Voltas Ltd
NSE:VOLTAS
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Voltas Ltd
Earnings Call Analysis
Summary
Q4-2024
Voltas reported a robust Q4 and FY24, with consolidated total income for the year rising 32% to INR 12,725 crores. The quarterly income surged by 42% year-on-year, reflecting strong demand for their ACs, which saw a 35% annual volume growth. Despite global challenges, the company maintained solid profitability with net profit after tax climbing to INR 248 crores from INR 136 crores last year. Their UCP segment grew 44% in Q4. The company has ambitious plans for expansion and is focusing on boosting capacity to meet rising consumer demand.
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Ladies and gentlemen, good day, and welcome to Voltas Quarter 4 and Financial Year Ending March 31, 2024 Earnings Call, hosted by DAM Capital Advisors Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Ms. Bhoomika Nair from DAM Capital. Thank you, and over to you, ma'am.
Thanks, Sagar. Good afternoon, everyone, and a warm welcome to the Q4 FY '24 Earnings Call of Voltas Limited. We have the management today being represented by Mr. Pradeep Bakshi, Managing Director and CEO; Mr. Jitender Verma, CFO; Mr. Nikhil Chandrana, Head Corporate Finance; and Mr. Vaibhav Vora, Manager, Corporate Finance.
Without any further delay, I'll hand over the call to Mr. Pradeep Bakshi for his opening remarks, post which we'll open up the floor for Q&A. Over to you, sir.
Hi. This is Jitender Verma, CFO. Mr. Bakshi is also here. And I will be opening the session with intro on our results, and then we will take up the question answers along -- Mr. Bakshi along with me.
So good afternoon, everyone. As we know that the financial year '24 remained an eventful year, starting with supply chain disruptions in the aftermath of Russian Ukraine, Israel Hamas conflict and the Red Sea crisis. All of these have led to a sharp jump in shipping rates.
Crude prices have also soared past post Iran-Israel war, spiraling into a considerable surge in inflation. Tightening of globally synchronized monetary policy has also caused unwarranted pressures on businesses. Despite many unfavorable situation, the world avoided a recession and the banking system proved largely resilient.
At an overall level, global growth remains buoyant in spite of the aforesaid circumstances, and the growth bottomed at 2.3%. For 2024, the IMF has estimated global growth at around 3.2% in 2024, which is at the same page as in 2023.
Back home in India, despite multiple global headwinds, India's monthly economic indicators like PMI, services like GST and direct tax collection supported robust business activity. Uptick in India's growth would continue to be driven by the government's make in India thrust and high infrastructure spends. Also narrowing of trade deficit and a lower CAD would support growth.
The IMF has estimated India's growth at 6.8% in FY '25 and 6.5% in FY '26. The company has seen record-breaking top line growth over the last year with the sale of over 2 million ACs in FY '24, indicating a strong market demand for the company's products, registering a quarterly growth of 72% and an annual growth of 35% in volumes.
The volume growth was also driven by split air conditioners, sales of which doubled in Q4 and grew over 50% for the full year. With this incredible volume growth, the company reported consolidated total income for the year ended March 31, 2024, which was higher by 32% at INR 12,725 crores as compared to INR 9,667 crores last year.
Profit before tax was higher by 58% at INR 486 crores as compared to INR 307 crores last year. Net profit after tax was at INR 248 crores as compared to INR 136 crores last year. Earnings per share or a face value per share of INR 1. For year ended March 31, 2024 was at INR 7.62 as compared to INR 4.08 in the same period previous year. For quarter ended March 2024, the consolidated total income grew by 42% at INR 4,257 crores as compared to INR 3,003 crores in the corresponding quarter last year.
Profit before tax was at INR 174 crores as compared to INR 214 crores in the corresponding quarter last year. Net profit after tax was at INR 111 crores as compared to INR 143 crores in the corresponding quarter last year. Earnings per share not annualized for year ended was at INR 3.52 as compared to INR 4.35 in the same period previous year.
The corporate balance sheet continues to remain healthy with the cash and cash equivalents at INR 2,835 crores as at March 31, 2024. You all have seen our results, so I'm not repeating the snapshot which is there. I go straight to the Segment A, Unitary Cooling Products or UCP, as we call it.
The year '23-'24 set a new landmark for the company and helped us set our dominance in the air conditioning industry. A year here driven by...
