Grasim Industries Limited

I now hand the conference over to Mr. Ankit Panjnathia. Head, Investor Relations. Thank you and over to yourself.

Yes, thank you, Sandeep. Thank you all and good afternoon to everyone for joining us today to discuss grapheme financial results for quarter 4 and full financial year ended 31st March 2023. Trust everyone got chance to look at the financial statements and quarterly presentation uploaded on the exchanges and also available on our website. As you are aware, we don't provide specific earnings guidance. Anything said on this call which reflects our outlook for the future or which could be constructed as a forward-looking statement must be reviewed in conjunction with the risks that the company faces. The same is also highlighted in the last line of our presentation. Additionally, for reference purposes, the recording and the transcript would be available on the site. We welcome our leadership team on this call to discuss and share key updates on our financial results, business, and segment-wise performance. We have with us today Mr. H.K. Agarwal, Managing Director, and Mr. Bhavan Jain, Chief Financial Officer. Also joining the call, we have leadership team from key businesses. We have Mr. Himanshu Kapanya, Business-Ed-Based Division, Mr. Jayan Robles, Business Health, Chemicals, Packing and Intuitors Business and Mr. Rashid Hargave, CEO of Paints Business. I now hand over the call to Mr. Pawan Jain for his opening remarks, post which we will open the floor for Q&A. Over to you, sir. Thank you, Ankit. And good afternoon, everyone. We welcome you to discuss our annual performance as well as quarter 4 results discussion. First, I would like to give some highlights on our annual numbers and then we would cover three aspects for the quarterly performance. As you are aware, the macro-global environment of our businesses has been very volatile in the years gone by due to various factors such as energy prices and inflation rates shooting up globally, demand flow down across global markets, supply chain disruptions, etc. The results for Trans-Sibir 23 are to be seen in this background. Despite the challenging macro environment, FY23 is a momentous year for Gratin. We have achieved various milestones and we hope to continue this momentum in FY24. We have constantly demonstrated growth on YOY basis and achieved highest ever consolidated revenue of over Rs. 1 lakh crores in this year. The CAGR in consolidated revenue and EBITDA over FY20 to FY23 stood at 16% annually. The consolidated level, Ultratech, Aditya Billa Capital and Aditya Billa Renewables have added to the strong growth of the underlying standalone businesses. A key point to highlight is the reported PAT vis-a-vis the comparable PAT of the previous period. The strength alone as well as consolidated pay for last financial year, that is FY22, needs to be adjusted for the exceptional items, tax-related write-backs and profit from discontinued operations accounted in the last year. Working of these adjustments has been shared in our presentation. Also, costs in the current year are elevated significantly. due to the initial costs of our high growth new businesses which impact the overall profitability. On standalone basis as well we have achieved highest ever revenue for FY23 of Rs. 26,840 crore. Standalone EBITDA for the year stood at Rs. more than Rs. 4,200 crore over the same period of FY20 to FY23 The same alone, revenue recorded a growth rate of 19% CAGR and 18% PAT. Furthermore, over the past decade, we have multiplied revenue by 5.6 times and EBITDA have multiplied by 4.2 times. The growth under dynamic macroeconomic conditions clearly demonstrate driving forces of the unified approach of five pillars of our strategy. namely leadership across businesses, constant product and process innovation, increase our sustainability quotient, capital allocation to build high-growth businesses, and constantly work for and maintain cost leadership. The highest cover revenue at standard oil level is largely driven by strong growth in two large segments, which is viscose and chemicals. Viscose business achieved highest ever sales volumes during the years on the back of strong domestic demand. Chemicals also posted its best-ever years on the back of stable demand and historically high realizations. Textile business has achieved its highest ever revenue again, largely driven by linen business. Linen Club, which is India's premium linen brand, has been increasing its presence across India. with 210 exclusive brand outlets, versus 186 in FY21 and 168 in FY22. The presence across ambios also increased now to over 8,000 touchpoints. The premium fabric brands under Soctas and Giza House are other scalable opportunities on the retail side. Furthermore, on the brand side, we would like to highlight that there are multiple brands which we have created across various categories of viscose, chemical and will be now doing so for grains. In viscose, we were able to create the full demand position, Leewa as a premium sustainable under cost-sufficiency creation category. Leewa is also associated through co-branding with some of the finest brands across the world. There are also well-established brands like Ultratex and Aditya Birla Capital which are created by our key facilities which play big in your life. Responsible corporate has been key motive where Grasim continues to work and amplify its efforts through its sustainability goals and