ACRYSIL Q1FY23 Earnings Call Highlights
Seeing favorable tailwinds and stabilization in freight cost and softening of input prices.
Increased dealer network from 1,500 to 1,880, further plan to increase domestic foothold by increasing dealers to 3,000 by end of FY '23. That's doubling the dealer expansion. Witnessed strong volume growth across all the categories for Quartz sinks using appliances and process. This is a result of the increased production capacity, increasing branding promoting activities in domestic markets.
.The company is going to launch several new models for India, U.S., Europe and U.K. in coming months.
Supplying Quartz kitchen sinks for IKEA for their global requirements. Partnership with IKEA has further strengthened with IKEA doubling their current requirements. Additional production and supply started in July 2022. This expansion of order of IKEA is a testament of commitment to meet schedule delivery and product quality standards. Continuously striving towards building new partnerships and tie-ups in international market with global players.
In stainless steel category, the company's manufacturing stainless steel using technology, which allows the company to penetrate metallic like Gold, Rose Gold etc. The company sells a wide demand to be exported things to Canada, New Zealand and Australia. Also we're going to start exports to GROHE, Germany.
The company is observing strong demand for faucets and hence the company is starting assembly line for kitchen faucet manufacturing with CapEx of INR 5 crores with a capacity of 100,000 pieces per year. The project is expected to be completed by end of December 2022.
Filed a worldwide patent for green thing technology. Acrysil will be the first one in the world to launch green thing made out of bio green quartz from organic materials such as spinach, beetroot and charcoal.
Export may witness some moderation in quarter 2 FY '23 going to macro challenges and different travel trends, including the geopolitical situation. On a full year basis, company will continue to witness a good healthy growth overall business, the already growth trajectory and aggressively building brand renovation adopting differentiated technology.
Total sink market is about 5 million sinks. Premium market where opportunity lies for ACRYSIL is about 30% of that. Talking about 1.5 million sink premium to our clients. Against that, doing the quantity at about 120,000 numbers approximately a year. Just scratched about 10% of the market share.
Have new models for IKEA planned to develop in quarter 3, which will get impact in quarter 4. Overall IKEA business looks very nice. Also looking at the reserve opportunity for stainless steel sink and faucet. So the first part of the stainless steel sink audit has taken place. The IKEA team is coming end of the month for the final commercial negotiation. Believe that the stainless steel project will take off with IKEA very soon.
Will see acquisition benefits of cross-selling very soon in quarter 3, quarter 4. The worktop business is a integral part of this thing, and have been identified as the most important category. It is going to be one of very strong growth verticals. Would be entering into this space by way of distribution and then finally backward integrating it to business. Will be able to control the channels more strongly and once done in U.K., plan to take this glory gradually in the U.S. Plan to do it in India and then going to plan to take it across the world. Once have kind of got a sizable business to about $100 million, then will be able to looking at doing a backward integration for manufacturing which will then help to create a large capability, opportunity and a huge market penetration to be challenged where acrysil is not present.
The demand is going nowhere. Secondly, sales are still very strong. The overall business is very strong. It is just that temporarily softening because of the absence of consumers, out of their homes, out of their markets. Once they are back in, Christmas season is going to kick in. People are going to be in the festive mood. The inflation is gradually tapering, the geopolitical situation is improving.
Expect for the next 2 years not going to leave any stone unturned, going to strive to maintain growth levels at 25% to 30% for the next 2 years' time.
To a large extent, sluggishness in the export market will be compensated by the Indian sales.
Looking at least 30%, 40% growth of Quartz Sinks in India. Last year, the stainless steel sinks in India, sold about 50,000 sinks odd. This year going at maybe 100,000 sinks annual rate, close to a double.
Solar plant cost would be around INR 15 crores to INR 16 crore and would get around INR 4 per unit saving in the energy cost. Around 60 lakh unit per annum generation capacity.
Putting up a new R&D engineering center for upgrading the technology to improve the efficiency, to improve the quality.
As far as the ERP system, have started the SAP process, plan to complete by end of the year, March. We'll get the whole ERP system in place. Appointed Deloitte to try to take whole Acrysil to the next level. So within the next 60 days, will probably hear an announcement from acrysil that what is the next gold-set of the company, for the next 5 years' time.
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