Sorry for the interruption. The line for the management and chairperson has been dropped. Please stay connected while we reconnect the management line.
Ladies and gentlemen, sorry for the interruption. We have the line for the management connected. Please continue, sir.
The split inverter category of air conditioners is in high demand, driven by consumers' desire to have products with an advanced feature and its long-term advantages of saving energy costs. The expanded product portfolio of Voltas with newer SKUs designed in-house and competitive pricing has resulted in increased share of the inverter AC category to over 80% during the year.
Based on the success of the inverter split category, the company has expanded inverter portfolio in the window air conditioner category as well at strategic price points during the year. Further, during the year, there was strong demand for premium category of products that is 4- and 5-star rated products, and the overall sales mix for Voltas for these products has also improved.
Strong brand positioning, distribution reach, leverage on the supply chain helped us retain our leadership position for the year with the YTD March market share of 18.7%. We continue to leverage our strength in traditional channels and increase our concentration in modern trade and organized channels as we continue to build an extensive network of exclusive brand outlets, or EBOs, including experience zones at strategic locations, all of which will help in strengthening the market share.
Voltas has maintained its leadership position in the air conditioner category for more than a decade and has maintained its lead over the competition. The brand is here to further expand its retail and distribution network, grow product portfolio and gain an additional edge over the competition. The company also registered a significant growth in volume in other cooling products, including air cooler and commercial refrigeration products.
The commercial refrigeration industry witnessed low traction throughout the year on account of reduced investment by the brands, more particularly in chocolate category, the growth of the commercial refrigerator category has remained tepid.
However, channel push and anticipated demand for cold beverages, ice creams from across the industry helped us clock positive results for the business. Nevertheless, the outlook for this category is promising and growth drivers are visible in the current financial year.
The air cooler vertical has emerged as a crucial extension of Voltas product line, providing an impetus to the company's position in the cooling industry. The acceptance of our high-end product portfolio, expansion of channel and tactical distributors team supported the primary delivery to the channel partners, which helped in reducing the growth during the quarter.
Voltas water heaters continued to gain good acceptance across the distributors and customers. The commercial air conditioning vertical also contributed to the growth journey for the UCP segment. Performance of VRF, light commercial air conditioners, packaged air conditioners, ducted AC reported notable growth across sectors. However, input price escalations and inability to pass on the same to the customers owing to stiff competition have impacted the margins for this business.
Increased commercial activity across the country, coupled with focus on customer retention and aftersales service supported the overall growth for the category. However, competitive intensity has lagged the businesses ability to garner margin accretive, especially in AMC jobs.
For the year, very consumer-centric finance schemes have also contributed significantly to increase in sales during the current financial year and would eventually help grow the market share going forward. Further, on the cost front, commodity prices have started to accelerate upwards, even USD-INR has depreciated over a period of time. Both of these have been detrimental to the profitability of the business.
Nevertheless, various value engineering and cost austerity drives have kept the profits in balance. To summarize, for the quarter ended March 2024, UCP segment registered revenues of INR 2,955 crores, a 44% growth in turnover from INR 2,049 crores in quarter 4 FY '23. The segment reported an EBIT of INR 270 crores in quarter 4 financial year '24, as compared to INR 206 crores in quarter 4 FY '23, a growth of 31%.
For year ended March 2024, UCP segment registered revenue of INR 8,160 crores, which is a 29% growth in turnover from INR 6,475 crores in financial year '23. Segment results was INR 693 crores in FY '24 as against INR 538 crores in FY '23, which is a growth of 29%.
On CapEx front, we are happy to announce that our expansion plans for both our factories in Chennai and Waghodia are in line with our target, and we would gear up for commercial production to be ready for second summer/festive sales. Both our upcoming plans will have strategic advantage of the location and help us cater to south and west markets. This will enable us to meet growing demand for the underpenetrated refrigeration products, which would in turn help us deliver a powerful performance to give our consumers comfort and convenience. With our story of volume growth, we are optimistic on utilization of our factories to the optimum scale and get the cost leverage on the business going forward.
Segment B, Electromechanical Projects and Services, the segment revenue for the quarter was INR 1,098 crores as compared to the previous corresponding quarter revenue of INR 746 crores, which is a growth of 47%.
