thapar, executive]

Mr. Piyush, we could not get your full question, your voice was very fumble.

[Devanshi Dhruva, executive]

If you could just be a little louder.

[Piyush Parag, analyst]

Okay. So my question was more on the WPI performance. How has during the quarter? And how do we see its revenue and EBITDA outlook over the next 2, 3 years? And currently, what is the capacity? And how do you expect this capacity and revenue potential to improve in the medium term? Yeah. That was my question. Am I audible now, right?

[Sanjay Thapar, executive]

Yes, you are. So Walter Pack India has done this quarter, INR 356 million turnover with an EBITDA of 31.5%. We always referring that we will maintain our growth at 20% to 25%, and Walter Pack will be part of that.What was the third question? On the capacity side, the company is currently working on 75%. They have 2 plants. 1 is in Pune and second in the [indiscernible]. 1 plant is working on 75% and another is working on 55%. So average you can say 70% to 73%. That was the current capacity as of now for the current financial year.

[Kannampadathil Joseph, executive]

So let me supplement that by giving an outlook on Walter Pack. So it's a very trans-motive, very I would say it just puts SJS into another trajectory. The in-mould forming technology that Walter Pack, they have very strong knowledge on tooling. And in fact, there are very few companies in the world which has that expertise. So Walter Pack Spain, which was the parent of Walter Pack India is amongst the global benchmark for in-mould forming and IML technologies. There is a trend of using IME and there is a trend to use also electronics and lighting inside the in-build lighting of the car. So there are some very innovative technologies in place, and there is a very strong demand from customers. In fact, in this year, you will see [indiscernible] customers because these projects are under development, but we will see a lot of cars from mega passenger vehicle OEMs in India, which will have this new generation technologies coming in. So growth had -- while on an overall consolidated level, we have guided that we will grow at about 20% to 25% organically. And Walter Pack also will grow at that. This year, they'll grow a little faster because they address also a consumer durable segment. And overall, I would like to think of you to think of us as a consolidated entity that has an end-to-end solution for all aesthetic parts. And Walter Pack is going to actually help us introduce a lot of new technologies to the customers in India and overseas. So I think the growth path is extremely positive for Walter Pack.

[Devanshi Dhruva, executive]

So for FY '24, we have guided last time also, overall consol growth, including WPI will be 50%. So you can interpret the growth with that because organic growth of SJS and Exotech together, as Sanjay mentioned, will be 20% to 25%.

[Piyush Parag, analyst]

Okay. Did you say 50% overall growth?

[Devanshi Dhruva, executive]

Yes, overall 50% Y-o-Y growth for FY '24.

[Operator]

Our next question is from the line of Mr. Ronak Mehta from JM Financial.

[Ronak Mehta, analyst]

So continuing on WPI, I wanted to check, so what are the opportunity areas for gross selling from the existing business? I believe some of the PV OEMs for whom SJS was a Tier 2 supplier earlier now becomes Tier 1 post WPI acquisition. So how have been the response from the customers in terms of awarding new business after the acquisition? If you can throw some color on that?

[Kannampadathil Joseph, executive]

The one is we have a cross-selling opportunity between 2 companies. They also made some dials, overlays, et cetera. So that SJS will get more out of that business. And also we have Walter Pack won a lot of new orders because we don't want to name the customer in here worth about INR 30 crores to INR 40 crores for FY '25. So this year maybe we would get about 12 to 13 comps out of that for this year. And another consumer business will also grow by almost about 50% for FY '24. And because of that, some of the other -- the content per vehicle is also increasing, which will impact our overall phase as well for SJS.

