Kaynes Technology India Limited (KAYNES) Q1 2027 Earnings Call Transcript

Ladies and gentlemen, good day, and welcome to Cain's Technologies India Limited Q1 FY27 ONS conference call hosted by Access Capital Limited. As a reminder, all participant lines will be in the lesson-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star, then zero on your touch-tone phone. Please note that this conference is being recorded. And now in the conference, over to Mr. Nikhil Kandul from Access Capital. Thank you and over to you, sir.

Thank you, Niro. Good morning, everyone. On behalf of Access Capital, I welcome you all to the Q1 F527 Earnings Concord of Keynes Technology India Limited. Today, we have the test management, represented by Mr. Savita Ramesh, Chairperson, Mr. Ramesh Kunnikanam, Executive Vice Chairman, Mr. Muthukumar Naranswamy, Managing Director, and Mr. Jairam Sampas, Full-Time Director and Chief Financial Officer. Now, I'll handle the floor to the management for the opening remarks, post which will open the floor for Q&A. Thank you and over to you, sir.

Good morning, Nikhil. Thank you, Nikhil. Good morning to... Thank you, everyone, and thank you for joining us. On behalf of Keynes Technology team, I would like to welcome all of you to our Q1 FY27 Earnings Corps. Joining me today are Mrs. Savita Ramesh, Chairperson of our Board, our Managing Director, Dr. Muthukumar Naranswamy, Mr. Jairan Sampath, Whole Time Director and CFO. Mr. Sumit Verma from our Investor Relationships and MUFGIR, our Investor Relations Partners. Let me begin with a brief overview of our financial performance for Q1 F527. Our total revenue stood at INR 946 crores, reflecting an year-on-year growth of 40%, which is largely driven by EMS business. EBITDA for the quarter was 147.6, crores translating into an EBITDA margin of 15.6%. And 31% year-on-year growth. We have a robust order book of around INR 9,000 crores. Before I go further into the numbers, I want to spend a few minutes on something more important than any single quarter's performance, and that is the confidence you have placed in gains and our responsibility to earn it back quarter after quarter through consistent delivery. Over the past quarters, our entire leadership team across strategy, finance, operation, and investor relations As worked with one shared priority demonstrating our progress to investors, customers, and partners, through visible, measurable delivery rather than commentary, that focus comes directly from listening close to you. Following our quarter four and full year FY26, several of you raised fair and direct questions. On the gap between our stated aspiration and delivered performance, on the base of our working capital normalization, and on the clarity of our communications, we look... We took that feedback seriously and it has shaped exactly how we have operated this quarter. Our two strategic growth engines, Kane Semicon and Kane Circuit, remains a key management focus. Like the rest of the industry, we saw some disruption this quarter from the escalation in the West Asia, affecting equipment imports and component logistics globally. Not specific to games. This led to minor timing slippage in our OSAT and PCB ramp-up schedule. We have responded with the same playbook that served us through past discussions, diversifying logistics rules, building strategic inventory on critical components, and working closely with Equipment vendors and alternate schedules. Both Kane Semicon Unit 2 and Kane Circuit Chennai remains on the track to be operational by quarter 3 FY27, and we will continue to update you transparently on our progress every quarter. In a few minutes, Dr. Muthukumar will take you deeper into the business, our core EMS performance, and other businesses. He will also cover the new customer wins and recognitions this quarter, our leadership and sustainability initiatives, August electronics integration and overseas expansion, progress on OSAT and PCB, including a new... International partnership and a marquee automotive opportunity and our entry into space technology. He will close as I will too on why balance sheet strength says non-negotiable as we scale. Moving fast in a more competitive world. Before I hand over, I want to spend a moment on something that sits above any single business line, that is speed. The world we operate in, electronic semiconductors, and EVs, space technology, is moving faster than it has ever, and the commodity set. We are up against in India and globally. It's moving with it. Being right is no longer enough on its own. We have to be right and fast. That means shortening the distance between a strategic decision and its execution on the ground. And it means building the muscle across engineering, supply chain, and program management. To execute with precision, even as we move at pace. This is a discipline we are actively building into, how Keynes operates, not just something we aspire to. The domains we are scaling into semiconductor packaging, PCB manufacturing, space technology, aren't just important to Keynes. They have foundational... To India's ambition in electronics and deep tech manufacturing, and being part of building that capability, is something we take seriously. That said, work this new comes with a learning curve, and we won't... Pretend otherwise. What we can commit to is this, that we are learning quickly, converting those learnings into better execution the next time, and building the governance to make sure lessons learned in one part of the business don't have to be relearned in another. That combination moving fast. Executing with precision and learning faster than the curve demands is the standard we are holding ourselves to. With that, I would like to hand over the call to Dr. Mutukumar, our Managing Director, who will take you through our operational performance in greater details. Thank you. Over to you, Mutukumar.