The segment results for the quarter reported a loss of INR 108 crores on account of delayed collection in certain overseas projects. Healthy opening order book, quality PQ, more focused management after the transfer of business has translated into healthy business performance of the domestic projects business. The domestic projects business recorded a growth of 38% for the quarter and 73% for the year ended March 2024. The business continues to focus on governance, working capital management and high productivity to translate the orders into profits and in turn into better cash inflow.
The order path for the domestic projects business stands at INR 5,024 crores, respectively. For international projects, projects in Saudi continue to deliver good performance and drive the revenue growth for the business. Based on past experience, we reassessed our exposure, especially in Qatar, where we continue to face unreasonable delays in release of due receivables and prolongation of execution timelines.
We judiciously took provisions due to slow recoverability of receivables resulting in a loss for the quarter of this segment. While the region impacted the business result and the company has made the necessary provisions for the year, we are fairly optimistic. We do not have further setbacks from the geography, and the international business should be on its way to deliver positive results in the next fiscal year.
The carryforward order book for international business as at March 31, 2024, stood at INR 3,030 crores, largely in UAE and Saudi Arabia region. Total carryforward order book of the segment stood at INR 8,054 crores, vis-a-vis, INR 7,414 crores of carry forward orders as at March 31, 2023.
Segment C, Engineering Products and Services. Segment revenue and results continue to report improved performance for the quarter, registering healthy growth over previous year. Segment revenue for the quarter was INR 156 crores and EBIT for the quarter was INR 48 crores, respectively. Segment revenue for the year was INR 588 crores, and the segment results for the year was INR 206 crores.
Mining & Construction equipment vertical has achieved its targeted numbers despite facing pressure for margin reduction. India's infrastructure projects and the revival of the mining sector present growth opportunities for the business. M&CE focused on enhancing its market share in its part screen business and have a healthy supply of its machines. The recent allowance for commercial mining of coal and the relaxation of FDA norms in the mining sector by the government are positive developments for the business. These initiatives are expected to boost business for this vertical in the coming years. The textile industry experienced volatility characterized by fluctuations in cotton and yarn prices.
The textile market remained sluggish due to highly subdued export demand for yarn. As a result, CapEx within the industry has decreased across the sector, which led to reduced utilization levels of spinners. Despite the opposite factors, the business performance of our Textile Machinery Vertical, or TMV, reached all-time high levels due to its healthy order book and through continued focus on after sales business.
Voltas Beko. The home appliances industry in India has witnessed a healthy growth, fueled by the surge in demand for both large and small appliances. Voltbek leveraging Arcelik technical expertise and Voltas' strong brand presence, expanded its footprint in Indian households by manufacturing mainly in India products in Sanand, Gujarat and focusing on enhancing its distribution network, particularly in South and West India.
In the ensuing year, Voltas Beko achieved significant milestones, becoming the fastest-growing Indian consumer durables brand in just 5 years, selling over 5 million appliances despite multiple headwinds of COVID. Voltas Beko has solidified its potential -- solidified its position around the top brand in semi-automatic washing machines for '23-'24. Voltbek has also seen growth in the market share of refrigerators, washing machines and semi-automatic tabletop dishwashers.
Voltbek has delivered a volume growth of over 50% in revenue and quantity compared to last year, largely due to new product development and increase in billing locations. Voltbek is dedicated to expanding its market presence across various product categories and deploying customized approaches for market penetration and growth. These initiatives will involve [ prioritized ] top retailers adopting channel-specific practices to enhance market reach in key regions through retail and distribution channels, and maintaining a strong focus on boosting e-commerce and omnichannel development.
New product launches, including larger capacity refrigerator and enhanced features will help us in our growth trajectory to attain targets for breakeven and 10% market share.
Outlook. At the Board meeting held on May 7 '24 for adoption of accounts for the year ended March 31, 2024, the Board declared a dividend of 550%, despite various provisions taken by the company in its international project business over the last 2 years.
Board deliberated the importance of higher volume growth in its UCP business, which delivered healthy segment results and its commitment to pass on the share of profits to its shareholders. At the consolidated results level, this distribution of dividend amounts to a 72% payout of its profits during the year by way of dividends.
Cooling products being a weather-dependent and seasonal product, the summer period becomes critical for the industry and company for growth. The grunt weather forecast and increased footfall projects towards a sustainable growth. The company is adequately prepared to secure the opportunity both on supply and consumer demand front and will continue to pursue its aggressive strategy to strengthen market share in a profitable way.
