Amber Enterprises India Limited

Q4 FY2022 Earnings Conference Call

May 13, 2022
DISCLAIMER: E&OE - THIS TRANSCRIPT IS EDITED FOR FACTUAL ERRORS. IN CASE OF DISCREPANCY,
THE AUDIO RECORDINGS UPLOADED ON THE STOCK EXCHANGE ON 14TH MAY 2022 WILL PREVAIL

MANAGEMENT: MR. JASBIR SINGH – CHAIRMAN & CHIEF EXECUTIVE

OFFICER – AMBER ENTERPRISES INDIA LIMITED
MR. DALJIT SINGH – MANAGING DIRECTOR – AMBER
ENTERPRISES INDIA LIMITED
MR. SUDHIR GOYAL – CHIEF FINANCIAL OFFICER –
AMBER ENTERPRISES INDIA LIMITED
MR. SANJAY ARORA – CHIEF EXECUTIVE OFFICER
(ELECTRONICS DIVISION) – AMBER ENTERPRISES INDIA
LIMITED
MR. SACHIN GUPTA – CHIEF EXECUTIVE OFFICER
(RAC & CAC DIVISION) – AMBER ENTERPRISES INDIA
LIMITED

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Moderator: Ladies and gentlemen, good day and welcome to the Q4 and FY2022 Earnings Conference
Call of Amber Enterprises India Limited. This conference call may contain forward looking
statements about the company, which are based on the beliefs, opinions and expectations of
the company as on date of this call. These statements are not the guarantees of future
performance and involve risks and uncertainties that are difficult to predict. As a reminder
all participant lines will be in listen-only mode and there will be an opportunity for you to
ask questions after the presentation concludes. Should you need assistance during the
conference call, please signal an operator by pressing “*”then “0” on your touchtone phone.
Please note that this conference is being recorded. I now hand the conference over to Mr.
Jasbir Singh, Chairman & CEO of Amber Enterprises India Limited. Thank you and over to
you Mr., Singh!

Jasbir Singh: Hello and good evening everyone. First and foremost I hope you are all keeping safe and
healthy. On the call, I am joined by Mr. Daljit Singh, Managing Director, Mr. Sudhir Goyal,
CFO, Mr. Sanjay Arora, CEO, Electronics Division, Mr. Sachin Gupta, CEO, RAC & CAC
Division, and SGA our Investor Relation Advisors. We have uploaded our results on the
exchanges and I hope everybody had an opportunity to go through the same.

In the past two years, the growth in consumer durables was impacted due to COVID-19,
induced lockdown in peak summer season. Now with weakening of COVID-19 intensity
coupled with harsh summer across India consumer durables are experiencing a robust
demand. The summer season is a critical period of appliances like AC. Almost 60% plus of
the annual demand is met during the five months period that is from mid January still
almost June and July.

Demand from B2B segment has improved in the last couple of months lead by reopening
demand from schools, colleges and institutions. This trend is expected to continue for near
to medium term. March to April has seen good momentum in urban as well as rural areas,
which has further strengthened the demand environment. As the economy was recovering
from COVID related impacts the geopolitical tension created due to war between Russia
and Ukraine has lead to inflationary pressure on commodity prices including the crude oil.
Further COVID induced lockdowns in China has lead to supply chain disruption, which has
further added to the pain of the economy and availability of raw material for the
components.

However we have been able to pass on majority of the prices and been to largely maintain
our profitability. Another event which is being closing watched is BEE table revision which
is going to be implemented by July 1, 2022. The customers are cautiously planning on
volumes. We at Amber are fully geared up to address this stable revision. All our model

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lineup is ready and expect smooth transition to new table providing full energy efficient
products to the markets.

I am pleased to report that the company generated record sales of almost of about Rs.4200
Crores. This is achieved highest ever revenue for the full year. After two years of
slowdown, we are witnessing a robust demand comeback. Pre-COVID industry was at 7
million sets in 2020 which fell to 5.2 million sets and in the financial year gone by it has
risen again to 6.4 million sets. Looking into strong demand due to peak summer we expect
industry will demonstrate nearly 30% plus growth trajectory.

We at Amber are excited to see this jump in demand and are confident of outgrowing the
industry. At our best estimates basis total size in the value terms of the industry is about
Rs.17000 Crores; however, the manufacturing contribution is about Rs.12000 Crores.
Looking into our wide offering of components to the industry our value contribution in
RAC sector for both finished goods and components is around 26.5% as of today. As the
component contribution with our customer is expanding along with CKD and SKD
offerings, it is more relevant to look at value based contribution from here on. The company
is providing very comprehensive and integrated solutions in component space and finished
goods space.

We are glad to share that our revenue spread today stands at almost 50% - 50% level in
respect of RAC and components and other businesses. Earlier this level was 76% and 24%
in 2018 at the time of our listing.