Thank you, Mr. Ramesh, and a very good morning to everyone. Thank you all for taking the time to join us today. Mr. Ramesh explained about our revenue growth and EBITDA, how we have performed, and also what are the strategic initiatives. Achieving a 40% year-on-year growth in the Q1 and looking at the numbers. This has been specifically come with the reduction in the growth of about smart metering business when compared to Q1. We have taken the feedbacks of various stakeholders, and looking at the current situation of our balance sheet and centering sheet, we have taken a conscious decision of growing more in Electron EMS business, which is our traditional and core business. And we have de-grown in the smart metering business, not because we don't have capacity, not because we don't have business and orders, but we put our foot down saying that we need to make a collection first to make sure that we continue to supply. The current situation in the places where we are doing the installation of meters due to the natural calamity of floods, which has also impacted this by keeping everything, our objective of bringing the balance sheet to a better shape, we de-grown. But our team of the leadership team, the operating team did an excellent job of growing in the EMS business, stand-alone as an EMS business growing much, much higher than the 40% overall growth. There was a promising top-line growth. We agree, but as Mr. Ramesh said, we at the Canes and our board of directors doesn't look at for a quarter-to-quarter, but for a long-term strategy. But when the growth is good, we also see the impacts on margin due to cost escalation driven by global supply chain issues. And the macro factors such as rise in the energy and the crude prices, the commodity prices, and the forex movement, which in turn led to a rise in the commodity prices. We expect this could take a couple of quarters and profitability to normalize and return to the levels as we ideally committed to. Yes, Keynes did good in the quarter of things, but this is due to the strategic initiative of understanding the market is going to go like this. The management team took a decision to pull forward and keep the materials ready. There is a sharp increase that's happening in the entire supply chain, which is leading to take time for supply to the extent of more than six to eight months in some categories, and the management team has already taken initiative to ensure that Enough materials on the pipeline is available with us to take care of the business commitment for the future quarter. Well, one of the questions that has been asked by you is, are we growing in the EMS business? I have answered yes. Even when we have de-grown the smart meter business, we continue to grow on EMS business. I'll talk to you about smart meter business for a while before I go into the new customers. Turning into smart monitor business specifically, growth here was flat to negative this quarter. This was compounded by an impact on installation due to the flood situation as we explained earlier. In terms of working capital, even though the number of days has moved from 190 days for the quarter standalone, and if you took it at 12-month rolling, it is about 163 days. I wanted to emphasize that in terms of the EMS business, the team did a good job. If you look at the total sales of about 942 crores, the revenue that has come from the EMS business is 844 crores, that is, including GST. And the team did a remarkable job of collecting 847 crores, thereby ensuring that one of the highest collections for this quarter. However, the sales in our grid press, which is a metering business, is about 240 crores, whereas our collections is 88 crores, which is what made us to take a decision to stop productions and supplies. which will have a reasonably a better cash flow. Having said that, we have taken up at all levels in the Griffith business, and though late, we have got about 200 crores of money in the first week of July, which gives us the confidence that whatever the commitments that we have given to you as the leadership team, that by the end of the financial year, we will turn the cash positive, we are pretty confident on this. Though our inventory levels in terms of the working capital has gone up by about 150 crores, as I said, this is a strategic decision that we took in the month of February, looking at the global market situation and the volatility. Just because our team has added upon the inventory there, we could be able to successfully grow at 40% of plus. And the EMS business alone is about 48%. This inventory increase has helped us, and this will also take us to the next level.

We also talked to you earlier about some delayed delivery for a government product.