For the project business, we will continue to follow cautious and adopt risk mitigated approach while selecting new orders. The execution of the orders in hand is paramount to ensure timely completion of the project with tendered margin. And we can open for question and answers.
[Operator Instructions] Our first question is from the line of Ankur Sharma from HDFC Life.
First question was on the room AC business. If you could share your market share as of end of March '24. And also, where do you think you can take this number to in the current year? We understand you've taken a lot of initiatives, especially on the modern trade side, ties up with a lot of large national retail brands. So if you could just help us where do you see your market share in current year? Second -- yes.
First is about the market share. I think my colleague shared with you our market share as of financial year-end on -- this thing is 18.7%. Yes. So year-to-date basis, it is at 18.7% on the room AC category.
Right, I understand. Is it possible to share the March number -- March end number, and also where do you see this number going ?
So you see, if you look at our market share for last about a year or so, it's been hovering around 20-odd percent. And also, if you look at -- this is the syndicated research numbers, which we talk about here. And they are actually -- there is always a lag in the numbers, secondary shares reported by them.
But if you look at on a primary sales basis, we have done about more than 2 billion air conditioners. And industry size has been rated as about 10 million. So we are about 10%, 20% as per primary sales reports as well estimates also. So this is the market share numbers as of now.
But if you look at the strategy you are talking about the strategy as to how we will take it forward. As you would have heard us saying that we have been trying to probably capture market share extraction from each of the channel now. We've been focusing on, besides the conventional channel distributors, modern trade, exclusive outlets, and also the e-commerce platforms. So every where, we've got a strong presence, and it is going to continue as we go forward also so that all these channels give us a proper market share. And our endeavor would be to continue to maintain and sustain this leadership position as well as market.
Also, if you look at whatever may be the secondary sales numbers being presented by this third-party syndicated research agency, international agency. But if you look at on the primary sales number, there is no brand which is closer to us. They're miles away from us without naming anyone of them. Many of them are still struggling to catch up with 1 million mark. And we clearly having crossed 2 million, with many of them, we have doubled in them.
However, when these numbers are reported by the syndicated researchers, it does not show up the correct market share figure. So what I am interested in delivering to my shareholders and stakeholders is to continue to grow with this kind of growth. If you look at the growth which we have spelled out in the quarter 4, it's more than 70% -- about 72% or so. And even if you look at the annualized or the total YTD financial year's growth on the room AC front is more than 35%.
And if you look there's another segment, which is the split category, which is dominant in the total room AC. Roughly around 85% to 88% or 90% sales is coming from the split category. There, we have been able to double up our number in this fiscal.
And also, if you look at even in the quarter 4. And if you look at on an annualized basis, also YTD numbers also, it's been about 54%, 55% or more than 50%. So from this, you can look at as to how we have been widening the gap with other brands. So I'm sure the shareholders would be interested in doing that rather than only knowing some number, which is out of all secondary sales.
Also, whatever we have from -- whatever material has gone into the market in the last quarter. Because secondary sales as I said, there's a lag. So now in the coming months, you'll get to see ideally, the market share, even as reported by the syndicated research should also go up. So I'm expecting that to go.
But we are actually confident that we are doing well for ourselves and for our shareholders in terms of giving them, providing them with the growth on both revenue front, also on the volume front. So this is what I say. And going forward also, our strategy is going to continue to strengthen the other channels, which we have started focusing on in the last 1.5 years. The other channels -- like channel like e-commerce and also the exclusive outlets, we continue to grow. We have been present in more than 325 exclusive outlets, more than 26,000 channel partners across the length and breadth of the country. So I think this shows the might of the brand. I'm sure I've been able to answer to your query, sir.
The next question is from the line of Rahul Gajare from Haitong Securities India Private Limited.
I've got 2 questions. The first one is on the project business. Sir, in the project business, is it possible you could share with us the provision that was booked in the fourth quarter? And whether all of this was specifically from the Qatar project. And if this is the last of the provision that we've seen over the last 2 years in Qatar and how are the projects in the other regions and your outlook for FY '25 as far as the project business is concerned?
So Rahul, I'd like to answer it twofold. If you look at the project business, overall project business, it is twofold. One is domestic project business and another one is the international piece. So if you look at our domestic project segment, which is UMPPL, which is our subsidiary -- wholly-owned subsidiary. There, you would have seen we have done pretty well. And you would have seen our growth in the revenue is and also the profitability. Yes -- growth has been about 20% in the revenue, and in the profitability also has been about -- how much is that?