agenda. Given the complex and intensive manufacturing processes, we highlight Grasim has been able to make a tangible impact in R523. We have been able to reduce fresh water consumption intensity by 15% compared to FY22. The GLG emissions intensity has been also reduced by 6% compared to baseline year of FY19. This is despite the increased capacity over the same period and contribution from renewable energy improved by 3 percentage points from 5% in FY22 to 8% in FY23. On the innovation side, we continue to provide markets with differentiated, sustainable solutions to drive its goals to our conscious session. For instance, there has been continuous progress on developing MMCF, that is, man-made cellulosic fiber, from the textile waste. Commercial production of Leva Revival viscose from 30% textile waste was achieved on one of the large USF lines. Likewise, commercial production of live cell fiber was achieved with up to 31% of raw material being textile waste. Now, coming to performance of quarter 4 of the year, consolidated revenue stood at its highest level of Rs. 33,462 crore, recording a growth of 16% biowise. Revenue from significant subsidiaries, UltraTech and Archipelago Capital, grew by 20% and 23% respectively. We believe that our key subsidies are direct beneficiaries of India's expanding infrastructure, growing financialization, and growing demand for renewable energy. Consolidated EBITDA stood at Rs. 4,873 crore. Record is a growth of 5% YOY, largely due to performance from Ultratech and Agitabular Capital. Standalone businesses revenue was up by 7% at 6,646 crore compared to 6,196 crore in Q3 of this year. Standalone EBITDA de-grew 6% QOQ to 542 crore compared to 580 crore in previous quarter. At segmental level, this course has sequentially recovered at a faster pace and we have exited the exited the quarter at the month high level, quarter high level. The effective Q4 EBITDA was impacted by exceptionally subdued conditions of Q3 which continued in the initial period of current quarter. However, there remains a continuous improvement month over month in the quarter gone by. The utilization levels are near to highest levels. Demand recovery has also resulted in China inventories reaching below the previous average of 23 days, which reflects well-balanced demand-supply situation currently. With course, revenue during the current quarter grew by 18% QOQ to Rs. 3,760 crore, while combined EBITDA forced the VSF and VS5 businesses put together, showcased sharp sequential recovery due to VSF now reverting back to the profitability, compared to EBITDA loss in Q3. Global caustic market remains oversupplied due to higher operating rates and lower demand. On similar lines, Indian Clore Alkali market also remains oversupplied due to incremental capacity. The CFR SEA prices of caustic soda corrected by 25% QOQ and 28% YOY during the quarter for and these are the lowest prices since September 2021. While the impact of the same could come with a delay, the current quarter revenue de-grew by 4% YOY to Rs. 2,397 crore compared to Rs. 2,487 crore in Q4F by 2022. The mix has further changed in favor of the chlorine derivatives with an increased revenue contribution of 100 BPS QOQ and YOY. To further enhance our focus on chlorine derivatives, we have acquired the required land at Velayat adjacent to our existing plant for setting up manufacturing facilities in due course. In next three years, chlorine integration would be 72% compared to 60% for R5-23. Contribution from specialty chemicals segment improved significantly. based on improved demand and softening raw material prices. Revenue performance from textile remains stable at Rs. 520 crore for this quarter, recording a growth of 8% YOY, largely driven by strong underlying demand from the wool and linen businesses. However, the profitability for the current quarter was impacted due to exceptional rise in the flex prices, which is the raw material for our linen business. The B2B e-commerce opportunity is big and scalable. We aim to be a meaningful player in due course of time in the segment of marketplace for building materials. We are on track to launch full-scale operations in C2FI24 beginning from cities in the state of Maharashtra and MP and plan to cover major part of the country in due course. The excitement is at peak. across with regards to long tower paint business which is now just three quarters away. The segment is big whereby it can accommodate multiple players where we aim to be a second largest player in Indian organized decorative paint market. The capex paint is also progressing on expected lines and would be at peak of its requirements in the current and next year. Simultaneously, activities for business plan implementation are also progressing well for commercial lawns in Q4 FY24. Coming to the balance sheet, the capex for FY23 was largely towards chemicals and tanks. Next year, there would be accelerated capex which would be undertaken for future accelerated growth of the company. To fund the same, the company has already entered into long-term loan agreements of Rs. 5,000 crore. As of 31st March 2023, companies earned the loan to date Rs. 1,780 crore. Excluding our investments in the high-growth businesses, the existing businesses continue to remain free cash flow positive. We will share the capex plan for the current financial year that is FY24 once the same is finalized and approved by the board. I would stop here. Thank you very much.

