Creative Newtech Limited Q4 and FY24 Earnings Conference Call Summary
Financial Performance Highlights
• Strong Year-on-Year Growth:
• 24.15% increase in total income
• 77.08% rise in profit
• Q4 Total Income: Rs. 320.44 crores, a 20.48% decline year-on-year
• Dividend Recommendation: Rs. 0.50 per share, pending shareholder approval
Key Achievements
• Honeywell Business Growth: Over 100% growth
• New Product Launches: Honeywell soundbars and car air purifiers
• Strategic Partnerships: Collaborations with CyberPower Inc and distribution agreements in UAE and Indonesia
Q&A Session Insights
• Brand Partnerships:
• 2-3 new brands added annually
• Aim for 30-35% of business from new products
• Sale of Ckart Division:
• No revenue loss anticipated
• Focus on high-margin businesses
• Growth Projections:
• 25-30% annual growth in topline
• 40-50% growth in profit after tax over the next 4-5 years
Licensing and Market Expansion
• Licensing Business Growth:
• Targeting increase from 11-12% to 25-30% of total revenue in 2-3 years
• Expansion into 38 countries
• Gaming Market Potential:
• Partnership with CyberPower to leverage U.S. market share
• Focus on e-sports and high-performance gaming PCs
Strategic Focus Areas
• Consolidation in Key Markets:
• Middle East and Southeast Asia
• Technology Utilization:
• Use of ERP systems and AI for content generation
• Growth Targets:
• 25-30% increase in topline and 40-50% in bottom line annually
• Improve EBITDA margins from 4-5% to 7-9%
Share Swap Agreement
• Increase in Stake in Secure Connection Limited:
• From 52.5% to 77.5%
• Consolidation of Honeywell business for shareholder benefit
Concerns Addressed
• Decline in Total Income:
• 28% decline despite increased other income from Ckart sale
• Changes in export incentive income structure noted
• pTron Brand Performance:
• Low margins but committed margin of 10-12% with potential for high ROCE
Conclusion
• Final Remarks:
• Ketan Patel thanked participants and invited further inquiries.

Q1 FY24 Earnings Conference Call Summary for Creative Newtech Limited
Key Developments
• Participation in GITEX Africa 2023.
• Planned preferential issue to raise INR 80.10 crores for distribution and brand licensing expansion, especially for Honeywell.
• Launch of next-generation Honeywell sound bars.
Financial Performance
• Total income: INR 471.34 crores (93.15% YoY increase).
• EBITDA: INR 9.91 crores.
• Profit After Tax (PAT): INR 5.88 crores (45.98% increase).
Brand and Product Strategy
• Honeywell revenue: INR 40.8 crores with a profit margin of 5.7%.
• Focus on brands that enhance customer experience, targeting millennials and Gen Z.
• Aim to increase Honeywell business contribution from 8% to 30% by FY '25/'26.
Working Capital and Payment Structures
• Current working capital: INR 173 crores with a 22-day cycle.
• Honeywell operates under a licensing agreement with payments based on minimum guarantees or sales percentages.
EBITDA Margins and Product Mix
• Acknowledgment of low margins for the quarter but improvement in absolute margins year-on-year.
• Strategy to enhance both percentage and absolute margins as higher-margin businesses grow.
FMSG Segment Performance
• Slight degrowth in FMSG segment excluding Honeywell contributions.
• Honeywell revenue in FMSG: approximately INR 32 crores.
• Seasonal business with higher turnover expected in the latter half of the year.
Future Projections and Expansion Plans
• Projected PBT margin increase for Honeywell to 21-22% by FY '25-'26.
• Plans for geographic expansion into Turkey, Egypt, Saudi Arabia, and South Africa.
• Emphasis on appointing distributors and ensuring compliance with local certifications.
Licensing Arrangements
• Honeywell's licensing process involves collaboration and evaluation of brand resonance.
• Honeywell grants first right of refusal for new opportunities in unrepresented regions.
Conclusion
• Executives expressed confidence in surpassing previous performance expectations, focusing on EPS growth over margin percentages.