The profitability is also around...
More than 30%.
Yes.
More than 30% growth in this thing also. And also, if you look at -- there are 3 segments into it. One is the infrastructure projects. In infrastructure there also is MEP, water and electrical. All 3 segments have done well. And for the very first time, we have crossed more than almost...
INR 90 crores.
In the infrastructure alone, we have done about INR 90 crores -- INR 95 crores, INR 96 crores. And other businesses also textile, machinery and mining construction also, it's been almost INR 100 crores each, about INR 106 crores in textile, probably INR 100-odd crores in the mining business.
So all these cylinders have continued to deliver in these last 2 years, if you look at, and they have continued to outperform the industry. Even the market shares in each of the segments also, whether it is textile machinery, it is more than 62%. Mining construction also more than 65% in the product where we sell and even in the infrastructure business, we remain one of the dominant players in India.
So coming back to the international piece, yes, of course, it has given us some headwinds in the last few quarters. And you will recollect, we have met you very recently, Rahul, and there also I had projected to you that it is largely coming in from one geography, which is Qatar. Some small pieces had happened, but that is almost about a year back. But off late whatever has come through is coming from the Qatar region only.
And we have proactively taken whatever we thought probably is delayed payments, et cetera, we have taken into account, and we have already provided for. So going forward, hopefully, we are confident there will not be any further provisions. So except for one, continued liability, which we have already shared with all of you all along, which is one in Qatar, in the one hospital Sidra , which I'm sure all of you know that. So except for that, I think we are all good to go from here.
And if you look at the 2, 3, 4 major projects, which are continuing 2 in KSA, Saudi Arabia, 1 water theme park in KDI and another one hospital project, which is doing well, we are continuously delivering, executing it well, and we are recovering our deals, everything from there. Then another one in Dubai, that also -- so everything is going on well.
On the current projects which are being executed, the large projects, we've been doing reasonably well. So I'm confident as we go forward, this will all be a past for us, international whatever issues we had, and it should be a healthy proposition in the international business also as we go forward.
In fact, to add to that, I would say that whatever provisions we have taken, if we are able to collect in the near future, that would give us an opportunity to write back these provisions, that's an opportunity for the coming years.
So also -- let me correct. If you look at -- I stand corrected, our growth in the -- at the EBIT level is 61% in the infrastructure universal domestic piece, which I was talking about. And the turnover growth has been 73%. So I stand corrected on that because I was talking only one leg of it. Now put together all 3 pieces, this is the final growth numbers.
The next question is from the line of Pulkit Patni from Goldman Sachs.
Sir, first one is just an observation. It is the first time you released a number in terms of volumes right at the end of the quarter. Is it a practice that you're going to be continuing going forward as well? Every quarter, we would get to know the volume number immediately thereafter?
Pulkit, see, this was a very, I would say, an extraordinary achievement where we achieved 2 million. And that is why immediately after the quarter end, we had...
Of course, also whenever we get an opportunity, whenever such milestone achievements will continue to happen, which we foresee happening as many of our businesses have been doing pretty well, so we'll continue to inform our shareholders and investors and all the stakeholders so that they are appraised of whatever developments have been happening at our end. That will be our endeavor.
Okay. So I'm assuming this is not going to be every quarter, but only if there's a milestone. Sir, now my question is, as I look at your revenue for this year for this segment, INR 8,000 crores, historically, when you were doing INR 4,000 crore revenue, you were reporting 13%, 14%, 15% margin. This time around, we are at a much lower margin number. Now while Mr. Bakshi spoke about how growth focused you are, how should we look at this margin going forward? Because with such strong volumes, at least we were expecting some bit of operating leverage to reflect in your margins a lot better. That would be my question number one.
Shall I answer?
Yes, sir, please.
So if you remember when I talked to you last time also, as we are looking at growing the businesses and our primarily focus is on increasing the volume and the revenue. And at the same time, last time also, we said that we will continue to deliver a high single-digit growth. And I'm sure you will all appreciate that we have continued to deliver. And actually, over the last time was reported, we have done slightly better on that also.