We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on your 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 queue assembles. The first question is from the line of Naveen Sarding from ICICI Securities. Please go ahead.

Hello.

Yeah, Naveen, yes.

Yeah, good evening, sir. Good evening. Thank you for the opportunity. Sir, my first question was on the VSCO segment where in slide 17 of your presentation says that the price movement for grade ESF is up 4% quarter on quarter and even the March exit is nearly 2% better as compared to the average for Q4. But when I do the same arithmetic for the reported revenues and the volumes, Sequentially, I see a drop of almost 5%. If you could just help us understand the reconciliation as to are we missing anything this particular point here. Thank you.

This is actually a other one. This slide, what you are referring is the China index price. There we have reported by CCS, China which publishes weekly information on various drivers. So in China it is Q1Q but many times this price is not reflected exactly in the same way in all the markets. So there were many things happening and in Indian market or in export market because of various other macro factors this did not happen. reflect in the same way actually you are right in your analysis that there is a slight reduction in the price realization in the quarter core so your analysis is right in that sense so obviously my question then would be

In the current quarter also do we continue to see that pinch, that lag versus global crisis or it can then have the tendency to reverse back or come back to mean that much faster?

In China also prices have corrected to some extent and in India also prices have moved to some extent convergence. So these are dynamic things. are now more or less in the similar direction I will say for the time being, current period.

I just want to ask a slightly longer like you know I mean horizon question here because I look at your EBITDA let's say this goes EBITDA per kg from FY03 okay and till 23 if I look at that average is more like you know 25 or over definitely 20 to 25 rupees per kg I think currently we are more averaging like 5 or 6 if I am not wrong for the latest quarter or in that range of 5 to 7 so when can we expect the like you know the average EBITDA per kg go back to those long term average of if not 20 at least 15-17 from the current levels please see it is going to take some time I don't want to sound very pessimistic or optimistic those levels have different era and the current era is very different

In those periods we had import duty, we had anti-dumping duty in India, China had not had so many players, the capacity had been added and so many things. But the current situation is distorted by another side of the equation that is inputs of dispose making like coal, caustics, sulfur, coal all had gone very high. So slowly slowly these things are getting corrected. So that will help to restore the market. And prices are also going to improve in due course. But currently the macroeconomic factors, the demand and all these things are greatly disturbed. So these are not normal times. So we also work to get those kinds of margins back. That will be wonderful. But I think it will be... not practical to expect 25,000, 25 rupees kind of margin in immediate near future.

So clearly I think the removal of anti-dumping duty is having an impact on the domestic market and hence profitability versus the past could see challenges to get back to the longer term asset.