Q4 FY 2023 Earnings Conference Call Summary for Creative Newtech Limited
Company Resilience and Growth
• Chairman Ketan Patel emphasized resilience amid macroeconomic challenges.
• Shift towards digital technology has increased product demand.
• Expanded brand portfolio with additions like Cricut and Razor.
• Secured Honeywell licenses in 38 countries to enhance revenue.
Financial Performance
• Q4 FY 2023 total income: INR 402.98 crores (50.16% YoY increase).
• EBITDA: INR 11.49 crores (up 23.92%).
• PAT: INR 6.45 crores (up 24.55%).
• Full-year income: INR 1,402.25 crores; PAT: INR 27.25 crores (41.56% growth).
Honeywell Business Insights
• FY '23 revenue from Honeywell: INR 108 crores (INR 79 crores from India, INR 29 crores international).
• Target to increase Honeywell revenue to INR 180 crores next year.
• Expansion into 38 countries, including the Middle East and Africa.
Segment Focus and Strategy
• Restructured segments to align with market trends.
• Focus on growing Fast-Moving Consumer Goods (FMSG) over lower-margin Enterprise Business (EB).
• Plans to rationalize EB and consolidate brand distribution.
Future Expansion Plans
• Potential fundraising of INR 40-50 crores for Honeywell expansion.
• Target of INR 500 crores in Honeywell revenue by FY '26.
• Overall revenue goal: INR 2,100-2,200 crores.
Challenges and Market Dynamics
• EB growth linked to increased branding investment; margins becoming crucial.
• FMEG segment facing stagnant growth due to traditional distribution challenges.
• Partnerships with brands like BPL and Polycab to enhance presence.
Profit Margins and Working Capital
• Honeywell contributed INR 6.4 crores to profit margins.
• Working capital cycle improved to 31-34 days, expected to stabilize at 37-38 days.
• Rising raw material costs impacting gross profits; reduced operating expenses noted.
Brand Management and Operational Strategy
• Emphasis on brand retention strategies and long-term partnerships.
• Consideration of dropping underperforming brands based on ROI.
• Negative cash flow from operations due to increased GST deposits, with optimism for recovery.
Conclusion
• The call concluded with gratitude for participant engagement and a focus on future growth strategies.

Q3 FY '23 Earnings Conference Call Summary
Company Performance
• Total income: Rs. 428.97 crore (41.87% YoY increase)
• Net profit: Rs. 7.69 crore (up from Rs. 7.00 crore in Q3 FY22)
• EBITDA: Rs. 12.69 crore (20.16% increase)
Strategic Developments
• Impact of macroeconomic factors: inflation and supply chain issues
• Opportunities from India's digitization initiatives
• New segmental structure focusing on:
• Fast-moving consumer technology
• Enterprise business
• Growth in licensing agreement with Honeywell
• Launch of B2B e-commerce platform, Ckart
Future Outlook
• Expected annual revenues: Rs. 1,200 crore to Rs. 1,300 crore
• Aim to improve profit margins in upcoming quarters
Financial Metrics
• Debt-to-equity ratio improved from 0.85 to 0.77
• Further improvements anticipated
Geographic Expansion
• Licenses in 36 countries; target presence in 18-20 countries by 2025
• Actively seeking distributors in the Middle East and Southeast Asia
• Projected revenues from Honeywell business: INR 170-180 crores next year
Segment Challenges
• Issues in Fast-Moving Social Media Goods (FMSG) segment due to supply chain problems
• Focus on high-margin businesses moving forward
• Honeywell to be reported as a separate business in future financial statements
New Partnerships
• Agreement with Razor (gaming company) expected to commence operations within the quarter
• Projected gross margin for Razor partnership: 12% to 14%
Additional Insights
• Recent profits in electronic goods segment influenced by recognized credit notes
• Optimism about improved business conditions in China post-COVID restrictions
• Progress in establishing a dedicated business head for licensing operations
• Recruitment of experienced personnel to enhance e-commerce strategy
Conclusion
• Chairman Ketan Patel thanked the team and participants for their contributions.