So yes, in RAC, if you look at alone, the margins have moved from 9% to 10% on a quarterly basis. And therefore, I think probably as we move forward, we're trying to improve on that. But when you go from INR 4,000 crores to INR 13,000 crores, you please appreciate. For that, we'll have to -- we cannot continue to make 12% and 13% margins.
But even if we've been maintaining high single-digit growth, and I'm sure you would have seen many other brands also reporting the numbers, how many of them have been able to maintain this kind of EBIT number. So I think probably we've been doing reasonably well in delivering to the expectations of the shareholders, and we'll continue to do so as we go forward.
See, the point here is that with our increased volumes, the rupee profit or the rupee EBIT is on a much higher trajectory and that is which adds to the earnings per share of the -- which is the important thing for the shareholders. So if we are focusing on higher volumes and delivering higher margins in rupee terms, that is the goal and the growth.
And also, in line with that, we have also given the dividend ratio, 550% this time as against 425% last year. So I think you will understand our intentions to pay more to the shareholders. That's how we are looking at it.
No, sir, completely understand. I think clearly, the volume focus is visible in every way. Sir, my second question is on CapEx. Now obviously, volume being such a big focus, you're doing some CapEx. Can you just talk about where we stand in terms of capacity? And obviously, India is a growing market, how do we intend doing CapEx to build that capacity even further?
Yes. So very good and important question at this juncture, especially. You see, I was going through a couple of reports, news items wherein it is shown that across the Asia Pacific region, the heatwave is quite intense. And coming back to India, which is our main prime focus market, there also, country is very hot and humid at the moment. It's unbearable, and temperatures are hovering around more than 40, 45 degrees in several places. And therefore, there is a great demand of compressor products, so much so if you look at my growth in the last 2, 3 months, it's been more than 70%, 75%, which is unprecedented. And I'm sure howsoever good planner you maybe as a brand or as an organization or as a person, individual also, I don't think this kind of growth would have been planned by anybody and would have expected.
So as a result, what has happened is the stocks have started to disappear from our warehouses. Factories are augmenting their production capabilities, but that is getting outpaced by the sales demand. And therefore, willy-nilly and actually, we are trying to invest a lot of CapEx into augmenting our facilities and gearing up to cater to those rising demand. So we are, as you would know, as announced earlier, we bought out a very large land parcel of about 150 acres. In my opinion, probably this is going to be the India's largest manufacturing plant, which I'm going to set up in Chennai, which is going to go live by the end of this month. And this will take by many -- this will take my manufacturing to almost another 2 million as we go forward.
So immediately, 1 million will catch up from this year itself will start in the next 1 year's time from May, June onwards, until the next May, June, I'll add up at least 1 million to my production capability. Currently, my manufacturing plant in Pantnagar is giving me a capacity between 1.3 million to 1.5 million. So I would be able to reach to about 2.3 million to 2.5 million, which is suffice my requirement for the current year. But I'm going to add up to that another 1 million in Chennai. So I am trying to catch up with the game in next 2 to 3 years, when I hit about 3 million, 3.5 million, I would be safe in able to cater to this rising demand.
So we're spending amount on product development, we are spending amount on augmenting production facility, not only in the room AC, but also in the other product categories, our commercial refrigerator products in Waghodia, our commercial air conditioning in Waghodia, that is near Baroda. We have set up a plant which -- wherein also, we have invested a lot of CapEx, and we are augmenting capacities in both these plants as well. And then also at Sanand in our Voltbek range of appliances also, there also, if you look at our numbers, we have done almost touching 1 million each, refrigerator and washing machines. So there also, we are gaining grounds. Our market shares are increasing. Our volumes are increasing. And therefore, we need to augment all these capacities to be able to live up to the consumer requirements. Have I answered, sir?
Yes.
Our next question is from the line of Nikhil Kale from Invesco.
Just wanted to check one thing. I think you mentioned that your RAC margins have gone from 9% to 10% on a quarterly basis. Just wanted to understand, did I hear it correctly because on a UCP basis, it's still 9.2%, so that would suggest that the other segments are pulling it down. Is that understanding correct?
Yes, absolutely correct.
Yes, RAC definitely increased. There was a slight bit of headwind on the commercial refrigeration and CAC. But as Mr. Bakshi has already mentioned, we still continue to maintain according to our guidance, which we have given to the investor community of, high single-digit margins, and we are within that, quarterly ups and downs notwithstanding.
So fair to say that even full year basis, you would be northwards of, say, 9% for the RAC segment?