It was an accident, yes, but then there were a lot of disturbances. Shipping rates were very high, imports were... Now shipping rates have come back to normal. So, so many moving pieces in the whole game. So, this is very cyclical business. The cost, the prices move very fast. So, the cycles will continue to operate. And cotton prices also were very high until May last year. And then cotton prices crashed. So, that affected all the fiber prices also. And in due course cotton prices will also get back to normal level. They will pull up all the Pfizer prices also. So there are many factors influencing the both price as well as the cost side which determine the margins. Just to add Yavin, you see these are very challenging times in sense the global developed markets have the negative consumer sentiments, the and the inflation rates shooting up, affecting the consumer sentiment, etc. And you also have to see that all the Chinese players are currently making losses in BSS business. So that situation cannot continue for long. And if you look at the numbers, I mean, even as recent as Q1 of FY23, our bargains were very good. I think we in excess of 20 rupees per kg. Yeah. So, the situations are very volatile currently. It is not that we will not achieve those numbers. The current cycle is a kind of difficult cycle in the sense energy and the input prices are up and realizations are down. So, we have the double memory kind of situation. We don't think that this is a permanent kind of situation.

Thank you so much.

Thank you. The next question is from the line of Neeraj T. Moria from Annual Research. Please go ahead.

Yeah, good afternoon and thanks for the opportunity. So just continuing with the earlier question, so if you rightly explained on the realization side for the VSF, but if you can just explain on the raw material side because we have seen the pulp prices correcting sharply from March onwards, so If you can explain us what were the average pulp cost for us in Q4 and when can the benefit of this reduced pulp prices could accrue to grassing. Be on the caustic soda side also because caustic soda prices have further corrected from March-April onwards. So how does the contract for caustic soda happen for the VASF division within grassing? And third would be the premium for the value added VSS. So what I could find is that the premium from last one or two quarters have shrunk. It has further shrunk in Q4. So was that one of the reason why the profits per kg had an impact in Q4? So this is on the VSS. Okay. So I will touch the premium on VATS first. So there was some reduction in the premium but it is within the very small range so that is not really a big factor but the main thing was the VAP demand was also impacted because of the macro global macro situation the Europe America all those places the consumer spending especially consumer spending has been impacted very severely so the VAP go in more expensive kind of government so their demand was impacted by value then The premium on the app was little bit down but not significantly. So that is not matter of great concern. Okay. The caustic transfer prices are based on the market prices. So we follow previous month market, average market price and that is the transfer price for the next coming month. It is done on a consistent basis from all the caustic transfers. So, that is market driven. So, we get the one month lag from the current export prices. And yes, proxy prices are coming down. So, that is reflecting in the lower cost of production on the cyber side. That is true. Correct. What about the bulk side? Bulk side, see the highest bulk prices have gone to about $1200 per ton sometime last year. Now they are holding at about $900. So our cost of help is at $900 now currently. Correct. So was it the same level in Q4 also? So from Q4 till now the prices have not further fallen? No. See, we have some long-term agreement where we follow previous quarter's price. And those we have now made some adjustment to reflect the current prices thicker than one quarter lakh. So currently quarter four, I will say from now onwards prices will reflect one month's lag. Okay. The second is on the chemical side. So if we see on the chemical profitability, I think our ECU was down close to four and a half rupees. similar is the fall in our profitability if we do some reverse calculation so just wanted to understand on the cost part so if you can just help us explain what was the average cost of power for us for the plastic business in Q4 and for FY23 so and has that cost coming down because now call cost has fallen even if you can just help us explain our external power cost, what we purchased from the grid. So, because just wanted to understand from you that because the realizations have fallen, how much of the cost savings we can work with going forward based on our cost of power matrix. So, maybe couple of points, right. So, the biggest impact of profitability really has to do with the costing price.

Yeah.