I'm happy to say that that business also helped us to come to some normalcy, and about 30 to 40% of the business has been executed in the last quarter, which you can see the increased growth in the various segments, which we'll talk about. Going forward, we'll also be providing you the rolling 12-month view of these metrics on receivables or payables or net working capital rather than the quarterly average so that you all get a picture of the long-term growth. On the existing business, I also wanted to bring it to your notice that the receivables from our leading electric vehicle are two-wheeler customers. Whereon, most of you are right, the concern has come down significantly to below the 100 floor, thanks to the continuous efforts of management in working like a partnership with the customer to bring back the money that we only have. Having talked about the balance sheet, as Mr. Ramesh or Executive Vice Chairman said, We strongly believe that P&L is very important, but balance sheet is going to be clean. So going forward, we'll continue to spend and ensure that the team is working, making a balance sheet much, much better than what we are doing now. Moving into the new business, let me talk about the new business and logos that we added to our portfolio, along with an update of existing logos and their impact on our business going forward. We added one of the India's second largest two-wheeler electric vehicle manufacturers to our existing EV portfolio. The team did a remarkable job of completing the product development testing in a record of about eight months, and now we started serial supplies to this. Along with this, we have onboarded global brands from Germany and France, one of the India's leading wireless communication companies, and a handful of other new logos together. Both our automotive team and non-automotive team are doing an excellent job of bringing more than, in a quarter of about 90 days, and wherein we had a working day of 75, we had more than 72 customers who have walked into our company, which talks about the customer confidence into our company. I'm pleased to share that one of the biggest achievements this quarter was receiving an all-around performance award from our major customers, which includes Mahindra. And that too for a quality and overall commitment to development. We got a best award from Siemens, the top supply recognition award, and of course, development partner excellence award, which gives them a confidence to tell how our customers believe in us. And of course, we made some more on the best delivery and development support. We also wanted to highlight Kane's commitment to building our next-generation leadership team. This quarter, we completed... A full mapping of skills and capabilities for every individual across the organization and we have begun a special training program to prepare a high-potential talent to the next level of challenging leadership role. Cates is committed to sustainability, as all of you know. As a part of our Go Green initiative and to reduce the carbon footprint, we are actually working with the government of Karnataka on a research land which is about 20 kilometers of our facilities in Mysore. To plant 10,000 trees across 20 hectares of land, contributing meaningfully toward the environment. We also plan to increase our consumption of renewable energy at the power source for our factories. To 3 gigawatts of solar, installation is in progress, leading to 23% reduction in energy intensity in the last two years. You all know that we acquired August Electronics in July of last year. And at this point in time, we have completed one year of a successful acquisition. As Mr. Vice Chairman said, this has given us a good inroads into the North American market, and our acquisition at this point is shaping up very nicely. It's a good EBITDA margin business, and we are hopeful that growth will accelerate into our overseas business going forward, and also bringing in more of value additions to India. Not just from our subsidies, but also increasingly export-oriented business as well, with a key global player like Honeywell, Otis, Eton, and many others. Let me turn to the newer business, Oset and PCB. I'm sure that everyone is looking at this. I want to specifically congratulate our subsidiaries head for taking the commitment across all the levels. The team is working extensively to make sure that our commitments are honored. The CAPEX done in FY26 was 473 crores for OZAD and 324 crores for PCB. Our current goal is to CAPEX at about 300 crores for OZAD and PCB. But as I said earlier, with the subsidies coming up, we'll be funding more. And as we have more customers, we have to move. Cash is not a constraint here. We want to make sure that the modular investment to make sure that we have a shift and balance is on our CAPEX spending and revenue. We also received, happy to say, that we also received the government subsidies to the tune of 170 crores in OSAD business till July 26. On OSAD specifically, our partnership between Mitsui and Cane Semicon is a major milestone of our subsidies. I congratulate our team for entering into such a strong partnership, and that gives Cane Semicon the opportunity to access a significant market opportunity in Japan. On the PCB front, we are seeing a strong traction and interest from the global players. You all know that the market, when it becomes volatile, and when it becomes a supply chain lead time is more, PCB is one component where it is getting into the global shortage at this point of time. The suppliers are demanding that we need to pay advance, and it takes about 6 to 8 months even for order booking. This is the time I think change is entering into this, and our commercial production is set to start from the next quarter, and our team is doing the last-minute finishing of the capital, and we are on track as per our commitment. We are also happy to say that we have a recent engagement with one of the largest EV manufacturers globally in the automotive sector, and the team has come to our plant, visited, and has given a very positive feedback on the capabilities we are going to work with on the global standard. In fact, we are now very close to closing the deal, which once finally would be a significant validation on the quality and scale of what we have been shared. As we said earlier, we continue to evaluate the opportunities of internal consumption versus external sales, which will be taken care of by the business mathematics. Let me also give you an update on our space technology initiative. Our first pre-use satellite is currently in the prototype development phase, and we expect it to be ready to launch in mid of next year, once the required regulatory testing is complete. We are now awaiting a confirmed launch date from ISRO on the PSLV or GSLV vehicle. This is a meaningful milestone for us, not just launching one development satellite, but getting into establishing gains capability into the emerging satellite electronic domain and opens the door for broader participation in India's space technology system. Alongside this, the request of ISRO, our subsidiaries free of precision and aerocallit technologies are entering into titanium gas bottle manufacturing to support their five programs, and DRDO has a similar requirement for gas bottles across several of their missile projects, which gives us a second anchor customer in this space from day one. Before I close, Our balance sheet remains priority in its own right, not just a byproduct of the growth. The discipline now across the organization will definitely bring us to the commitment what we are given. Looking ahead, the key priority is what the organization said. I just want to reiterate. NPD and value-added product, a product-led solution there is rather than the service-led solution, and of course the next strategic frontier for Cain and our operational excellence. Operational excellence, quality, and disciplined capital allocation remind the foundation we are building it on. I know last couple of quarters have tested your confidence and our commitment to keep learning it back and consistent delivery one quarter and quarter after quarter every time. With this, I complete my initial remarks. I would like to thank you, Access Team, for hosting this yearning call and all of you are joining today. I will now hand it back to the question and answer session. And thank you very much. And over to you, Matt.

