Symphony Ltd

NSE:SYMPHONY

Earnings Call Transcript 2024-Q1

[Operator]

Ladies and gentlemen, good day, and welcome to Q1 FY '24 Earnings Conference Call of Symphony Limited hosted by Equirus Securities. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Manoj Gori from Equirus Securities. Thank you, and over to you.

[Manoj Gori, analyst]

Thanks. On behalf of Equirus Securities, we welcome you all to Q1 FY '24 results conference call of Symphony Limited. We have with us senior management represented by Mr. Nrupesh Shah, Executive Director; Mr. Amit Kumar, Executive Director and Group CEO; and Mr. Girish Thakkar, CFO.

Now I hand over the call to the management for the initial comments, and then we'll open the floor for question and answer. Thanks, and over to you, sir.

[Nrupesh Shah, executive]

Yes. Thank you, Manoj, and thank you, Equirus. Good evening to all. Welcome to Q1 June quarter conference call of Symphony Limited. Yes. So we are having a brief presentation. To start with, customary safe harbor statement is applicable.

So to start with, on a standalone basis that is Symphony India Limited, Y-o-Y, there has been a degrowth in domestic sales by 14%. That is on standalone Symphony domestic business, down from INR 188 crores to INR 160 crores. However, despite this local [indiscernible], as everybody knows, this was a [indiscernible] summer, but still, this has been second best June quarter in terms of the domestic sales or passing any of the June quarter sales pre-COVID. And in that respect, it has been 9% vis-a-vis best of the best June quarter sales.

And this has been achieved on account of various initiatives of Symphony, and this has also resulted into us for the data available right up to 30 June, which are also in public domain, we have also improved our market share.

As far as international business is concerned, there has been a decent performance for June quarter. The top line is almost in line with last year. However, EBITDA margin percentage is superior and so is PAT. And particularly, IMPCO Mexico has registered highest ever quarterly revenue, up by almost 37, 38 percentage and EBITDA also. This is on account of consistent good summer in Mexico.

And as far as GSK China, of course, it's not significant. But nevertheless, it has turned around, registering a small PAT. As far as Climate Technology Australia is concerned, its performance remains subdued on account of local macro headwinds. However, down the line, I will cover our turnaround strategy.

On a consol basis, gross margin percentage stands at 49.7 percentage, which is up by 400 bps on a Y-o-Y basis, while standalone gross margin for the same quarter is higher by 60 bps, which is on account of combination of factors, including price hike, value engineering and softening of input costs. And on a consol basis, EBITDA margin percentage stands at 9.3 percentage. However, on a standalone basis, it stands at 4.2 percentage.

However, let me share with you, this need not be extrapolated for the year because in the first quarter that is in June quarter, there are some disproportionate high costs, including advertisement, sales promotion and few of the overhead. So neither IMPCO Mexico performance, which is recently good, similarly, Symphony India, no way this quarterly performance is an extrapolation of the entire year.

In fact, despite this summer because of our entry to ancillary products, which sell around the year plus a variety of the strategies and proof of the pudding collection, whatever received so far in the current month, which is almost in line with last year. So our internal study and action plan is irrespective of this summer of '23. We expect decent performance for the year. Including on a standalone basis, we expect top line growth as well as profitability growth, including improved EBITDA margin percentage.

As far as LSV is concerned, it continues delivering a robust performance. And day by day, we are certainly gaining that traction. And during the quarter, as all of you know, we have completed our buyback, all in all amounting to INR 249 crores. And for June quarter, the first interim dividend, that is 50 percentage of the face value, all in all about INR 7 crores has been announced.

So this is the [indiscernible] chart of our consolidated performance on a consol basis. Revenue stands at INR 302 crores. That is Y-o-Y down by 8 percentage. Cost of goods sold is -- terms of the percentage is 15 percentage lower vis-a-vis sales growth of 8 percentage. And that has translated into gross -- if you can point there, please, the pointer.

While gross margin percentage as [indiscernible] stands at 49.7, that is 400 bps higher. And from gross margin percentage of 49.7, EBITDA is [ 9.3 ] percentage marginally lower than last year on account of operating expenses of INR 122 crores because some of those expenses are [indiscernible] the nature. And on the right-hand side, there is a detailed breakup of various expenses. And finally, resulted into PAT of INR 24 crores. That is 7.90 percentage.