Another important update during the quarter was on acquisition of 60% stake upfront in the
equity share capital of Pravartaka Tooling Services Private Limited which is engaged in the
business of injection mould tool manufacturing and injection molding components for
various applications. This acquisition will help our company to have in house capability of
injection molding tools, manufacturing and grow its components segments with focus on
providing more diversified solutions of injection molded components for industries such as
automotive, electronics, and consumer durables.

Now moving on to the divisional performance, RAC division, we were able to convert few
customers from the first phase of gas filling to offering completely built units CBUs for our
RAC which began this fiscal year. New customers have been added in this division. On the
commercial RAC side, we have added entire product line up of commercial ductable ACs as
well as cassette ACs, which we have started to offer to our existing customers. In the motor
division, we have increased our products offerings to our customers by adding new models

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for both the domestic and international markets, very strong order book due to addition in
new products, customers and geographies.

Our Electronics division, which comprises of ILJIN and EVERwe have added new
customers and have started supplies for new age applications of smart wearables and
hearables furthermore as the market is moving rapidly towards inverter ACs, we are
confident of growing our revenue share from electronics division going forward.

On the component division we are adding new products, new customers and new
geographies and our recent acquisition of Amber PR and Pravartaka Tooling is also part of
this division. We are witnessing good business traction and integration is happening
smoothly. On the mobility application which comprises of Sidwal we have on boarded new
customers who are global leaders in this segment. We are progressing well with new
product developments for various business segments. Recently we added products to cater
to the data centres in this division. Our order book today in mobility division is very (audio
cut) 07:45

Sudhir Goyal: Thank you and I think apologize for this disruption. I will now take you through the
consolidated financial highlights. On the revenue side, our Q4 FY2022 revenues stood at
Rs.1937 Crores versus Rs.1598 Crores in Q4 FY2021. FY2022 revenue stood at Rs.4206
Crores versus Rs.3031 Crores in FY2021.

On operating EBITDA side, Q4 FY2022 operating EBITDA stood at Rs.133 Crores versus
Rs.147 Crores in Q4 FY2021. FY2022 operating EBITDA stood at Rs.296 Crores versus
Rs.229 Crores in FY2021. Operating EBITDA margins for Q4 and FY2022 stood at 6.9%
and 7% respectively. Q4 FY2022 and FY2022 operating EBITDA does not include ESOP
expense of Rs.4.08 Crores and Rs.15.67 Crores respectively.

On the PAT Q4 FY2022 PAT stood at Rs.59 Crores versus Rs.76 Crores in Q4 FY2021.
FY2022 PAT stood at Rs.111 Crores versus Rs.83 Crores in FY2021. All divisions are
ready to take advantage of multiple opportunities. Our goal is to capture the bulk of room
AC and HVAC and component market share. We feel that this opportunity will boost our
position in the domestic market while also providing a solid foundation for export markets
going forward. That is all from my side. We are happy to take Q&A from everyone.

Moderator: Thank you very much. We will now begin the question and answer session. The first
question is from the line of Ravi Swaminathan from Spark Capital Advisors. Please go
ahead.

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Ravi Swaninathan: Good evening. Sir my first question is with respect to the mix of room air conditioners and
components? How much was it during the financial year FY2021-FY2022 if you can do a
broad breakup?

Jasbir Singh: Mix of room AC and RAC components or room AC and only components all put together.

Ravi Swaninathan: The components and the entire kit so basically if you can give the breakup?

Jasbir Singh: Actually what happens is when customer asks to give them the semi knocked condition or
CKD condition that becomes a component for us. That does not go in for the finished goods
category. Finished goods is very different, but if I talk about full year RAC room AC is
Rs.1975 Crores and components have jumped to Rs.2231 Crores including mobility
application.

Ravi Swaninathan: Including mobility application yes?

Jasbir Singh: So if you reduce mobility application which is Rs.289 Crores so almost similar size so
almost about similar size of RAC is the components now.

Ravi Swaninathan: Got it Sir and with respect to the say the price increase that we would have taken over the
past 12 months what would have been the magnitude of that and are there further price
increases are they on the cards given the fact that demand for the summer is likely to be
good so how is the price increase likely to be going forward and the kind of magnitude of
increase which are likely to be associated with the BEE norm change also if you can talk
about that? My next question is with respects to the price increase Sir past 12 months what
kind of price increase that we would have taken and is there any further price increase that
is likely to be there on cards given the fact that demand is being good and what kind of
price increase is likely to happen across products due to the BEE norm change?

Jasbir Singh: So Ravi on the price increase because of the commodity increases in various quarters we
have been able to pass on to our customer on quarterly lag basis so as of now if I see in the
last three quarters, I think in totality of course it will vary from model to model but on an
average I can say that somewhere between 8% to 9% is the price increases which has
happened and on the BEE front which is going to be implemented from July 1, 2022 every
model will have a different kind of a price increase when the new table gets implemented
but somewhere we should expect finished goods getting expensive by at least Rs.1000 to
Rs.1200 on a model to model basis.

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Moderator: Thank you. The next question is from the line of Naval Seth from Emkay Global. Please go
ahead.