Thank you. We now begin the question and answer session. Anyone who wishes to ask a question, you may press star and 1 on their touchstone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question is assembled. Participants, you may press star and 1 to ask a question. First question is from the line of Renobade from IFL Capital. Please go ahead.

Yeah, hi. Good morning, team. A couple of questions from my end. First is, while you did allude that the core EMS has done better than 40%, am I right if you mentioned somewhere in the call that EMS grew 48% during the quarter? So, can we just clarify on that first element? What are the risks of the solar metering business that we have?

See, the overall business growth is 40%, the matrix is 28, so the total growth is more than 48%.

Got it. And while operating performance has been pretty strong, given the increase in inventories, as well as working capital, our PBT margins have been much softer. So, do we have any bridge in terms of arriving at what is the kind of PBT from the core EMS business? Just to assign and see whether the EMS business profitability below line is intact or is there a significant drain out there? And third question aligned to this is, while smart litering, we have consciously scaled it down because of working capital issues and concerns. But it's been almost two years, and the net profitability and expectations returns from this business has been suboptimal. So any thought process, does the management have to correct this strategic decision that we had taken two years back? Any views in terms of opportunities to diverse this business in future? Some of the utilities are looking to buy out the metering businesses. So, what would be your thought process on this side to relieve both the working capital management bandwidth from the smart metering directly to the portfolio that we have here?

I'll answer you one by one. I'll take the profit before tax or profit after tax for our comparison at this point of time. The other income that used to come to us earlier from our QIP funds, Which is where the investment has come in. It's dropped about 2.5 points on our PBT or P80. That's one of the major reasons. Other than that, if you look at our depreciation has gone up with the various investment that's coming up, whether the revenue needs to come. And look ahead in the next two quarters, I think this will start coming back when we are going to generate revenue from our semicons and circuits and of course some of the programs that we're running currently. So the second question is what you asked specifically on the metering business. As we said, we have entered Embarked in this journey of metering business, which has given a very good visibility on our ability to develop a product and launch it to the customer. Today, though we are not able to make a better receivables on this, I want to reiterate amongst all the metering companies which are doing assembling, we continue to be the number one installation done across the country than any other competition. But that's not our objective. We wanted to make sure that we reach always the best. You are right. We are evaluating the opportunity.

We are now centering and consolidating our operational performance in metering this core.

Of course, we understand the challenges which is alongside of installation meter and getting it in over a long period of revenue. The management is seriously looking at options and opportunities available. Like, whatever the methodology you told, I don't want to commit at this point of time, but as we committed, in the February earnings call, you will hear more from us about our strategy to de-release the receivable portions of the matrix business.

Sure, and lastly, what are the delivery timelines that we are looking in terms of final commissioning of the OSAT and BCB for the current financial year? Thank you.

Our commitments, as indicated by executive vice chairman during last year, we are going to have a commercial revenue booking from this year, from third quarter and fourth quarter, and we are committed to that. And the project is on track. I want to specifically put on the record to thanks to my team in both who are working day and night to make sure that this happened. Our customers' validation is over in the Semicon project, whereas OSAT project is starting now. But we are very, very confident that we will be doing this.

Thank you.

Added to what Dr. Muthukumar told, our OSAT, all the trials and validation is getting over now. We will start the commercial buildings, and as far as PCB is concerned, our entire capacity has been requested by one large player, a global player, so their plans are going on in our factory, as on today, as we speak. They have also approved and given us a vendor code for that.

Super. Thank you, and best wishes, please.

Thank you very much. I request all the participants kindly limit yourself to two questions for a participant and rejoin for a follow-up. Next question is from the line of Siddharth Vera from Namora. Please go ahead.

Yeah, hi, thanks for the opportunity. So, first question is on the quarters, would you be able to share the cash flow from operations for this quarter if it is available? And second is how much will be the smart meter revenues in the current quarter, which we have booked? Apart from that, sir, I mean, in terms of new order wins, if you can share some more color, we did get about 15 lakh crore of new orders. If you can share some color about which are the key customers there and the key order wins quantum, which we have got in the current year, current quarter.