Yes, next. And this is the waterfall chart, EBITDA movement from 10.40 percentage to 9.3 percentage. Yes, next. So on a consol basis, the capital employed for trailing 12 months, which includes our subsidiaries in Central India, stands at INR 300 crores. That is lower by 15 percentage, and ROCE in the core capital employed stands at 36 percentage. And RONW, that is return on net worth, stands at 15 percentage on trailing 12 months. And of course, this RONW should improve down the line on account of the recently concluded buyback, which will reduce the denomination of net worth.

And this is the same chart of standalone performance as just good, the details of that. And this is the preferred chart of standalone EBITDA margin percentage.

And on a standalone basis, considering trailing 12 months, the capital employed in the core business stands at INR 48 crores, reduced by 43 percentage. ROCE percentage on a core business stands at 336%. And RONW is 20%, while treasury stands at INR 342 crores as on 30 June, down by almost INR 170 crores, INR 180 crores vis-a-vis 30 June '22.

And coming to outlook. Symphony remains and has cemented its position to be numero uno in the air cooler industry. As said, we have increased our market share even though overall industry has degrowed. And thereby, our degrowth during market is [indiscernible] than the industry degrowth.

However, in terms of the product category in terms of the future outlook, whether it is Symphony India or globally, we very much remain quite confident [indiscernible] due to a variety of reasons, including continuous launch of innovative value-added products far, far ahead of competition, calibrated price hike and value engineering, continuous thrust on semi-urban and rural markets.

And we have plans, so initiatives to further enhance our semi-urban and rural market [indiscernible] into [indiscernible] and dealer distribution network as well as continuous growth of sales through alternate sales channels that is other than general trade sales.

We have, last year, successfully entered into adjacent product categories, which have resumed very well, including products like Duet and Surround. And we are going to launch many more models as well as a larger category. And because of its uniqueness, because of its positioning is expected to continuously do well.

There are long-term structural growth drivers, whether it is in India or domestic market on account of, as everybody knows, intensified heatwave climate change as well, and that does result into strong tailwind of air coolers.

Just to share about recent updates in terms of the U.S. consumer space. Despite all headwinds in U.S. despite the macro position in the U.S., the Home Depot, which is our largest customer over there, majority of the goods, what they had bought from us, have been already liquidated and sold to the end consumer.

In fact, considering the current status, we believe that as it was earlier expected in many, many models, we are likely to be -- at the end of the summer, they are likely to be out of stock. There are some [indiscernible] in middle of September.

And as far as Climate Technology Australia is concerned, as shared in earlier conference call, the major business transformation is underway. However, on account of domestic macro factors, this transformation is likely to take some time even though it is in implementation full fledged and we believe that part of that result we should get in the current year and mostly in the next year.

Again to repeat, the initiatives what we are doing is substantial reduction in cost of doing the business, which should result into CODB reduction of almost 40% by next year; revamping the product category; and converting in-house part of the manufacturing, which was already outsourced earlier, now complete revamping the in-house manufacturing to outsourced business model; as well as leveraging this retail distribution channel. And considering our product category, committed to pursue the growth with a complete focus on ESG.

Yes. So thank you and open the floor for question and answer. And we'll be happy to answer any questions.

[Operator]

[Operator Instructions] We have a first question from the line of Aditya Bhartia from Investec.

[Aditya Bhartia, analyst]

My first question is on market share gain that you spoke about. If you can give us some more details about how sharp the market share gain has been? And is it among the organized side that you refer to it? Or is it a [indiscernible]?

[Unknown Executive]

The market share gain, as said, has been on a pan-India basis. Specific [ regions ], the overall market share gains have varied slightly. However, on a pan-India basis, we have seen a market share gain, especially in the traditional trade and rural segment, which was -- which saw less default [indiscernible] online channels this year versus the last year. So that's the core of the market -- the market share.

[Nrupesh Shah, executive]

And this is vis-a-vis organized market. And we consider the organized market to do sale in multiple states, having a branch. And our barometer remains the same what it was in the past. And in that respect, as per the data available as of now, our market share gain seems to be in excess of 3 percentage, about 4%, yes.

[Aditya Bhartia, analyst]

Sir, if you could share some more details of [indiscernible] market share standing today versus how it may have been a year back and 3 years back?

[Nrupesh Shah, executive]

No. So if I can take you [ 20 ] years before so -- and [ 20 ] years before, our market share used to be, I'm talking value-wise, not volume-wise, it used to be 43%, 44%. For last couple of years, it inched up and remain around 50 percentage. Current year as on 30 June, it seems higher by -- higher in excess of 3 percentage.