So, earlier Pawanji mentioned that the international prices have dropped by a significant amount. Yeah. So, it has good domestic prices, right? Correct. And that's the main reason actually why the cost of profitability has dropped. True. Second most important reason it has dropped is actually lower demand in downstream chlorine industries. So, a lot of downstream chlorine industries are dependent on textiles, on agrochem, on aluminium refining, and all these industries are actually slowing down, which is resulting in a higher negative flow rate. These are actually the two most significant factors for a drop in our cost of profitability. The power rate, to be very honest with you, is a marginal issue here. Our blended rate has not really changed much between the last several quarters it's at the rate of you know maybe 7.3 to 7.5 rupees per kilo I think it would be somewhat more detailed to get into what is captive what is not because you know one of our value proposition to be honest is we are a pan India player right we are the only player in India that can supply caustic in the east in the west in the south And each of these areas have their own coal cost, they have their own transport cost. So to look at power in isolation doesn't really build a future. So if you really want to understand our business, you have to understand that we serve cost across multiple segments in all geographies. We are a leader, for example, in providing cost to the mining segment in the east. Those are more important for us. I would say power costs will manage. We continue to focus on renewables and

changes from that is actually not so significant thank you for answering the questions in detail and sir i'll join back in the queue thank you the next question is from the line of ravi kumar from jeffries please go ahead hello yeah good morning uh good evening sir uh my first question is on your sales segment so with now 25 percent of the tickets behind and like multi-course like generally coming down globally so is this 10,000 crore of capex plan which we have for paint is this the firm capex or is there some division which could be possible in this number and a related question is on you have earlier in a couple of calls back you indicated your peak net debt will be at 2.7 for the overall business including potential losses in earlier for paint segment With significantly slower improvement in standalone business ongoing, is there a rise number which we can look at of the net debt to EBITDA for ongoing capex?

Good afternoon, Pradeep.

This is Himanshu. There is no change in guidance as far as capex of paying business is concerned.

We maintain the same numbers. I'll hand it over to Pavan.

Sir, this net debt to EBITDA is no use. it will depend upon the actual capex spend and the EBITDA how it performs over the quarters so this 2.7 or whatever number we have shared is not a static number but yes the 31st March 23 is 0.4 is added to EBITDA which of course will move up as the capex spending goes up and we borrow for capex going forward ballpark but it should rightly be higher somewhere right on 2.7 because the profitability has an ongoing business seems significantly more subdued and prolonged so right now if you say yes today it looks like that yes it will go up but we don't know after two quarters how the business is for curve if suppose ESF and our chemical businesses are back to normal levels then it may not change significantly.

On other segment question, BSS and chemical, based on, so both the segments have clearly seen decline in cost environment and BSS is also, as you said, improvement in pricing also and demand internationally. So, both of these segments should have been like sort of a bottom profitability in this quarter or like next, I mean, going forward, I mean, BSF seems like a bottom, but is the chemical profitability should also reverse from here?

So, again, see, I think that will depend upon how the global prices move, etc. See, what is in our control is the cost. So, what we are doing is that we are increasingly, I mean, we are sourcing more and more renewable power, which is cheaper power. Wherever we are possible, we are enhancing our power capacity. In real life, we are enhancing our captive power plant capacity. So, on the cost front, we are doing various initiatives. chlorine side we are taking initiatives where we are increasing the chlorine integration level so all those things are there one additional aspect is like phosphoric acid plant which was not operational in the group 4 is now operational so possibly yes we can say that it is welcomed out but everything again depends upon the global crisis as well as the impact in of the same in the Indian market. I want to add further on what Bhavanki said. So look, you know, chemicals is a portfolio, right? So, for example, if you look at Quattro 4, our specialty business, mainly based on epoxy resins and hardener, actually doubled in profitability year over year, right? So, you can hardly call a bottom there, right? Similarly, if you look within Costech, we also have a large storage derivative portfolio As Pavanji mentioned earlier, our phosphoric acid plant, we had to take a shutdown. That has restarted. So I think it would be somewhat difficult to predict a bottom or a top for the chemical business given the portfolio impact that is there. And I think what we can say is that demand continues to remain subdued. broadly across the portfolio there are certain bright spots in it maybe there are certain less bright spots in it but it is it is it is it's not correct to call a bottom and it's also not correct to say that you know it's going to dramatically drop too right that's also not the case and in VSS case is there any update on anti-dumping duty review by government so the EGTR has recommended importing anti-dumping duty on imports from Indonesia and China, but the finance ministry did not accept or they did not act on that, so that recommendation lapsed after 60 days period. So, as a matter of fact, as a result of that, there is no anti-dumping duty on VLS currently.