We normally don't share the revenue with... Segment-wise and vertical. But because metering business and EMS business, most of you are asking specifically, we wanted to share this with you to give a better clarity. Our overall revenue for this quarter is about 946 crores, on which our sales, this is 946 crores without GST. And our sales is about 90 crores, 210 crores in metering business and rest all is in the EMF business. That is a split between the EMS. That's why we said our EMS business core growth has gone more than that. Having said that, I will go to the next question of who are the new logos that we have added up. I already spoke to you. We normally don't share the customers. One of the largest two-wheeler EV manufacturers, we have been working with them for the last. One year, and our photos have been finished up, and serial production has started now. The global players, as we told you, last quarter we said our aerospace business is not picking up because of the global situation. But we're really happy to say that this quarter, we have come back very strongly, and the customers' PFAP and all is going on. In fact, segment-wise, even though we don't specifically, the aerospace business and all is the one which we have grown substantially up. Every segment, be it railway, be it automotive, be it aerospace defense, every segment after segment we have grown. For your exact point on the growth percentages in the standalone EMS business, which is include other than metering business, if you take it, and of course other than foreign entities also, because our acquisition of the August Electronics was done only in July, so last year first quarter was not there. So as a standalone EMS business, if you see, our growth is 53% from 618 crores of last year to this year of 639 crores, standalone EMS business. My overseas entities, if you take from 24 crores last year to 102 crores, this has grown at 327%. There is a new acquisition that has happened. As a metering business, last year, first quarter, our sales was 231 crores, and this year, it is 204 crores, which means the minus 12% growth. That takes us to 40% overall. Hope I have answered your question.

Yes, sir. Thanks a lot for this. And would it be possible to share the cash flow of operations by the end of first quarter? Okay.

At the end of first quarter, I think we... As we said, our inventory has gone up by a hundred and. Thank you very much. I am doing this, except for the inventory, I think the receivables the negative was only 90 cross 90 because of the metering and in terms of EMS business, the team has did a extremely good job. Inventories is a strategic decision. So, we are, we have improved on our commitments, whatever we are told, and we will ensure that going forward, our commitments of last quarter, the reversal is going to happen.

Got it, sir. Thanks a lot. And in Osatak, DC, we put together what has been the total investment till now, and for this year, how much investment are we planning to do?

As I said, at this point of time, the total capital that we have spent between these two entities, just give me a minute, we were, we did about.

Muthu, it's around 1250 crores. Both put together. Yes.

Right, sir. Yes. Both put together is 1200 crores, maybe about

700 crores in OTA and 500 crores in our...

Thank you. PCB. PCB.

And we have in transit around 250 crores of items which are head to come.

Thank you. Send us a request to come back for a follow-up. I request to all the participants, kindly limit yourself to two questions per participant and rejoin for a follow-up. Next question is from Lano Santos Seshadri from Avengers Park. Please go ahead.

Yeah, hi. Good morning. Thanks for taking up my questions. So my first question is on the smart metering business. So how do you think about this business internally? Do you see this as an extension of this EMS business, or do you think that's a completely different ballgame? And also in the past, you have spoken about the shift from a service model to a product model. Can you set some light on how this shift is tracking? Are you on track to move towards the product-based model? And also as a follow-up on that, let's say one year down the line, would we continue to see the smart metering business included in the consolidated results, or is there any possibility or plans to move a portion of this business or maybe a full part of this business outside the balance sheet, either through diversification or any other means?

I think, thank you very much, sir. I think you have given us all clues on how to do that. I'll tell you, sir. The metering business, we acquired about two years before, and prior to that, we were a supplier to that company as a PCB assembly. So, this has given us gains, a very substantial confidence of getting into a product company and working on it. The metering business, per se, has two sets of business. One is manufacturing of the meter, and second is the installation of the meter and doing the services for over a period of eight years to the government. Keynes is always very strong in its forte of manufacturing, and when we are talking about the revenue of EX, 60% of the revenue or 65% of the revenue comes from the EMS business. So we still consider this helping as our EMS business to grow when we are at the metering business. Having said this, our forte of getting into the customer, installing this meter, and providing the software solutions to them is a new area that we ventured, and we have been doing extremely good for a company which has taken into this initiative one year before. If you look at Keynes as a very distinct advantage of the company, which has got manufacturing of meter, a capability to install meter, and have a software integration facility, which makes us as one of the preferred suppliers or preferred manufacturers, both put together, preferred service providers from the electricity board agencies, because... The way in which we are able to integrate and install, because we have a metering, manufacturing, software, everything is available at one shot. These are the listing advantage. Yes, but the business model is a little long because there is a part of CapEx model and Office model, which is impacting the receivables. So, our strategy to do this is, how do we consolidate the revenue? We are still making the revenue of 60 to 60% on this because of our EMF business. So, like what you said, we have plans of various business models of diversifying this other portion of it that we provided separately and making sure that the receivables from that is not impacting directly into our balance sheet. But having said that, it is not a simple thing that we need to do. We are working on this model. As we committed, we come back by our February month on our strategy to see how we are going to manage this business. But we are pretty confident that we will be able to do the turnaround by end of this year in terms of receivable centimetring business.