Naval Seth: Thank you very for the opportunity Sir. I have two questions the first the clarification.
Actually the revenue what you stated about RAC seems like a 3% decline on Y-o-Y basis
so is my calculation correct and if yes what was the volume number for Q4?

Jasbir Singh: No in fact Naval basically there is almost about 22% jump in the RAC complete numbers.
As I explained that is Rs.1975 Crores, last year it was Rs.1621 Crores just the RAC.

Naval Seth: Sir I am talking about quarter because I had deducted three quarters from your annual and
Q4 I am talking about?

Jasbir Singh: Q4 I think we will come back to you because we have to just evaluate exactly because we
need to still strip down the components and the kits front plus the finished good stuff
category.

Naval Seth: Understood but any volume number you can share for Q4?

Jasbir Singh: Q4 yes we have done about 1.5 million numbers as of finished goods are concerned, kits
and semi-knockdown conditions are there other than that

Naval Seth: Understood and second question on your gross margin so if I look at your standalone gross
margins have kind of compressed to 10.5% which is kind of lowest since the time you have
got listed so as you stated that large part of the cost increase has been kind of done with so
it fair to assume that Q4 there was a lag and hence there is a pressure in Q4 margins or this
is something which will continue as a new normal going forward?

Jasbir Singh: Naval we need to see that last three quarters on a quarter lag basis we have taken increases
of about 8% to 9% but the last quarter which has just finished that number will be
implemented in this quarter so there is a lag of one quarter so one quarter is missing. I think
this trend if the commodity keeps on increasing in the similar fashion this will continue but
if the commodity stabilizes then we will come back to our normal position back, over a
period of four quarters.

Moderator: Thank you. The next question is from the line of Bhoomika Nair from DAM Capital. Please
go ahead.

Bhoomika Nair: Good evening Sir. Sir just to continue the previous quarter in terms of price hikes? You
mentioned 8% to 9% increases so far? What would have been the cost increase and what

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further price increases are required to take back our margins trajectory to an 8% level which
is what it used to be historically at?

Jasbir Singh: If you see on a yearly basis Bhoomika we are at 7% now and if I add up the quarter lag
which is one quarter difference we should somewhere about the same percentage so getting
back to the similar portion of course as I explained to Naval that in case the commodities
keep on going northwards, we will always have a quarter lag. There will be one quarter
where we will not be able to pass but once this commodity cycle stops then of course we
will come back to our normal position cycle.

Bhoomika Nair: Sir right now what is the price lag of that one quarter which is yet to be passed on?

Jasbir Singh: So in this I think close to about 2% to 3% is the total overall basis because in a yearly if I
see there is a total upwardly movement of close to about 11% to 12%.

Bhoomika Nair: Okay Sir the other question is on the subsidiaries? We have seen a fairly strong
performance and we are looking at export opportunities as well for PICL as also from AC
perspective if you can just give some more color on where we are on that entire export
growth story?

Jasbir Singh: So in motors we have actually demonstrated almost about 81% of increase in revenue and
the bottom line is also now very healthy as guided earlier we have achieved that from
Rs.131 Crores we have already touched Rs.236 Crores and exports is moving fine. We have
been able to do almost about close to about 1.5 lakh motors export to Middle East and to
US markets and we expect this numbers volumes to double in the current financial year. So
export is going very well. There will be 100% jump in value and volume in motors as far as
the exports are concerned because now we are raising our share of business with the
customers where we were earlier just having a foot in the door.

Moderator: Thank you. The next question is from the line of Renu Baid from IIFL. Please go ahead.
Due to no response, we will move to the next question which is from the line of Sonali
Salgaonkar from Jefferies. Please go ahead.

Sonali Salgaonkar: Good evening and thank you for the opportunity. Sir my first question is regarding the
volumes. Could you help us with the volume numbers for RAC for FY2022 versus FY2021
and the industry as well and Sir also an extension to this what will be our guidance for
volumes or even for the margins considering that you have mentioned that the price hikes
that we have taken in Q4 is set to benefit us in the next quarter?

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Jasbir Singh: So basically as explained that industry was at 7 million and then fell to 5.2 and now as per
our best estimates industry has closed at 6.4 million so from that perspective if we see I will
hand over to answer Sachin is going to answer this question as far as the volumes are
concerned for the complete division of RAC and how the trajectory is going to be. Sachin
over to you.

Sachin Gupta: As we discussed in line to the industry like estimate is around 6.4 million so the same
number for Amber stands to a tune of like 2.6 million so we had estimate of somewhere
around 2.8 to 2.9 million when the order book was almost there in place but as we know
that there was lot of supply chain issues from China so there are a lot of customers who
could not supply us the compressors and controllers on time so that was the lag that may be
reflecting in the next quarter.

The second thing is that if you see the energy rating table is scheduled to be implemented
from January 1, 2022 so in line with that we have seen that the window as the category has
come down so for us if I see that indoor contribution has increased and the outdoor
structurally has changed so there are a lot of customers who are asking us it in a modular kit
form so that is why it has moved from finished good to the component category and that is
why you can see the split today stands at 50:50 so this is on the number sides.