On a, I would say, yearly guidance basis, I would still maintain the same thing of high single-digit growth on market...
No, sir, I am saying for FY '24?
For the full year '24, the numbers would be down closer to 9%, I would say, which we have already reported. If you were looking at those RAC, yes.
Got it. Just on the project business, we've seen very strong growth in the domestic side of things. So now what proportion of our total revenues is coming from the domestic side? And again, there, would it be possible to highlight what kind of margin levels are we seeing?
For the total project business, our guidance on the project business, I would say, Domestic as well as International, has been between 4% to 5%, and we would continue to maintain that. As we have seen in the last 2 years, we had to take certain provisions in the international business. So if we exclude that, as we expect that majority of the problems are behind us, and we should be looking at a better future international business also, so we expect that. Our domestic business has continuously been doing good, especially doing much better after the business transfer agreement was complete, and that has been a very positive thing to the same business.
So if I were to answer on your very question that -- basic question what you said is, the domestic businesses contribution in the project business, if you have looked at my order book, it is -- the domestic business is double than the international business. It is INR 5,000 crores plus and there, it is INR 3,000 crores. So we are definitely more focused on the domestic side of our project business, where we have got a better handle and control. And therefore -- and also this business has been doing well reasonably for the last couple of years. You would have seen it is growing. It has shown reasonably good growth, our water projects as well as electrical projects, besides the MEB, which used to be our mainstay earlier on, we have been doing well in all these segments. And there, the margin is also slightly better, and therefore, we'll continue to focus more on this.
And if you look at in this business, the beauty is the return on capital employed. And if you look at in this window, return on capital employed, only the infrastructure piece is about 40%, over 40% or 49%. But if you look at this universal piece total, it's almost about 100-odd percent, 89% or 90% roughly. So I think this is what we have been focusing upon, and you rightly noticed that we want to focus on the domestic piece more than the international piece.
The next question is from the line of Bhavin Vithlani from SBI Mutual Funds.
I have a couple of questions. The first is, as you mentioned, the very strong growth in the industry, industry stocked out, and even then you're guiding for high single-digit margins. So we are not seeing margin expansion. So if not now, then when? That is question one.
The second is, if you could maybe take out -- if you just help us with what is the provision that you made in the overseas project because we're seeing a negative hundred in it. So what actually is the provision? And taking that provision out, what is the EBIT margin in the projects business for the quarter as well as for the year? You gave some return on capital number, it will be helpful to understand the absolute EBIT in this.
Third is, in Beko, you had earlier guided for breakeven in FY '25 and positive trajectory on the margins from there on, and you get to a high single-digit margins in Beko as well. If you could just help us where are we in that journey? So that -- these are my questions.
So okay, I will answer some of your questions and the question. So first of all, if you asked about the growth, see, industry growth has been, as per the syndicated research, it's about 20-odd percent, if you look at. And I shared with you our growth in quarter 2 has been 72 -- quarter 4 is 72%. And on an annual basis, it's been more than 35% in the AC category. And if you look at all unitary cooling products also, it's been more than 30% growth, which we have registered. So that's one piece, and we are growing faster than the industry.
Secondly, during the peak season, when you say, if not now, when will the margin expansion happen? Suddenly, during the course of the season, it becomes very difficult because dealers have already -- your customers have already placed orders on you, and you have already given them pricing, et cetera. And suddenly, you can't go back to them that I'm increasing my prices with immediate effect and therefore, start making more margins. So that becomes a little difficult at the moment. But of course, we'll keep our eyes and ears closer to the ground and see if whenever as and when there are opportunities and there are other challenges like demand supply, gaps, et cetera, that time we will see as to how do we move forward in that direction on to that.
And second question is about?
He asked about the margins on the project business, which I already answered.
Project business margins, we've already shared with you. It's been hovering around 4%, 4.5%, 5% at the EBIT level. On a gross margin level, they've been higher, yes.
And then the third is on breakeven.
And coming back to VoltBek and the breakeven that we answer you on that also, see VoltBek also is continuously showing growth. Our growth this year has been more than 50%, has been about 53% on the entire consumer durable category, refrigerators, washing machine, microwave and dishwashers. So coming back to I had -- yes, of course, we did talk last time when we spoke that we are talking about making the EBITDA level, we said we will be breakeven by the end of the financial year '25. Yes, of course, we still maintain that, and our endeavor is in that direction, one.