[Aditya Bhartia, analyst]

Understood, sir. Understood. And secondly, you talked about strong growth in LSV segment. Again, over there, if you can share the details how large does the segment have become? And how are you seeing the business shaping going forward?

[Nrupesh Shah, executive]

So I would say still it constitutes vis-a-vis our standalone sales in single-digit percentage, of course, that percentage is now in high single-digit percentage. Again, on account of competitive and other reasons, we are sharing absolute sales performance.

But by and large, it has performed in line with our expectation and budget. And we have successfully implemented many, many projects across the vertical and industry. And I think internally and externally for the necessary team, the trade partners, service aftersales, even outsourced manufacturing and revamping the range of the model, so a combination of all that seems to be [indiscernible].

[Aditya Bhartia, analyst]

Understood. And the last bit, sir, on new product introduction, [indiscernible] correct, when you're saying that you're looking to engineer into [indiscernible].

[Operator]

I'm sorry, Mr. Bhartia, your voice is not very clear.

[Nrupesh Shah, executive]

Yes, it's breaking in between.

[Aditya Bhartia, analyst]

Yes, sir. I was just asking on new product introduction, is that very clearly that [indiscernible] due to the company going forward?

[Nrupesh Shah, executive]

No. See, there is some noise in between, and your voice is breaking.

[Operator]

Mr. Bhartia?

[Aditya Bhartia, analyst]

Hello? Is it better now, sir?

[Nrupesh Shah, executive]

Yes, please go ahead.

[Aditya Bhartia, analyst]

Yes. On new product categories, so do you intend to enter into any new product category going forward? Did you mention that, that is what the plan is?

[Nrupesh Shah, executive]

So as said, we have already entered into Duet and Surround products, which are sold around the year. They have received good response with unique features and performance. We will further enhance this range. And right now, that's what we have to share with you.

[Unknown Executive]

So what is called the tower side category, Aditya. So that category is something that we have already gotten in. And we have a set of product within the tower side category that we have launched in the last year and that we continue to drive forward. That's as much as we can talk about.

[Operator]

We have a next question from the line of [ Namit Arora ] from Indgrowth Capital.

[Unknown Analyst]

Sir, my question is your company was always considered [indiscernible] and a market leader. But the last 3 to 5 years have been fairly challenging for a variety of reasons. So given your perspective, any reflections on any learnings in the last few years, anything you would have done differently? And how are you sort of taking those learnings for sort of the coming 3 to 5 years?

[Nrupesh Shah, executive]

Well, you are absolutely right. So they're having some learnings in terms of how to derisk vis-a-vis a [ bad ] summer. And I think to an extent, we are succeeding, including entering into adjacent category, including increasing the sales through alternate channels. That's also working well.

And precisely in that direction, even though currently, especially as on March '23, our subsidiaries haven't done well. But it's exactly the strategy in that respect. And we are very much convinced and confident that overseas markets are also having huge potential.

And as it was witnessed in June quarter, again, I'm not saying it is a reflection of the full year. But IMPCO Mexico registered 40% growth and highest ever EBITDA margin amount, et cetera. But we have yet to work a lot, and we are working upon in respect of the turnaround of Climate Technology.

And as far as the domestic market is concerned, I think a major, major thrust in respect of various strategy and initiatives by enhancing our presence substantially, not incremental in rural and semi-urban market. Anything else to add?

[Unknown Executive]

So that's the [indiscernible] point to look at. And Namit, the core of the learning is there's risk there in the season in the last 3 years, 2 of these were affected by COVID. So multiple [indiscernible] exist, and our strategy is focused on channel diversification.

So that's the range expansion adjustment segment and geographic expansion that we have followed for quite some time. So the right mix of these 3 is what we are pursuing, and we are confident will help us address these risks today and provide growth.

[Operator]

We have a next question from the line of [ Hardik Rawat ] from IIFL Securities.

[Unknown Analyst]

Can you hear me?

[Operator]

Yes.

[Unknown Analyst]

Actually, I wanted to ask with respect to Mexico business, could you share some numbers as to what sort of a margin that you registered? And what is the exact revenue or revenue growth?

[Nrupesh Shah, executive]

Sure. So Mexico for the quarter, top line was INR 77 crores versus INR 56 crores of corresponding figure of previous year. EBITDA is about INR 19 crores versus INR 10 crores. And PAT before exceptional item about INR 10 crores versus INR 6 crores.

And as you asked about IMPCO Mexico, let me share figures of other subsidiaries also. So as far as Climate Technology is concerned, sales is INR 51 crores versus INR 60 crores. That is 6-0. EBITDA, negative 2 versus negative 5; and PAT, negative 5 versus negative 3, which includes interest on acquisition loan as well as depreciation.