Sonali Salgaonkar: Sir on the guidance side?

Sachin Gupta: Sorry.

Sonali Salgaonkar: Guidance Sir if any?

Sachin Gupta: Guidance probably industry somewhere is posed to like industry is talking of 30% growth
so it should be landing somewhere around 8 million to 8.2 million industry size.

Jasbir Singh: Sonali what we have done recently is because of this larger shift structurally into more
components business for us we have started looking at our market share from a value
perspective so that is more relevant now because components is playing a big role and if
you see room AC and the room AC only components, I am taking out all the other
businesses. I am not considering refrigerator, washing machine, microwave or mobility
applications. Only RAC and RAC business that today holds on we have a strong market
share of 26.5% and I think we should be able to add at least 100 bps into this market share
going forward because our components strategy is moving very, very strong.

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Sonali Salgaonkar: Got it Sir. Sir my second question is any update on PLI would like to share and also our
capex number?

Jasbir Singh: So on PLI we have been already approved for Rs.400 Crores, Rs.100 Crores in ILJIN and
Rs.300 Crores in Amber. The first financial year investment threshold has already been
achieved by us. Now current financial year we will have to bring incremental sale on which
we will start getting 6% benefit by the next year so next year will be the first year when we
will start getting incentives from the government back and on the capex front, on the
complete consol basis in the whole group we have done Rs.415 Crores capex including all
our subsidiaries. This includes maintenance capex as well as R&D spends plus the new
Greenfield facilities which are coming up. That is the capex which we have done.

Sonali Salgaonkar: Sir in FY2023 what capex to expect?

Jasbir Singh: So our Sricity plant is now almost under completion so that capex some part has gone last
year completed now this year so we will. If I talk about all six subsidiaries plus Amber put
together including the Greenfield facility of Sricity which is there, which is going to be
completed this year we should be closing somewhere about Rs.350 Crores to Rs.400 Crores
on the capex front this current year.

Sonali Salgaonkar: Thank you.

Moderator: Thank you. The next question is from the line of Renu Baid from IIFL. Please go ahead.

Renu Baid: Good evening Sir. Sir the first question is you did mention that on the commercial side you
recently launched some solutions for the data centre market so what kind of solutions are
we providing because if I understand most of them are large size, high cooling chillers
which are there so what are our solutions in this segment if you can elaborate and who are
the customers with whom we are working?

Jasbir Singh: So these are not the chillers part. This is basically machine cooling solutions which we have
developed. All the customers are multinationals in this case. I will not be able to name them
because we have NDAs with them but we are glad to share the first PO has come and this is
going to be a decent business contribution in Sidwal moving forward.

Renu Baid: What would be in to us from a perspective what will be the average ticket size of
opportunity for us, typical say 5 megawatt or a 10 megawatt kind of data centre capacity?

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Jasbir Singh: This goes into the series of the racking system where this is purely a precision air
conditioning which goes into the complete server racks. This is not the building data
centres. You would need a chillers kind of a thing.

Renu Baid: I understand the product now.

Jasbir Singh: These are the products so these products are in various kilowatts capacity from 12
kilowatts. It goes from further down also 8 kilowatt to may be 14 kilowatt to 15 kilowatts
depending on the rack size so the normal ticket size of this is about Rs.4 lakh to Rs.5 lakh.

Renu Baid: Related to this just one follow-up so this we are doing as an ODM solution or largely we are
doing it for a couple of MNCs who were earlier importing and we are doing it as a local
sourcing arrangement for them?

Jasbir Singh: No we have developed ODM solutions and as import substitute all.

Renu Baid: Got it. Sir the second question is as in your comments did mention about targeting diverse
and markets now while earlier they were looking across components more focus around
HVAC solutions? Some of the acquisitions on the automotive side increasing the presence
and other initiatives that you mentioned so what is the business strategy on the components
especially if you see the EMS space across multiple sectors and industrial and automotive
we see the market opening up in a big way so what are our plans for the electronics business
and the components to focus on the core HVAC business or actually go big on the overall
EMS market in terms of the opportunities unlocking actually?

Jasbir Singh: Renu we are a very comprehensive integrated B2B solution provider and now since the
divisional concept has come in, in the company every division be it room AC, be it motor
division, electronics division, components or mobility they are growing on a very simple
four pillar strategies. They are bringing up new products for different applications not
necessarily for AC application or room AC applications but for different applications and
plus they are increasing geographies. They are increasing wallet share within the customers
and bringing new products so these are the four pillar strategies which every division is
following up like in electronics. Now they have diversified into variable and they started
giving it to board as a first customer . They are adding some new more customers into that
category plus they are also now catering to fan industry plus motor is now almost finalized
at a last leg of giving solutions to e-rickshaw motors and chimney motors. I think this
current year we will see some small business happening but next year again a big number
will come up and in the component space now since we have wide variety of components to
offer so we are not restricted to only at HVAC space. We can give it into the refrigeration

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space. We can give the solution in the automobile sector, industrial sector and whatever
sector it comes so that is what every division is doing and expanding in different ways so
you will see a very different number from now on. When we got listed as I told that the
spread was very different 76% contribution was purely room AC as the finished goods and
the company was half the size of what it is today but now we have successfully done 50:50
and going forward if we talk I think RAC sector as a whole will come down to less than
50% so that is our strategy moving forward.