[Sanjay Thapar, executive]

Just to supplement what Joe just said. So as I said, large involved forming parts are the fortress of Walter Pack India. Now Walter Pack does not supply 2-wheeler OEM. So company like Bajaj, company like Royal Enfield, company like Honda, we are in the process of telling them what we could do with IML technology that could improve aesthetic, especially for the plastic [indiscernible] for these bikes. So both for the EV segment and conventional ICE engines, I think the IML and IMD technologies that we have to offer, which will -- and IMD will piggyback on this, will find a lot of demand when the customers see this. So at the moment, we are working on some development projects, which I think are very exciting technologies. So cross-selling to 2-wheeler customers and cross selling to our large consumer client customer. So Whirlpools of the world, Samsungs of the world, they use a lot of large IML parts which require deep forming, which at SJS we could not do. Now with Walter Pack, those markets are within reach for us, and we already enjoy a very strong customer relationships. So I see the synergy playing out extremely well in terms of how growth at Walter Pack will come plus how is the whole entity, all these 3 companies working together could offer some solutions which are too innovative.

[Devanshi Dhruva, executive]

Especially the Exotech and on the Walter Pack side, both the places, we have added passenger vehicle customers. So in fact, there'll be a lot of cross-selling opportunities between Exotech and Walter Pack also because both of them have customers, which can be used for cross-selling opportunities, like Mahindra Exotech, we have Maruti, Tata Motors with Walter Pack. So a lot of cross-selling opportunities between these 2 companies will also be possible.

[Piyush Parag, analyst]

Understood. Okay. So one more question on the recent addition of the new clients, Autoliv and Toyota Tsusho. So just wanted to clarify, will this be only for the India business or you will also export to the global plants?

[Sanjay Thapar, executive]

Our strategy always has been that we take customers and we grow them into mega towns. So our focus as I said earlier, is to prove our credentials with them with the global companies in the Indian market and then use the goodwill that we have generated in terms of capability demonstration to penetrate to the global network. So these are, let's say, staffing steps with Autoliv, we won a large order of course for the India market. But then once we deliver these parts to their satisfaction, we will certainly be having a conversation with them now, let's take it global. So luckily for SJS, we've grown because customers have wanted us to grow. So the guys come to what say, why don't you come and supply to me at this location. So I think we are competitive in terms of quality cost delivery and that helps us bring customer confidence to introduce us in more and more costs globally. So that has been the theme and that will be the theme for both these customers as well.

[Piyush Parag, analyst]

Understood. Sir, one more housekeeping question to Mahendra. So Mahendra, on the consol financials, other expenses have seen a sharp jump both on Y-o-Y and Q-o-Q basis. So is that only because of the outsourcing in the Exotech business or if you can throw some color on that?

[Devanshi Dhruva, executive]

So other expenses have increased on account of 2 reasons. One is that there has been an increase in subcontracting employees, which comes under our other expenses. And the other reason is there is a one-time expense in terms of a provision made for interest on GST to the tune of INR 8 million. And that's a onetime expense. So that's the 2 reasons because of which the other expenses for this quarter looks a little high.

[Operator]

Our next question is from the line of Karn Bhargava from WealthBridge Capital Advisors.

[Karn Bhargava, analyst]

I have 2 questions. So I think I misheard the numbers for the WPI revenue, so if you could just clarify on that in this quarter?

[Devanshi Dhruva, executive]

Sir, WPI revenue for this quarter grew 21% Y-o-Y to INR 356 million.

[Karn Bhargava, analyst]

INR 356 million. Okay. And so there's been a lot of talk on the IME side, that is in-mould electronics. And I think last we spoke, you had mentioned that the product is still under development. So is there any update on that? And what kind of are you looking at in there?

[Sanjay Thapar, executive]

So the applications are quite diverse. So we are looking at 2-wheeler, we're looking at 4-wheelers. Since this is a new technology that the OEMs themselves are now trying to evaluate, so we have some prototype build requirements of projects going on with a few customers. It will take time because in the Indian market, typically what it involves is, there's a functional layer, as I've said earlier, which is the printed layer, then we are in the decorative layer, sorry, and then a functional layer, which has the electronic parts. So Phase 1 of this introduction is going to be LEDs are going to be implanted at the functional layer and that is going to be moulded together, making it let's say Phase 1 of IME to [IMA]. The next phase is going to be that there is going to be electronic components like ICE also formed part of the functional layer, which can reduce the size of the underlying PCB or connectivity to be body control, what we use in a car. So all that functionality will build in. But since this is a new technology, it will take time or my expectation is that it would be another 2, 3 years before you could see real life IME parts coming in. Another part is that Walter Pack be in IME technology. We have technologies, board agreement with Walter Pack and Walter Pack paint will be our technology partner really in terms of advising us, how to implement IMP and the existing IML and IME products that we have in India.