And coming to GSK China, top line is INR 12 crores, up from INR 9 crores; EBITDA, INR 1 crore. And so is the PAT, negative PAT of INR 1 crore corresponding period of previous year.

[Unknown Analyst]

And apart from that, with respect to since a month ago almost passed sort of for the second quarter, how have you been seeing the sales in the second quarter? Is the pickup -- because this is usually like right after summer. So what is the revenue looking like in the first month of operations?

[Nrupesh Shah, executive]

Yes. So as shared in the initial remarks, despite not a good summer, so far, our offseason collection is almost in line with last year. That's number one.

Number two, starting current year, of course, there will be some sales generated from adjacent category, more so from December quarter because still we are in the process of enhancing the range. And that will be in place in next 1 or 2 [indiscernible].

And I think there is a major thrust on this alternate channel, which mainly sales in March and June quarter because they don't buy in offseason. So -- and coupled with because whatever initiative or strategies we have decided to create substantially in rural and semi-urban market, we believe that year as a whole and in next summer even that should be helpful.

[Unknown Analyst]

Understood. Sir, last, like I had a couple of bookkeeping questions. First of all, there's a huge jump. There's a sharp increase in the other expense as a percentage of sales. So it is roughly 9% higher for the standalone business. So -- and I have seen that warranty expenses have increased drastically. Could you explain what expense these entail since it has increased by 3.5?

[Nrupesh Shah, executive]

First and foremost, it includes freight and forwarding expenses. It includes also warranty expenses, then it is also rent. It also includes traveling expenses. And as far as -- and there is also ForEx loss, which is on account of loan to GSK China, about INR 3 crores.

[Unknown Executive]

It is notional, so foreign exchange application.

[Nrupesh Shah, executive]

Yes. And legal and professional charges, et cetera. So all those combined under other expenses. However, in the same key chart, you would have seen that we have named some of the major expenses: freight forwarding, warranties, rent, travel, et cetera, et cetera.

[Unknown Analyst]

Understood. No, I just wanted to understand, there is a [ 2.4% ] as a percentage of sales increase. Is there any particular reason within any of those, so for example, like warranty or rent that has increased substantially vis-a-vis the previous year?

[Unknown Executive]

So Y-o-Y, there is some increase in rent expenses, and the [indiscernible], which is not in the June '22. So that is the major difference compared to June '22.

[Unknown Analyst]

All right. So the ForEx loss and rent expense.

[Unknown Executive]

Also...

[Unknown Executive]

Traveling expense, yes.

[Unknown Executive]

To understand is the voluntary expenses are more linked to the full year numbers. While when we look at it in the form of the quarter, it appears higher. But the full year numbers when we compare to that, it falls in line with what it has been traditionally.

[Unknown Analyst]

All right. Just one question. I was going through the financials and as for that, like usually, the bulk of your advertisement expenses usually in the first quarter. Could you give color like what is the seasonality on the advertisement spend, why it is more in the first quarter and later on sort of [indiscernible]?

[Unknown Executive]

So look, as you would recall, the selling season, the consumer selling season for air coolers is typically during March to June month. And of this, hence, the highest share of advertising and promotion for us through the entire year naturally falls in the actual May, June quarter. So for us, the highest consumer level engagement happens in this quarter followed by the March quarter, and that's how [indiscernible].

[Operator]

We have our next question from the line of [ Kavishi Mehta ] from ICICI Prudential.

[Unknown Analyst]

I have 3 questions. The first one is, can you throw some light how is the channel inventory plays at 1Q end? And also due to overall weak demand sentiment, do we see any [indiscernible] in channel behavior with regards to inventory buildup?

[Unknown Executive]

Right. So interesting question. So the first question first, the channel inventory as we see at the end of the June quarter, in some pockets across the country, particularly in parts of UP, Punjab and MP, the channel inventory is slightly higher than what we would have wanted. That is mostly on account of us having placed a good secondary sales in the market.

But due to unseasonal rates, some of these markets did not see as much tertiary as we would have ideally wanted those markets to deliver. So some of these positive channel inventory is slightly higher than our target and expectations. But overall channel inventories at the end of this year across the country is lower than the channel inventory that we had at the end of the previous year or for that matter, at the end of each of the last 3 years.

[Unknown Analyst]

Okay, okay. And given that the season has been weak during the current season, have you extended any schemes as a part of channel support?