Moderator: Thank you. The next question is from the line of Ankur Sharma from HDFC Standard Life
Insurance. Please go ahead.

Ankur Sharma: Good evening. Thanks for your time. Sir just going back to the earlier question on volumes
so like you said right 2.6 million is what you did for the full year which is if I am right is
about 24% growth Y-o-Y and broadly in line with the industry growth going above 22% at
6.4 million so probably your market share is broadly the same as last year? Just trying to
understand what kind of volumes will we do in 2023? You did say the industry volumes go
up 30% and assuming you obviously will do much better given as you have said these
customers who are doing gas charging and the complete solutions and you also I believe
have a lot of capacity also coming in right over the next year or so, so any guidance on
volumes where can we see both going 2023 or maybe 2024 whichever number you can
share?

Jasbir Singh: So Ankur basically we expect that the industry will demonstrate a robust growth of plus
30% but what we are now looking at internally is a value driven proportion rather than a
volume driven proportion. I will state the reasons why I am saying so because the moment a
customer demands that we need to supply them kits or we need to supply them knocked
down conditions, aggregate the components together minus the compressor, it becomes a
component strategy for us. It is no more a finished goods so we are seeing lot of customers
so what we are now looking into as is if 100 air conditioners are manufactured in India of
course preferably all those 100 should come from us, but today whatever percentage 23%
odd is being catered by us in terms of volume we would like this to go up but the other part
which we are not catering the 76% which are being manufactured by other brands those
number of ACs should have something of Amber in it so what we are looking at is that what
is the value proportion Amber is brining on the table in RAC and RAC components. It
should not matter to us whether they want minus gas, minus compressor, minus fan or they
want semi knocked conditions, they want half air conditioner, or they want full air
conditioner so we have started looking in to a value proportion from point of view and
today from our estimate we are at 26.5% as an industry as a complete RAC industry both in
components and this space and expect that this number can go up in tune to or may be more

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than in tune to the industry growth so we will out value the markets again in the coming
financial year as we go ahead.

Ankur Sharma: Sir and can you also share your subsidiaries the sales and EBITDA numbers for Q4 as also
for FY2022?

Jasbir Singh: So PICL I think I have already told but I can repeat it. We have done Rs.236 Crores of
revenue. In Electronics we have done total Rs.650 Crores of revenue both ILJIN and EVER
put together. Mobility applications has done Rs.289 Crores of revenue and PR has done
Rs.51 Crores and Pravartaka has done Rs.26 Crores actually Rs.25.59 Crores since we have
added them in the last quarter so that is the revenue.

Ankur Sharma: The EBITDA on Pravartaka?

Jasbir Singh: PICL is Rs.24.63, Electronic is Rs.25.95, Sidwal is Rs.67.35 and PR is Rs.7.06, Pravartaka
is Rs.2.97.

Ankur Sharma: Great thanks.

Moderator: Thank you. The next question is from the line of Praveen Sahay from Edelweiss Financial.
Please go ahead.

Praveen Sahay: Thank you for taking my question so my question Sir in the last couple of years correct me
if I am wrong we are seeing a realization going down for the RAC segment so is there some
change in the product mix? What exactly in this segment is going on?

Jasbir Singh: There is a big change in the product mix in the way that we are supplying more of indoor
units and window as a category has gone down specifically after the commodity price
increases. The delta between window and split has shrunk so it is more like a product mix
change than anything else to put together and also there is a shift towards like all this online
players they are largely into the one tonne category so that one tonne category has a lesser
realization.

Praveen Sahay: Growth path you had given for a 30% odd for industry so do you believe the numbers like a
lower tonne AC be here or go down from here further?

Jasbir Singh: Can you please repeat your question. We could not hear them clearly.

Praveen Sahay: So a followup on that like you are seeing this trend to continue and you will see a further
decline in the realization as online selling is increasing or one tonne sales is in a higher side

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because on the volume side you had given a 30% plus for the industry and also the increase
in the market share for you so is it fair to assume this realization to go down from here
further?

Jasbir Singh: Yes certainly and probably. The realization used to be monitored for the next one or two
years. The reason is that so there is a major shift in the country so country has witnessed
almost five energy revisions so now the sixth one is happening and because of that the fixed
speed as a category getting out so it is not getting to a status of nil but today the
contribution for stands 50% for the industry so it is coming down to 20% so the inverter
market should grow up.