[Karn Bhargava, analyst]

Okay. So you want to say, [Technical Difficulty] will be helping you out with the development of the product as well?

[Sanjay Thapar, executive]

Absolutely. Yeah.

[Operator]

Our next question is from the line of Shrinjana Mittal from RatnaTraya Capital.

[Shrinjana Mittal, analyst]

Two questions from my side. One is on Exotech. Sir, Exotech sales quarter-on-quarter was also slightly down. So what could be the reason for that?

[Devanshi Dhruva, executive]

So generally also, if you will see Q2 and Q4 are locally stronger quarters for us due to festive season and seasonality. And compared to that, Q1, you can't compare the Q-on-Q growth in terms of Q4 and Q1.

[Kannampadathil Joseph, executive]

No. Specifically for Walter Pack this quarter, so there was Walter Pack supplies to the farm equipment -- sorry, my mistake. So we have so many companies that I get confused at times, okay. So on Exotech this year grew, let's say, de-grow a little bit because the farm equipment demand was soft. So John Deere is an important customer, they export parts to North America, and that demand was subdued plus, of course, there was some delays in launching of a new product by the sanitary wear segment we supply to Geberit. So these 2 areas impacted a little bit sales for this quarter, but the demand for Q2 remains robust, and we hope to achieve our sales growth trajectory at Exotech, which of course is very, very strong demand.

[Shrinjana Mittal, analyst]

Second question is exports, like you mentioned, I think, around 11% is the contribution of export. Just wanted to see like what was it last quarter? Because you mentioned that the exports have grown this quarter.

[Sanjay Thapar, executive]

Last quarter, our export was 7.9% and which has now gone up to 11%.

[Devanshi Dhruva, executive]

So in fact, the entire year last year, if you see because of the geopolitical issues in Europe as well as macroeconomic issues in North America, exports has been impacted. And overall, for the year, in fact, exports took a dip of almost 32% degrowth. But this year, because we are seeing the demand coming back in Europe as well as we are winning new businesses on our export front. So that's why we are seeing the growth coming back and exports revenue has almost doubled this quarter, when compared to last year's same quarter.

[Shrinjana Mittal, analyst]

So like going forward, like for the year, organically, we are guiding for around 20%, 25%. So is this only for export business like what are you targeting on the growth front.

[Sanjay Thapar, executive]

So we don't provide guidance specifically. But as I said earlier in my commentary, the quarter 1 on a quarter-on-quarter basis, exports has jumped up by close to about 90% growth overall this last quarter versus the quarter a year before. And moving forward, we feel that this momentum should continue. We expect growth to return. So for us, Asia, EMEA and South America have grown well. North America and Europe still continue to be in the recovery mode. So it's a wait and watch situation there. But overall, we feel that we should come back to the pre disruption levels that were there last year. So we should come back to what were a year ago.

[Devanshi Dhruva, executive]

FY22.

[Operator]

Our next question is from the line of Ridhima Goyal from Acquaint Bee Ventures.

[Ridhima Goyal, analyst]

Just one question from my end. What is the consumer durable mix on the overall revenue? And what is the growth profile in this quarter for consumer durable segment?

[Devanshi Dhruva, executive]

So consumer durables was a little muted growth, I would say, almost about 2%, 3%. And overall, as a percent of sales, it was somewhere around 15%, 16% of our sales.

[Ridhima Goyal, analyst]

15% to 16%. Okay. And just one more part. I know that you guys don't disclose your order book as such.

[Devanshi Dhruva, executive]

Little louder Ridhima.