Okay, so they are not moving forward? Review is not moving forward?

They will not do it immediately and we also do not have any new information to submit immediately. So, DGTR can only recommend and then that is somewhat policy matter or the way finance ministry looks at the thing. The Ministry of Exiles has introduced quality standards for VSS imports. So for the time being, until then they have certified all the exporters, so the exporters cannot send VSS to India. So that is kind of reducing the imports of VSS into India for the time being.

Okay.

I think this last question. Sorry to interrupt, sir. Please turn the queue back.

Okay. Thank you.

Thank you. The next question is from Lionel Sumangal Nivartia from Kodak Securities.

Please go ahead. Yeah. Good evening, sir. Thank you for the opportunity. The first question is on the volume from both the divisions. In the past, we operated both the units at more than 95% utilization, which here both the units are in the 80%. we are also having this expansion at the chemical division. So, from the volume growth and utilization point of view, any direction you would like to give for FI24?

So, for VSF, we are now operating at high 90s or mid 90s. So, mid 90s, 93-94% capacity utilization and we believe that we should be able to maintain at that level going forward. But again, the market remains very uncertain. So many low level uncertainties, all energy price, Ukraine-Russia war, China-US issue, US banking crisis. So everything has some bearing on the tech side market in general. So we are all subject to all those But for the time being, we are operating at 90 plus capacity level. Coming to chemical systems, we have reported 89%. By the way, I do believe that our utilization is still better than most of our peers. So I think that is what you need to compare again. You mentioned about the new investment. So I would just like to kind of remind you that the investment for example, which are coming up in the next couple of quarters, frankly, related to our epoxy business in the life, which is not only completely utilized, but actually, you know, making good profit. There are some downfield expansions coming, as we have reported, for example, on our Deepipuram site, which is in the south of India, which is a market that is undersupplied from a plastic perspective. A lot of plastic moves from west to east. So, we don't really see Utilization challenges due to demand side of costing. Some of our investments actually are coming in in a very toxic business. But we do see that the end market for chlorine downstream industries is to pick up and it will pick up because many of them supply to a lot of basic industries such as diatomizers, pharma, etc. So, we don't see significant downside rates for our capacity utilization.

Okay, got it. So, second question is with respect to capex. Now, this year also we spent somewhere around 2000 and odd crores in the existing business and chemical business. I mean, what sort of capex, I mean, spending capex for spending these brownfield and deepwater neckings is less which would be spent in FY24.

and usf are we considering any upstream expansion brownfield or anything given here everything high utilization for the past expansion so the major part of vsf business effects was completed with the completion of our delight expansion now some investments are going on with the de-bottlenecking of our miracle fiber capacity that is coming to that will be complete in the coming quarter at the end of this quarter or mid of next quarter so that is not a big surprise anyway and then there are certain other environment related and the cost improvement projects now as we are utilizing high capacity we still We will work to increase the productivity of our existing plants. We will try to produce, spread the assets harder. And we are also planning some capacity addition for Liacel fiber plant, but still it is at the planning stage. But we will finalize our plan soon. You know, I just mentioned in the previous call, you know, that In fact, our epoxy expansion in the lab. Next to that is our ground field expansion for caustic at our Bipuram site. And then there are some other smaller projects in sodium derivatives, whether that's polyaluminium fluoride or monofluoroacetic acetate and those types. Sir, I missed the number. Did you share any number? We are still working out for numbers for all the businesses for the current financial year. As I mentioned in the opening remarks, we will come back to you with the numbers once the overall number, capex number for the company level numbers are finalized.