Secondly the window categories have come down so the realization of the industry will
move in tandem to how the inverter category in the country happens. We expect five star
contribution to increase in the product segment so the realization needs to be monitored for
at least the next one or two years how like the inverter category spreads in the country and
for sure we are seeing some demand for the lower tonnage AC like normally in India 8000
BTU ACs were not sold earlier but now we are seeing that demand for those kind of ACs as
well so I would say that in the next one or two years of journey where we need to monitor
this path.

Moderator: Thank you. The next question is from the line of Rahul Gajare from Haitong Securities.
Please go ahead.

Rahul Gajare: Good evening Sir. Sir I wanted to understand if you can give us a sense on the distribution
of volume across the region and if you are noticing a faster depletion in a particular region
with the chance of stock out so that is the first question?

Jasbir Singh: Well I think because we are in to B2B space brands will be able to answer this question in a
better form but as far as our data north contributes to almost about 35% to 40% and South
has started contributing close to about 30% to 32% and West and East contributes
remaining portion of that. As far as the inventory liquidation is concerned today because of
the peak summers there are many customers who have completely run out of the inventory
but does not mean that they do not have any inventory at all so they do have inventories of
some models and they do not have inventories of few models. The situation is varying from
brand to brand. We are aggregator of demand and what we are seeing is a good uptake and a
very good summer this time after a gap of two years.

Rahul Gajare: Our channel just indicated that there is a shortage of two tonne air conditioners in the South
market so that is the reason why I was talking about stock outs?

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Jasbir Singh: It could be a possibility that two tonne is a shortage because as Sachin explained that
compressor availability due to China situation and container not available is really right
now disrupting a few models supply chain and also looking into two bad seasons and the
commodity increase impacts. Many of the customers they planned in very conservative
manner. Nobody was anticipating such a high jump despite of commodities increase there is
a shortage in the material so you can imagine what kind of demand is there for this kind a
product.

Rahul Gajare: Sir my second question is on the compressor? Now GMCC is supposed to start
manufacturing very soon and highly will set up a unit with Voltas? Can you indicate the
kind of benefit that the industry will derive from moving away from imports to local
sourcing besides the longer time period how much cost will be a factor of local over
imports?

Jasbir Singh: So first of all it is a really a good step that this critical component will be available from
India itself and we are seeing GMCC highly as you rightly said Daikin is putting up
facilities so right now only 16% of air conditioners demand was being catered and
compressor demands was catered within the country. The remaining 84% was imported and
we expect that within next two years 80% to 85% of compressors availability will start
happening in India so one it will help us to reduce our inventory turns and inventory
position because we do not need to keep high inventory levels as far as the import is
concerned and the dependability on the currency flotation exchanges that will also reduce
and of course once this product starts get manufactured here and the economy of scale come
there should be some good benefit of at least 3% to 4% points on the beloved material.

Rahul Gajare: Thank you very much for the answers. Thank you.

Moderator: Thank you. The next question is from the line of Sandeep Tulsiyan from JM Financial.
Please go ahead.

Sandeep Tulsiyan: A very good evening. Sir first question is pertaining to this entire movement from RAC to
components what you highlighted is going to happen consistently just wanted to understand
with these kind of investments coming under PLI do you think there can be a major shift to
insourcing verses outsourcing which was currently driving in our favor say over the next
five years how do you witness the overall share between in sourcing and outsourcing? Give
me your thoughts over that because the investments are committed by all the larger brands
and all of that is on components side?

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Jasbir Singh: Sure so basically what our business model is if you closely monitor the Amber’s business
model, we have mitigated to risks largely. One is brands changing the strategies of
outsourcing to insourcing to outsourcing that is purely not in our hand. What is in our hand
is to offer them very comprehensive solutions.

Jasbir Singh: What is in our hand is to offer them very comprehensive solution. If they want to insource
we are happy to serve them in component space because if you see if they are putting up
facility any brand which already has the facilities today. Out of 17 manufacturing
companies in India which manufacture air conditioners almost 11 are brands and we are
supplying them components so if brands are shifting their strategy to insourcing they have
already asked us to be ready to supply critical components like cross flow fan or motors,
nobody is putting up motors, nobody is putting up cross flow fan, nobody is putting up
inverter PCB boards. A few of them are getting into heat exchanges but heat exchanges we
are not supplying any large quantity to the customers so this is going to help us a value
based proposition.

Second mitigation in our business model is brands exchanging market share. We have see in
past from 2004 till 2011 LG used to be undisputed leader of the markets having about 26%
to 27% but then Samsung used to have a large share but then it started reducing because
many other players came in so brands can exchange market share and in future also, so we
have tagged along our solutions to the industry and we have seen that in past also when
brands have exchanged the market share Amber has been able to demonstrate a very strong
growth because we have been able to either supply finish goods or supply component in
anyway.

Sandeep Tulsiyan: If you look at the overall revenue share that you mentioned 26.5% of this 12,000 Crores so
broadly that comes to about 3200 Crores of which you mentioned 1975 Crores is RAC so
balance 1200 Crores is the component is that the right way to look at it. The revenue would
be non RAC component for the company is that the right way to look at it?