[Ridhima Goyal, analyst]

Yeah. So I know that you guys don't disclose your order book as such, but it would be great if you can give some for the clarity, like what is the overall order book in terms of value and also its execution time? Like is it executed in 2, 3 years or maybe 5 years?

[Sanjay Thapar, executive]

So consumer durable, it's a very important segment for us, and we have made further inroads by this Walter Pack acquisition, where we've added a new consumer product line to our portfolio, which is the Fascia Plate that you have for modular switches. So Walter Pack is a large supplier of these to Legrand which is a leader in this business. And the demand is not just in India and overseas. Also, as I said, on one hand, the SJS product portfolio has very bright potential because we are under-penetrated in North America, as I mentioned earlier. So we are making inroads. South America, we've already seen the results. We will add to feet on the ground in North America and Europe to accelerate that further. Thus, this new technology areas, both in terms of the Legrand business for modular switch plates, that is also consumer business. And the IMF businesses that we could do with the likes of Whirlpool and the other appliance manufacturers, so that in the long or medium to long term would be very large growth drivers for our consumer appliance business. So already, as Joe mentioned in the earlier commentary, look at the company as a consolidated entity, that is what I would encourage everybody to see. So our dependence on 2-wheelers have come down, 2-wheeler and 4-wheeler now are largely similar, thanks to the addition of Walter Pack to our business and the consumer plan business also will be significantly higher, thanks to a large proportion of Walter Pack revenues going to the consumer businesses. So overall, I think we will grow at about 20%, 25% that we guided earlier in terms of the mid-term growth guidance that we have given.

[Devanshi Dhruva, executive]

Also if you notice, last year we added BARBE Group and even ISB on our consumer appliances front. And those will also grow over a period of time because initially, as we said that whenever we acquire new customers, we have a smaller chunk of their sales. But going forward, maybe after a year or 2, we will start getting more business from them as well. So we keep on increasing our global presence as well as customer spread also in consumer appliances.

[Ridhima Goyal, analyst]

I understand your point, but my question was related to the order book. It would be great if you can disclose the value, the order book, what is your current order book overall and its execution time period.

[Devanshi Dhruva, executive]

Segment-wise or anything. Overall, what we have guided for this 20% to 25% organic growth. And of that, almost 90% of our order book is confirmed for this year.

[Ridhima Goyal, analyst]

For FY '24, including WPI?

[Devanshi Dhruva, executive]

Overall SJS plus Exotech console business.

[Ridhima Goyal, analyst]

Including WPI?

[Devanshi Dhruva, executive]

No, not including WPI. But on the WPI front also, almost around 90% of the order book is confirmed for FY '24.

[Ridhima Goyal, analyst]

Okay. And just last, I need to understand was, do we have some common customers between WPI and SJS as a whole.

[Sanjay Thapar, executive]

Yes, we do, but a very small overlap. So WPI supplies to Tata Motors, we supply to Tata Motors as well, but our content is much smaller. WPI very large parts contributing almost about INR 2,500 to INR3,500 content per vehicle. Our current supply from SJS are just these dials that we supply. And of course, the optical plastic part that we will do will increase that quite well plus we do chrome-plating. So that is some of it. So the common customers likely or Tata Motors, Mahindra, for example, they don't supply too much. We have a large presence in Mahindra. So there are a lot of cross-selling opportunities that exist because we will not cannibalize the business if that in the question.

[Operator]

Our next question is from the line of Rohan Advant from Multi-Act.

[Rohan Advant, analyst]

My first question was on the technical support fees that Walter Pack pays to its parents, what was it earlier? And what will it be now now that we own it? And when you've calculated it, the calculated the pro forma numbers, what have you considered there? If you can talk about in terms of, say, percentage of sales?

[Kannampadathil Joseph, executive]

Okay. Earlier, the technical fees was paid by Walter Pack was in the range of 3.5% of the sales value. We have agreed for a fixed amount over a period of time. That was not a percentage of sales. But if I say broadly on the sales, it will be around 1%.