[Unknown Executive]

So that's not something that we have done partly because, typically, July onwards, we get into the next year's planning and related collections. And this -- even at this point in time in terms of tertiary is a very small share of the full year volume. So we have not extended any of these schemes or additional support to the channel at this point in time.

[Unknown Analyst]

Okay. Okay. And my last question is with regards to the subsidiaries. So do you see this current margin as a sustainable margin for the subsidiaries?

[Nrupesh Shah, executive]

That's right. On the contrary at EBITDA level, neither on a standalone level nor on a consolidated level, the quarterly margin we wish to achieve and we have plan in place to achieve much better EBITDA valuable percentage margin because as I explained earlier, in the first quarter, some of the expenses are skewed, which [indiscernible] go over 1 year traditional line coupled with other points as explained earlier.

[Unknown Analyst]

Okay. So do we have any target for that?

[Nrupesh Shah, executive]

No. Ultimately, in terms of the EBITDA margin percentage-wise, we wish to be and we are targeting to reach a pre-COVID level percentage.

[Operator]

We have our next question from the line of Rahul Gajare from Haitong Securities.

[Rahul Gajare, analyst]

I joined the call late, so I've got a couple of questions, probably [indiscernible]. Now with respect to the Q1 performance, and I understand you've not seen [ season failure ]. But the standalone performance, even during [ season failure ] earlier has not been as bad as what we've seen in the first quarter. So I just want to have your comments on the standalone performance first.

[Nrupesh Shah, executive]

Not very clear about your question. Standalone performance, not...

[Rahul Gajare, analyst]

Sir, even when we have had similar [ season failure ] [indiscernible] because of rain, not enough -- the season [indiscernible] not being enough, where the sales have been low. We have not seen EBITDA margin at this same kind of like 2%, 2.5% for a very long time. So is there a specific reason that this particular quarter, we have had operating performance, which also [indiscernible]?

[Nrupesh Shah, executive]

Right. So Rahul, what we need to, again, understand is the nature of this business is such that the actual May, June quarter, the Q1 quarter for us is also the culmination of the summer season. And some parts of this spend for example, advertising, state support schemes and everything, they need to be done to support the business then through the entire year.

So as we mentioned earlier, these have to be -- these are incurred during the quarter. And hence, they -- for this quarter, they are larger because on the entire year basis, we have still done reasonable volumes, and we have still done reasonable growth.

If you just go a quarter before and a quarter before, we had been doing higher several quarterly numbers in the last couple of quarters. So now that material is there with the channel. This quarter is where besides doing our salary sales, we have to spend on multiple schemes incentives and so on to get the entire channel moving, get the consumers, get to the consumer even in terms of product delivery and all.

So seen from that perspective, one needs to understand that some of the spend made in this quarter are to ensure that all the primaries and secondaries done in [indiscernible] to this quarter are taken care of. So that's why this is coming this way. I agree that the EBITDA percent margin this year, this quarter particularly, is lower than expectations. And that's something that like [indiscernible] has mentioned earlier also, that's not a sign of how things would stand as we go forward.

[Rahul Gajare, analyst]

Sir, and second question was with respect to this entire retail that we have seen in various parts of the world. Now the Mexico performance, this is closer to INR 77 crores, whereas last year, I think that number was closer to 110, 120 in that range. So [indiscernible] Mexico performance of the run rate continuing this range because if that is the case, we're looking at a very strong growth in the Mexico business.

[Nrupesh Shah, executive]

Yes. So as I said earlier, neither Mexico performance nor Symphony India performance should be extrapolated for the whole year or new normal. Because Mexico, there has very consistent decent summer, and hence, it has registered this sale. In fact, it also caught up some of the lost sales of March quarter.

Having said that, normally, their season ends in June. However, current year, there is extended summer. So somewhat sales is happening in July even currently also. So in that respect, it is better off, but no way we are suggesting it is new normal, neither Mexico nor Symphony India.

[Unknown Executive]

Suggesting, Rahul, is the approach of geographic diversification and hence, trying to minimize the risk of adverse event in one geography affecting the overall consolidated numbers. It's something that these trends show that we'll be able to go through the right geographic diversification.

So that's something that could come closer to us saying this is like the new normal, where given a good geographic diversification across the globe, some region or the other will always do good, and maybe some of the regions for a given quarter or year will not do as good.

[Rahul Gajare, analyst]

Sir, I was actually thinking about the -- from [indiscernible] perspective. Have you seen any traction in exports? And that is the reason why I was trying to see how Mexico [indiscernible] other part of the world.