Understood. Thank you, sir.

And you can also understand the management commitment to this by, we could have grown by, we have enough order book available in the metering business. We could have done more revenue, honestly speaking. But just to make sure that the discipline of the balance sheet, we have controlled our revenue growth in this area, which is also giving us, it's a very, very challenging time, but we want to be doing that and taking that discipline.

And on the part of the question, Brad, you mentioned that, you know, how is the shift from service model to supply model, how is the tracking?

We have done, who will take it? We have done all the pre-requirement study, everything. We are working with some partnership with many people, but nothing concrete has yet happened. You will hear in the coming quarters, may not be in the next quarter, the next quarter, third quarter, we will have some clear idea on it.

Thank you, sir. And just one more question. Thank you. Sorry to interrupt, Santosh.

Kindly come back for a follow-up, please. Thank you. Participants, please limit yourself to two questions and rejoin for a follow-up. Next question is from the line of Achalwadeh from Nuwama. Please go ahead.

Yeah. Morning, sir. Thank you for the opportunity. My first question is, if you could help us with the absolute figures of the receivables, trade tables, and the inventories as of June. I'm just giving a like-to-like number of what it was in March 26th, so if you could give us a similar number. The receivable was 1,528 crore. In fourth quarter. So if you could help us with the absolute figure and did I hear it right? You said the OCF was negative 248 crores. Have I understood right? For 1QSI 27?

Yeah, you are right. Tough quarter.

Okay. And if you could help us with the absolute figures of inventory, receivables and payables, sir.

Okay, I think on terms of receivables, I will start with this. We started this quarter with about 1765 crores in total, including current and non-current assets, and that has gone to 1925 crores, okay. Though our receivables in EMS, we started with 606 crores, and ended up with 613 crores, which means we did almost all the collections, including the GST amount. In metering business alone, it went up from 11.58 to 13.11. I think that is what took us the decision to reduce the top line in the business.

Got it. Secondly, with respect to the revenue growth, you know, in the previous calls, you kind of indicated that, you know, 30-35% kind of a growth. Given what we have done, given the strategy we are playing with, what is the revenue growth we should kind of pencil in for FI27? And how do you see the scale-up for OSAC and PCB for FI27 and 20X? Those are my two questions. Thank you.

For revenue growth, we have committed the 2X of the market growth. The first quarter, the market has grown at 17%, and we have grown at more than 48% in our EMS business. So we don't want to give an absolute number because there is so much of volatility in the market. The availability of material in this quarter and next quarter is going to have a huge impact into this business. So we don't want to commit on the top line number, but whatever the market growth is there, because of the strategic initiatives of keeping the inventory, keeping the manufacturing flexible, and having a very committed people, we are quite confident of achieving twice the market growth. So, this is what the commitment we are giving, and we are working towards this. As far as Oset and CCB is concerned, we have been told

from third quarter, the revenue starts in both the business,

and we have committed a full year revenue of totally 500 pros between both 450 to 500 pros, which is what we are targeting at this point in time. We are on the target.

Thank you. Achyad, I will request you to come back for a follow-up. Next question is from Lanark Raveen Sahai from PL Capital. Please go ahead.

Thank you for the opportunity. My question is related to the components. As you also touched upon and given some detail in the presentation, the prices for us components has been raised on the average of 30-35%. Even the lead time has increased. So can you give us some color on overall, you know, overall your business? How much of this cost inflation has already been captured in the Q1? And in the coming, you know, year, how much we will see the impact of that? And is there any margin comparison we are expected to see out of this?

I'll touch with the base, but I think I would allow Mr. Damesh to talk about it because of his huge experience in this business. Split this into two, PCB and other components. Other components, as you rightly said, the price is going up by 30-35%. And PCB is the one which is challenging today because even order booking is gone with an advanced payment. That's the level that industry is going on and there is a huge shortage that is coming in. Like how chips have controlled the manufacturing about 3-4 years before, it looks like PCB is going to have control on this. Having said that, the first quarter, if you look at foreign exchange itself purely, there's been an impact of about more compared to the last year, this year is about 3.5%. Of our import level, what we are doing on the EBITDA impact. But as I said, because of the strategic initiative that has been taken to build up the inventory, the impact was very minimal. And we also have a very good system of a back-to-back working with customers in most of the expenses they will be getting added. However, the other cost escalation, which is consumable price of availability of labor and the cost of labor, cost of electricity, the company continues to improve on our efficiencies, innovative ways of working, continuous improvements in case and thereby reducing the cost. The market is quite challenging. Looking forward, it is going to put the pressure on the bottom line in the coming quarter because there is a huge impact that is happening. One is availability, second is the price. With that I would request Mr. Ramesh there to give more insight into this.