[Rohan Advant, analyst]

Okay. And so when you've done the pro forma calculation, you have considered 1% because that is what it would be.

[Kannampadathil Joseph, executive]

Considered, yes.

[Rohan Advant, analyst]

Okay. And sir, secondly, our guidance of 50% revenue growth and 40% profit growth, but Walter Pack is a higher margin business, so it is margin accretive. So why would the profit growth be lower than revenue growth? What am I missing here?

[Kannampadathil Joseph, executive]

As I mentioned earlier, so we are in a transformation stage, think of it as the whole entity. So this guidance of 40% PAT is on the consolidated level of all these 3 businesses put together for us. As I said, we are entering many new exciting areas like optical, plastics, cover glass, which we will do for the first time. So I said that we will, in our last earnings call, I had mentioned that we will be expanding or accelerating our growth footprint. We are not so worried about EBITDA because we have a very consistent track record. So typically, what happens is that when you start a new product or product line before you offer to a customer, you do a lot of trials internally. So there's the larger consumption of raw materials, manpower, which is not built to the customer, so that impacts the EBITDA to a certain extent in the short-term. Also when we launch a product, we are extra careful in terms of quality. So any efficiency improvement that comes in is once that stabilizes. So if our past track record, you see at SJS stand-alone, we do closed about 30%, 32% of EBITDA over the last 5 to 6 years, and we've been steady in maintaining that. So these are new generation products requiring in the short-term additional materials, additional testing requirement, new manpower being hired to create to handle or to create competency in those areas. So these are the short-term costs that may impact margins in the short term but that is what is behind the 40% guidance that we've done.

[Sanjay Thapar, executive]

And just to supplement here, one is the business side. Another is when we made the acquisition of Walter Pack, we have taken the loans for that. So there will be a interest cost on that, plus a lot cash of our internal approval or our cash balance has been used to fund this acquisition, which was earlier generating income and now this can be very negligible income in this FY '24. So this all 3 fact will make the PAT at 40% growth over last year.

[Operator]

Our next question is from the line of Amit Hiranandani from SMIFS Limited.

[Amit Hiranandani, analyst]

Just continuing with the WPI side. If you, sir, can tell us more about going forward strategy in domestic and exports. I understand export is almost zero for WPI. So what is your strategy over there? And is there any restriction from WPI Spain that we can't go in certain countries or we can't acquire any customers. And yeah, on the WPI side, if I can continue on the revenue target, if you can give for 2024-2025 please?

[Kannampadathil Joseph, executive]

Yeah. So as I said, WPI is a great acquisition for us. There is a technology support agreement that is available to us. There's a very clear understanding between us and the parent company that we are allowed to service the existing customers that we have. And there are some areas that we were missing out earlier. I mentioned the cases of large IML, IMF parts to Whirlpool and to Samsung. These are very large companies globally. And we don't do any IML, large part IML part with them. So that is a great growth opportunity for us moving forward. We are also, as I mentioned earlier, the IME technology that will ride on that is something that we will do. So primarily growth I think is -- we are very, very clear that there is going to be a huge length of growth for the Walter Pack business going forward. Walter Pack is not consistent in many of the customers that SJS already has strong relations with. So this just adds some additional opportunities for Walter Pack technologies to be used for these customers. So cross-selling, exports and penetrating the Indian market faster than new technology products like IMV. So these are the growth vectors for Walter Pack.

[Devanshi Dhruva, executive]

Overall, as a company for SJS and Exotech put together, organic we have mentioned that it will be growing at a CAGR of 20% to 25% and inorganic acquisitions will add to this growth above this 20% to 25%. However, we won't be able to give any guidance in terms of Walter Pack currently because the acquisition has just got completed and we will work out the details on our strategy for the next medium term, at least for the next 3 to 5 years and probably then we'll be able to not take your question and give out the details later.

[Amit Hiranandani, analyst]

I'll just rephrase it. So at the optimum utilization capacity of WPI, how much revenue we can generate?