Jasbir Singh: Yes that is the right way to look at it.

Sandeep Tulsiyan: Can you give us a comparable number for last year just to see how these numbers have
changed and second part to that would be on your central air conditioning you had given
some guidance that it will start contributing to revenue from FY2023 so how much numbers
can we expect on that side. Those are the two questions

Jasbir Singh: I think Sachin will answer your CAC question especially the commercial AC and ductable
AC.

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Sachin Gupta: On the commercial side so as we discussed we started with offering of light commercial in
terms of cassette and we added ductable so this is the first year we are ready in terms of
offering to all the customer so today the contribution from CAC is somewhere to the tune
of 20 to 25 Crores which we expect to go up by somewhere around 100 Crores is next two
years so this is on the commercial side and coming to your previous question of the
contribution from the component versus RAC probably it would be better that we can come
back to your later on that.

Sandeep Tulsiyan: I will connect separately on that no problem.

Moderator: Thank you. The next question is from the line of Nikunj Gala from Sundaram AMC. Please
go ahead.

Nikunj Gala: Good evening everyone. Sir my first question is with respect to our complete build unit of
RAC. The number for the year 2000 Crores which you have mentioned over the last year if
I look at that growth, revenue growth would be 20%. Even I subtract the first nine month
and look at only Q4 RAC revenue growth that number is flattish what is the volume and the
value growth as you mentioned 8% to 9% is the realization growth excluding the
component market I am asking Sir. What is the complete built unit volume we have done?

Jasbir Singh: So in complete built units we have grown in terms of revenue by 22% last year it was 1600
odd Crores and this year it is 1975 Crores and on volume side we have already done close
to about 2.6 million where as last year we were at about 2.2 million that is the broad
numbers but as I explained in previous Q&A that there is a structural shift window has
come down and ODUs use have shifted to kits form or CKD form so largely these are
indoor units which we have done.

Nikunj Gala: So just to clarify you are saying 2.2 we have gone to 2.6 which is like 18% growth then in
that case the realization growth is very miniscule right as compared to the inflation.

Jasbir Singh: See you are looking at realization you are picking up revenue and dividing by number that
is not the current way of looking at realization. If you have to look from model perspective,
if I am supplying indoor product that is a product ranging from Rs. 5000 to Rs. 6500, if I
am supplying a window that is a product of almost Rs. 17,000 Rs. 18,000, if I am supplying
outdoor units that is a product of close to about Rs. 11,000 Rs. 12,000 so it will keep on
varying. This is not in our hand whatever customer demands we have to fulfill it. If
customers wants indoor we have to give indoor. If customer wants semi-knockdown kits we
supply that so that is what I am explaining to all of you that we need to see from Amber
perspective today is that how on a value based proposition what we are contributing that

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number is very strong that number is 26.5% today. This will keep on changing. I have no
idea if windows start selling again the realization number will go again. That is purely not
in our hand. What is in our hand is to give complete solution to customers as and when
wherever they require.

Moderator: Thank you. The next question is from the line of Pulkit Patni from Goldman Sachs. Please
go ahead.

Pulkit Patni: Sir thank you for taking my questions. Most are answered. Just one question in terms of
your employee cost. We have seen it on year on year basis increased from 100 Crores to
150 Crores. You mentioned something on ESOP which I did not understand if you could
elaborate does this include the ESOPSs and directionally how should we see these cost for
the next couple of years should we see similar kind of increases.

Sudhir Goyal: Pulkit can you just repeat 100 to 150 what you have referred?

Pulkit Patni: Sir employee cost from FY2021 to FY2022 has increased by about 50 Crores overall. Gone
from 102 Crores to 150 Crores so my first question this is almost a 50% jump how should
we look at this cost for the next couple of years and second what is the component of ESOP
that you mentioned which is included in this cost.

Sudhir Goyal: First I will answer you the ESOP so ESOP contribution in the full financial year is 15.67
Crores and in Q4 it is 4.08 Crores and on the employee cost so this 15.67 is included in the
employee cost for the complete financial year and balances are inflationary impact. One is
because of the volume increase and the value of the turnover increase and the increment
which we have provided because the minimum wage has increased.

Pulkit Patni: Yes so that was what I was trying to understand that for the next couple of years should we
assume for a percentage perspective similar magnitude, are we hiring a lot more people etc
or now this will normalize in terms of growth something like that.

Sudhir Goyal: It will get normalized since we are adding new greenfield facilities and we have to hire
some people in advance so that value is being added in the employee cost and going
forward it will normalize over the period.

Pulkit Patni: Anything exceptional here that is paid for senior management of Pravartaka or PR as part of
acquisition is that also included here.

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Sudhir Goyal: No. There is no exceptional thing which we have paid to anyone so all are in normal
category. There is no exceptional item in this and we have not paid anything extra for the
acquisition as well.

Pulkit Patni: Understood Sir. Thank you. That is it from my side.