See, this component industry has gone back to COVID times. Having said that, our company has done the deep diving, and we have decided to increase our inventory so that our customers' lines don't stop. In the past, we have done this, and we are very confident of overcoming this. Though our pricing are all pass-on. We may not get it immediately in that quarter, in the coming quarter, because it is normally adjusted quarter on quarter. So that's the update I wanted to give you. As he said, PCB business, the PCB prices have gone up three times. When it comes to components, availability has become a big problem. Prices are also going up, but those prices are going up in the range of around 10-12% only. But availability has become a big problem.

So, ultimately, we will be going to see our gross margin compression because of that, because there is a QOQ, I understand, there is a pass-through mechanism, but there is a shortage of our material as well. So, do you expect in the coming nine months, you will see the gross margin compression because of that?

Here is a difficult year. This year is a difficult year, but I don't think for us, whatever we have planned, we will try and meet the requirement. But it is not going to be an easy year. It is going to be a tough year.

Thank you. I will request to come back for a follow-up. Next question is from Indrajita Garwal from CLSA India. Please go ahead.

Hi, I have two questions. First, if you can give the Consol Capex guidance for effect 27 and effect 28.

Sir, we have communicated and we are standing by that. We said we will be funding for this Capex for this year with about 300 crores for OSAS, 300 crores for BTB, and about 250 crores for EMS business. We are on track for this. The first quarter spend is about 90 plus 90, 180 plus 50, 230 crores. All put together. But we also said that we have fund is not a problem, and as and when we get the newer business, the modular capacity expansion will go on. So, and also as and when the subsidy is coming, it will keep flowing in the system. This is just to keep a tight control on the cash flow. So, we are on track of whatever we are committed during the start of the year, and we'll be working towards that.

Sure. And my second question is, again, on the PCB business, while prices have increased, we have seen globally PCB margins have pressed because input costs have increased a lot more, CCL and other commodities. So, you mentioned that you have contracted your entire quantity with an overseas customer. So, what are the pricing or margin contracts over there? So, what kind of ROCs or margins are you comfortable to generate from that?

I'll leave it running to the advantage. Thank you.

This is too early to talk about these things. However, I don't agree that margins in PCB companies have come down, because as we catch up with the team, this last quarter, that is the second quarter of their financial year, they are all done fairly well, and this PCB crisis is going on for the last three, four months. But it is too early for me to give any clear direction on this. The top lines will go up, bottom lines will get affected is what RBI and everybody is projecting. With that, I wanted to.

Thank you. Indrajay Darlit, please come back, please. Next question is from Manos Saloni Salgaokar from Jefferies, India. Please go ahead.

Thank you for the opportunity. I have three questions. Firstly, you did mention about the receivable days. Similarly, can you please let us know the figures for inventory, payables, and the debt on the balance sheet? The second question is on the tax rate. It's quite high this quarter at about 35%, correct me if I am wrong. So, for the full year, should we expect it to normalize or stay higher than last year? And thirdly, on the OSAT and CC BY, I understand that we cannot name the customer, but just a broader idea that whenever the project commissions, you mentioned the timelines are being followed up. So, where do you expect the update to go? To domestic customers or to international customers? Thank you.

In terms of the inventory, again, about 96 days earlier, on the first quarter end, we have gone up to about 105 days. As I told you, this is a strategic initiative we've taken in February to import more material and keep it in our system. And we actually anticipated a little more to go, but because our revenues have been good in the regular segment, it has come down a little. For your, I wanted to hear your second question again, but I can answer on your, can you just repeat your second question?

So, with the first question, I also did ask about the debt on the balance sheet. The second question was about the tax rate.

If you look at the tax rate, the effective tax rate for the company is around 32% and odds, and our total debtors, I think Senpil, can you just tell it's about. Till you are there. Thank you sir, Sumit, is there sentil with him? Yes, yes sir, I am here.

Yeah, tell me sentil, he is about to answer.

Yeah.

Okay. See, effective tax rate is around 23 percentage and at the consolidated level, it is at 35 percentage. And the walk for this is like amortization, whatever we are doing for the intangibles. So, that is around 3%. And the others, whatever, like Semicon and Secures, whatever the intercompany interest, whatever we are charging off that is getting capitalized, that is around 5%. And the other loss-making entities are contributing to around 4%. So, this is majorly the impact of the contributors to the impact of the higher effectiveness rate.

The date on the balance sheet, sir.

Back to you.

Sorry, I can't hear you.

Any other questions that you have, Sonali?

No, I think, so, on the debt part, we don't have the number right now, is it?