[Devanshi Dhruva, executive]

So currently, we are at a capacity utilization of about 60% to 70%, and we can generate revenue to close to INR 200 crores.

[Amit Hiranandani, analyst]

INR 200 crores you are saying actual utilization?

[Devanshi Dhruva, executive]

Yes.

[Amit Hiranandani, analyst]

Okay. One last question from my side. On the stand-alone side, so SJS I understand is trying to acquire some strategic customers, which will, of course, benefit in the mid to long term. Can you please tell us these customers are from domestic or international markets? And secondly, are we going to see some impact on the margins due to the strategic step and sustainability of the margin, if you can tell us on the annual basis for SJS standalone please?

[Sanjay Thapar, executive]

So these customers are both domestic and export customers. And for the existing customers, it is new technology. So I talk about optical plastic, optical glass, where we are adding to our management bandwidth in terms of having some subject matter experts who will support this program. We will, of course have costs associated with that. So that is what is going to impact. But what customers that we are talking about are existing customers because our universe of customer is very, very large. But we are opening new doors in terms of new technologies with them, which is increasing the investment market very, very quickly.

[Amit Hiranandani, analyst]

Sir, my question have been answered. Just one request. From Q2 FY '24, we are going to incorporate WPI in the consolidated numbers. So it's a request if the team can provide WPI's financials separately, please.

[Operator]

Our next question is from the line of Arun Jay, who is an investor. Ladies and gentlemen, the line from Mr. Arun has dropped. We move to the next participant. Our next question is from the line of Vishal Khurana, who's an investor.

[Vishal Khurana]

My first question is, so we are almost providing the statistics to almost every 2-wheeler OEM except for Hero. So what is really stopping us to onboard Hero with SJS? And then who is the current supplier to this SJS and to Hero and aesthetics.

[Sanjay Thapar, executive]

So Hero is a company that we've been pursuing. They like us. They have visited and audited us. What I'm told, I mean, the ball is not in my court, it is in Hero's court. So they have to take a call as to when to start buying from us. They know SJS very well. They understand that we have a strong capability. So it's just wait and watch. So it should happen sooner than later, that is our hope.

[Devanshi Dhruva, executive]

The current supplier is Classic Stripes.

[Vishal Khurana]

Okay. And my second question is in the previous quarter investor presentation, we had mentioned that we had onboarded Foxconn, who will be making electric vehicles in India and will be supplying aesthetics to them. So may I know when they are going to put up that facility for this contract manufacturing [indiscernible].

[Sanjay Thapar, executive]

No. Foxconn is not one to make EVs, Foxconn is going to supply parts to EVs. And we announced last quarter that we had won a business from Foxconn, which was in the area of the display screen of the EV. So they supply to a company, I will not name it because our product is still under development, but it should start production in Q2.

[Vishal Khurana]

Okay. And my last question sir is, so we also discussed about that we will be entering into television and medical devices aesthetic segment. Is that correct?

[Kannampadathil Joseph, executive]

Yes. We won business for some decorative for the television industry. So that we have done. Medical device is, of course, the opportunity is in terms of displays and in terms of overlays and maybe IML parts. So that is a market that we are mining. So we are in touch with customers and we hope to grow that business as well.

[Vishal Khurana]

And sir, how big can this EV opportunity be since we are manufacturing a lot of television, other electronic items in India now.

[Kannampadathil Joseph, executive]

It is wait and watch. So this is just -- our specialty is make long-lasting durable aesthetic parts. So the opportunity in other areas is larger. So television while that is an opportunity, we have still not sized it to be honest, to say how large it could be. So at the moment, we've just entered this last quarter. So we will examine as we have discussions with the customer to see what more is possible.

[Operator]

Ladies and gentlemen, that was the last question of our question-and-answer session. I would now like to hand the conference over to management for closing comments.

[Devanshi Dhruva, executive]

Thank you everyone, for joining us on this call. If anybody's questions were left unanswered, please feel free to reach out to us, and we'll answer it to the best of our ability. Thank you.

[Operator]

Thank you. On behalf of JM Financial, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.