[Nrupesh Shah, executive]

Export reach in totality is not that significant. But coming to specific geography performance, as I had covered in my initial remarks, we have to talk about U.S., which is one large promising and significant market for us.

Home Depot, just like all other large organized retailers, cut back in terms of demand on account of destocking. But currently, because of a strong and good summer, we believe that considering the latest figures available with us, in many, many models, they are likely to be stock out in U.S., Brazil, which is in Southern Hemisphere.

However, preseason feel -- very initial indication, of course, seems to be quite optimistic and helpful. Even in Europe, we have made some beginning. We have employed some high-level resources. Of course, it's going to take some time to build up, but it's also moving in line with our target and budget and seems promising.

And frankly, this is what since long we are talking about derisking the strategy, whereby it's always going to happen some of the market or geography, whether in the country or globally may do well, while some may not do well. But in totality, ultimately we should make it up. So as you would have seen in current quarter, whether Symphony -- even though Symphony India didn't do that well, but the rest of the world made up part of the losses.

[Rahul Gajare, analyst]

So my last question is on the strategy towards local sourcing, especially in the Climate Technology area. Is there any change in that aspect, given the way freight costs have moved? Any thoughts on that change of strategy about more sourcing from India or the local [indiscernible] continues for Climate Technology?

[Nrupesh Shah, executive]

No, absolutely. You are [indiscernible] on that point. So as far as household air coolers are concerned, now it makes sense to manufacture and sale from India. So that's what's going to happen.

As far as local outsource, local in-house manufacturing or assembling is concerned, we are using substantially and in few quarters down the line, it will be completely outsourced business model, which includes the residential household from India for ducted coolers locally but through outsourced business model and for some other products from China.

[Operator]

We have our next question from the line of Nirav Vasa from Anand Rathi.

[Nirav Vasa, analyst]

I have certain queries based on the commentary which we have given in our FY '23 annual report, which was made with -- which elaborates our global strategy. So the first area that I wanted to understand is it pertains to our -- pertains to targeted market across GCC nations, where we have also appointed local representatives. So would it be possible for you to share some updates as to how we intend to get into this market?

[Unknown Executive]

So Nirav, we are already into that market, and we have been in the GCC countries, in each of the GCC countries for more than a decade now. Now what we have done and what we have mentioned in the annual report is to take the next level approach. So until now, most of the times, we have been focused on addressing this market through export-oriented team members based out of India.

Now we have changed that approach to also have a [indiscernible] level resource based out of Middle East itself to cater to the customers in that region and to build relationships and business in that region. So that's the additional work that we are doing with anticipation of further growth in the business in that market. But we have been in that market.

[Nirav Vasa, analyst]

Right, sir. And we are also looking at expanding our presence, our exports across countries like Egypt, Sri Lanka, Myanmar, Iraq, where a lot of currency and economic imbalances are there. So do you think those markets can be cracked early or it's a long-term aspiration?

[Unknown Executive]

Some of these markets that you mentioned, Nirav, for example, let's say, Egypt, Myanmar, at this point in time, there is a political and economic disruption in those markets. We have been doing business in the markets otherwise because the disruptions were there if, for example, there is a currency limitation that the government has imposed and we cannot get dollars out of that country. So for this year, at this point in time, the business is still awaiting resolution to this issue.

Sri Lanka, there was a political and economic turmoil, which has just recently gotten addressed, and we are now talking to potential customers there. So each of these markets, we have an exposure. We have active conversations with potential partners. And as and when economic conditions there are out, we would be in those markets.

Iraq is a good example. A couple of years back, it was doing almost nil business because again of the political situation. But over the last 2 years, we have a big business in that market.

[Nirav Vasa, analyst]

Sir, last question pertains to domestic business. How many SKUs do we intend to launch here for the forthcoming summer season?

[Unknown Executive]

That's something would be difficult for me to share on this call, Nirav, but we do intend to come up with new models. But unfortunately, I'm not able to share that upfront at this point in time.

[Operator]

Ladies and gentlemen, that was the last question for today. I would now like to hand the conference over to management for closing comments. Over to you, sir.

[Nrupesh Shah, executive]

Thank you, Equirus, and thank you, Manoj Gori. And thank you all the participants for sparing your valuable time on late evening. Thank you, and looking forward to meet all of you in next quarterly conference call.

[Operator]

Thank you, sir. On behalf of Equirus Securities, that concludes this conference. Thank you for joining, and you may now disconnect your lines.