So, we have the numbers. The equity ratio is good at about 0.3% at this point of time. The exact number I am not able to tell, around 800 growth total, but I think the team is picking it up. We are very well in control. Even for the approved loans for our

long-term capital in Semicon and Circuit, we are not taken at this point of time.

We are going through the internal funding you all know.

Thank you. So now I request to come back for a follow-up. Next question is from Aditya Bhartia from Investec India. Please go ahead.

Sorry, sir. I didn't hear it properly. Was the net rate number that you spoke about around 800-0.000? There was some disturbance I couldn't hear.

Yes, approximately, but I think I am just looking at from the finance deal there. It is around that number. We can give you the exact numbers soon. We can go to the next question.

Okay. Because on the cash flow from operation side, we are speaking about roughly 260 crore rupees of negative CFO. I guess there would have been around 100 odd, 100-150 odd crore rupees of capex this particular quarter, including the new businesses. Is that correct?

160 crores is the capex for this quarter. 180 crores, sorry.

180 crores. Still, sir, the net debt number appears to have increased much higher than what it should be. So, just kind of wondering how the reconciliation can happen.

Sir, we have given, I have, when I said operating tax flow is 275 crores. I have said only operating cash flow, consolidated cash flow at this. My cash profit is about 158 crores, my inventory gone up by 156 crores, my receivables have gone up by 90 crores, and others about 144 crores, tax at 26 crores. My fixed expense is 360 crores, the investment is 311 crores, 317, and of course, financing is 263. Those are the numbers for the, in the consolidated cash brokerage. What I said 259 is already net cash used in the operating activities.

I understood, I understood, sir. And on the issues that we are kind of highlighting around availability and cost side, does that mean that we should be anticipating lower margins, at least in the next few quarters? And how does the pass-through exactly happen? Because my understanding was that at least in the PCBA business, it is more almost like an immediate pass-through. And none of the other PCBA companies also spoke about this challenge. And that's why I'm kind of wondering, how should we think about this mechanic?

Sir, it's like what the chairman said, I wanted to rephrase the plan. It's a challenging time. We need to make sure that we have the balance between setting this off and also grow and service the customers. If we are not going to service the customers and if they are going to fail, it's going to impact us also. So we are working very, very closely with the customers. We have a strategic top customers. Wherein we have an understanding with them on an agreement like this on how we can move forward because the delayed decision making will have an impact on the business, a continuity and also we don't want the customer line to stop. So we have got an agreement with various customers on where all we can go, to what level we can go, the decision can be taken at our level and also where the customers also have been talking to us frequently and ensuring that the decisions are given fast. So our aspirations and our working is towards not to have any impact on the bottom line. But having said that, there will be some timing delay between this, which will have an impact. But one thing that we can assure you is, yes, we will be definitely faster than our peers in the industry, and we'll ensure that the minimum impact is to us.

One another point, one another point, it is a global problem. The entire industry is aware of it. This has been going on for last three, four months. So I am also surprised if nobody has addressed this.

Thank you very much. I did have a request to come back. Next question is from the line of Praveen Sai from PL Capital. Please go ahead.

Yeah, thank you for follow-up. One question is related to your order book. Can you give indicative numbers? How has been the sector-wise or the segment-wise your order book? Right now.

So, normally we don't use sector-wise or segment-wise, but we have a very good order board, and in the first quarter, our team has added more into the order board than what we have opened up or what we have delivered. So, very strong order board of more than about 8,900 pros in the system, and things are shaping up much faster. In spite of the global situation on the commodity availability, on the other side with the price escalation is going on. The customer offtake at this point of time is pretty good. If you see the growth, what is happening in both in the domestic and also global, in spite of the inflation that is happening across the world, be it North America or in India or in Europe, if you see that the demand has not softened at this point of time and is still growing strong. So this gives us a thing that things are going to settle soon and then it is going to be in a positive trajectory at this point of time. We don't see anybody saying that we are going to cut down, including the public sector enterprises or the government.

Thank you very much.

Ladies and gentlemen, in the interest of time, that will be the last question. I will now hand the conference over to the management for closing comments.

Thank you very much for your time and confidence to us. We tried to answer most of the questions, what we have asked for to your satisfaction, but reach out to us in case you need any concerns. For few of the questions, the specific questions is asked, our investment relations team members will reach out to you with the details. And we really appreciate your support and continued commitments onto the team. And your support is what's making us to grow faster and at the same time sustainable growth. Thanks to you. Thanks to my leadership team. Thanks to my operating team who have been staying strong during this difficult time and making our company from good to great. Over to Mr. Ramesh there for final closure.

Thank you to one and all, having interest in our company. We are continued with our commitment, and the days to come are challenging, but you will see good results. Thank you.

Thank you very much. On behalf of Access Capital Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.