Moderator: Thank you. The next question is from the line of Madhav Marda from Fidelity International.
Please go ahead.

Madhav Marda: Good evening. Thank you for your time. I just want to check that just continuing with the
previous question. The ESOP of 16 Crores that does not continue into FY2023 right that
will go away or that is a recurring item.

Jasbir Singh: Since we have recently announced our next level of ESOPs as well in today’s meeting so a
little bit increase will be there in the financial year 2023.

Madhav Marda: And also if I can request you to give us basically across our various kind of subsidiaries and
the standalone business the components part of it which we do for non RAC businesses that
we do. Could you give us a sense in terms of how the growth could be for the next couple
of years basically across motors, PCB, Sidwal, and also component for non RAC segment?

Jasbir Singh: Yes we can talk about the divisional part like motors is growing closely about 25% to 30%
CAGR and also mobility application is growing by 20% CAGR. We are seeing very robust
growth in HVAC solutions which we are providing to metros and also to railways. Indian
railways have also come up with new strategy they want more air conditioned trains so that
business is increasing very well for us and that will continue to grow at least 20% CAGR
kind of thing. In electronics we are seeing more than multiple jump. I would say
exponential jump. We should expect in fact at least 50% to 60% jump in electronics
division in the current year itself but of course subject to orders getting formalized with the
customers but as of now the order book is very strong so we should be able to demonstrate a
very strong growth in electronics division as well and both the Prarvartaka and Pioneer we
should except a growth of 25% to 30% year-on-year basis.

Madhav Marda: For the part of the component business where the non RAC component which we do. Like
there was for refrigerator etc.

Jasbir Singh: Non RAC components as far as refrigerator is concerned, washing machine, micro wave,
water purifier components, fan industry and others also so it will keep on varying from
customer to customer and year to year but what needs to be seen almost about 7 to 8 years

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back this non room AC category was almost negligible in the balance sheet which is today
almost about 25% in our balance sheet. So we have traveled this journey from 0 to 25% in
five to six years and this is growing very well and it is margin accretive businesses for us.

Moderator: Thank you. The next question is from the line of Keyur Haresh Pandya from ICICI
Prudential Life Insurance. Please go ahead.

Keyur Haresh: Thanks for the opportunity. I think the question that we lost some volumes of unavailability
of some components or compressor should we assume that this quarter we will offset for
that and probably there will be a flow through when you.

Jasbir Singh: Sir I am really sorry can you repeat the question.

Keyur Haresh: First thing that as you mentioned that due to unavailability of compressor we could not
produce what we planned should that flow through in Q1 of the financial year.

Sachin Gupta: So Sir we are expecting the growth but the only challenge is, if you see the earlier quarter
date Jan-Feb so we had an issue of the container because of port congestion at China but
now since March you must be aware there are lot of cities in China which are under
lockdown so still if you see the supply chain is not stable still. Still we are facing the big
challenge; the demand is good but the challenge remains same so what we are expecting is
that so the demand should move towards July and August as well. Plus there is a major
issue I will not say major issue. There is a major challenge for the industry is getting revised
from 1st July so all the brands are pre- cautioning on that side so the current model everyone
wants to consume till maybe 15th or 20th June and then from 10th July they want to get into
new models so what we see is that the demand rather than spreading into quarter it should
go until August and September. This is what we are expecting. We are excepting the festive
season to be good this time.

Keyur Haresh: But isn’t it the function of temperatures in Q2-Q3 or does it move to the next summer
only?

Sachin Gupta: Yes but if you see now with the e-com being dominantly strongly and if you see in August
there is an independence day sale through all this retails like Chroma, Reliance, and E com
then on the south side by the month of September we have Pongal so last year we were
emphasizing a good growth but obviously because of COVID it could not happen, so this
year the forecast of the discussion that are happening with brand. Obviously the curve is
getting settled so we are expecting the demand to be spread across in the second half as well

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so earlier like it was just spread just five or six months. This time we are expecting it to run
flat for 8 to 9 months at least.

Keyur Haresh: Okay understood. Can we give some guidance for the standalone business as well as for
each component as you see more bullish on the component segment, Sir can you give some
clarity of how to grow for the component business as well as for full AC business?

Jasbir Singh: The only guidance which we can give us that whatever industry does we will out value the
industry in terms of percentage so if the industry is growing by 30% I think Amber should
be able to demonstrate in value terms more than 30% of growth which means we will be
adding some market share.

Moderator: Thank you. Ladies and gentlemen due to time constraint that was the last question for
today. That was the last question. I now hand the conference over to Mr. Jasbir Singh for
closing comments.

Jasbir Singh: Thank you everyone for sparing your valuable time and being present for this call. I hope
we have been able to answer most of your queries and if you have any further clarifications
you can please reach out to us or our Strategic Growth Advisors, SGA will be happy to
address your queries. Thank you very much and have a nice weekend ahead

Moderator: Thank you. On behalf of Amber Enterprises India Limited that concludes this conference
call. Thank you for joining us. You may now disconnect your lines.

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