Secondly, we talked about, yes, after that post that from next to next year onwards when we move after '25, '26, '27, we'll start generating profit out of this category. But I don't remember I having told you that we will make high single digit in this category at that point in time when I discussed. But yes, of course, we said that our journey has begun of late, we are a bit late entrants in this category.
So yes, of course, we will start registering profit. But high single digit, it will take couple of years to reach on to that. But of course, as we go forward, our endeavor would be to definitely generate profit from this business too. And market share, of course, we are saying we plan to take it to 10%. If you look at some of the categories, if you look at refrigerators as of last March and report market share is 5.3%. Washing machine, all washing machines put together is 8.3% or 8.5% rather.
And if you look at the semi-automatic washing machines alone, there our market share and direct cool refrigerators also if you look at, you know semi-automatic washing machines, we have already, as of March end, we are at 15% market share. So I'm sure you will appreciate the effort which the team has put in to take us to this level. And as volumes get built up, the profitability will automatically start falling in place.
The next question is from the line of Girish from MS.
I just had a couple of bookkeeping questions. If you could help us with on VoltBek, your revenue for FY '24? And of the 26,000 touch points that you have on AC, how much is VoltBek right now selling at? And if you can give the billing points as well from a dealer perspective? And the second question was on AC. If you can just break us through the UCP, on commercial refrigeration, commercial AC and air coolers for FY '24 year ending, percentage?
So I will give you two-fold answer to this. One is when you say how many dealers or touch points we have, we've got more than 12,500-odd channel partners, who are selling refrigerators and washing machines for our VoltBek range of appliances. You talked about the turnover. Turnover is INR 1,585 crores as against INR 1,500 crores the budget, which we have taken for ourselves, and as against INR 1,088 crores in the last financial year. So this is the answer number two to your questions. And what is that you asked, sir?
Sir, just wanted, for FY '24, UCP breakup around how much of percentage is coming from commercial AC, commercial refrigeration and air coolers?
In terms of revenue, sir, if you are asking me. So we had done about INR 1,000-odd crores in commercial refrigeration. We had done about INR 1,300-odd crores in commercial air conditioning. This is how it is, and you can calculate the rest.
I just want to highlight on the VoltBek, when you asked us the revenue, we have told you the numbers, but these are not consolidated in the Voltas numbers. VoltBek being a 50-50 joint venture, we take only the profit and loss numbers, not the revenue numbers. So these are not included within our top line, just for your information.
Can you give us a guidance on CapEx? I may have missed it. For fiscal '25-'26, how much are we expecting to incur on capital expenditure?
'25-'26 is little farther, sir. I would like to answer limited to this year itself because we have not budgeted for next year, the CapEx probably, we'll do it.
'25-'26, no.
'25-'26 is a little distant. So I think I'll be able to answer a couple of months later when you ask us this question.
Fiscal '25 would be how much, sir?
'25 CapEx budget?
Yes, sir.
See, we had already announced that we will do a CapEx of INR 500 for our Chennai factory. So you can take that, approximately half of that was capitalized or rather capital work in progress for last year, and roughly about half will be within this year, FY '25, including for our Waghodia plants and other things. So roughly about that much.
But besides this, we are also augmenting our Waghodia plants, both the commercial AC, commercial refrigeration. There also, we are spending money almost to the tune of additional more than INR 200 crores, INR 250 crores during this year. And also to augment further on the Chennai plant besides what we spent about INR 220 crores, INR 230 crores. Balance part of the INR 500 crores, INR 550 crores will get spent during this year.
Ladies and gentlemen, we will take that as our last question for today. I would now like to hand the conference over to Ms. Bhoomika Nair for closing comments.
Thank you for such an opportunity to host the call, and wish you all the very best for the upcoming year. Thank you very much. Any closing comments from your side, sir?
Yes. I think we have made our intentions very clear that we will focus on growth and fire on all cylinders in all our business segments where we operate, we want to retain the leadership position. And this is clearly evident from the fact that while maintaining our volume growth, we have also been maintaining our margin leadership, which is a crucial thing. And I hope that the investor community and shareholder community will be happy with our results. I would say that should continue.
And we look forward to your continued support and confidence in brand Voltas and in us, and we'll continue to deliver on whatever commitments we have been making to you. Thank you.
Thank you. On behalf of DAM Capital Advisors Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.