Sir, just some clarification on the pain provision, this 7,500 which is approximately left, we said we will accelerate. So, this pending capex will be spent over what period? So, is it two, two and a half years?

So, we are on track on the project. We will consistently maintain that we will be launching our services in quarter 4 and we are on track of building our 6 plants. So, our initial guidance, we are on track on the initial guidance.

So, the plants, all the plant effects will be done for the plants in next financial year, by next financial month, by 2025. So, the major capex will be done by end of FY25. The small leftover items may be carried forward in the next year. Otherwise, 24 and 25 will be the larger part will be completed. Got it, sir. Thank you and all the best.

Thank you. The next question is from the line of Shamsundar Sriram from Franklin Templeton. Please go ahead.

Yeah. Hi, sir. Great. I'm audible. Thanks for the opportunity.

Yeah, please.

My question is on change. Given that Asian change is more strong in the West and the South region, from a go-to-market approach, how do we plan to take it up market region by region, just any flavors that we can share? And to that end, have we started building our network and dealer encampment As well, any comment on the progress would be helpful.

So, this is Lakshit. Let me take his answer. So, we have obviously studied all competition, including the market leaders. And we have a clear view of what are our key tasks, whether it is east, west, north and south. And as you would understand, like we are giving updates on our CapEx progress, Obviously, the work in terms of meeting the trades, meeting the dealers, trying to understand, collecting data is also all going on track in line with our proposed launch.

Thank you.

The current participant is not in the queue. We'll move to the next participant. The question is from Lionel Sarfraz Bimani from J.P. Morgan. Please go ahead.

Hello. Am I audible?

Yeah, please, go ahead.

Yeah, sure. So, my question was in continuation of the Pains discussion that we are having. So, first clarification I wanted is in terms of CAPEX that you said. So, the planned CAPEX will get done in FY25, but we are launching the product in FY24, fourth quarter of FY24. So, this means we will not have a pan-India or like, you know, a big entry per se. I mean... Can you please give some clarity on this side?

We will repeat what we have been saying consistently. We are in the process of building six plants which is a large capacity and we will be starting our services around the quarter 4 and in a phased manner we will reach pan India.

But we will have sufficient capacity to reach Pan India as more and more plants get launched.

We don't have to wait for all plants to be ready for a Pan India launch.

Okay. So this Pan India launch would happen subsequently for any target that you have in mind, sir, for this? And any particular region, as you were just talking to the previous participant, that you already have all these discussions going on with dealer networks, etc., but any particular region that you're looking for first entrants?

No specific reason. We are a pan-India player. Our ambition remains pan-India. It is whatever is realistically possible, we will move in a very systematic manner. There are no further guidance on specific geography at this stage.

Okay. Okay. Those were my questions. Thank you so much.

Thank you. We have Shamsuna Shuram reconnected from Franklin, Templeton. Please go ahead with your question.

Sorry, I got disconnected. Just considering on that pain question, we understand in the initial couple of years, the pain business will need some amount of cash inclusion. Now, I have two parts of the question. As for our internal estimates, when do we expect EBITDA breakeven and cash breakeven for this business? Gold power can't change business of the cash breakeven by F26 or F27. Is that a fair understanding? Secondly, the second part of the question, if you think of re-sensing existing cash flows from the other businesses, how much maximum cash losses should be taken from the same business from an outer bound perspective over a period of two years? If you can share some perspectives on these names, that would be very helpful.

I think that's a very myopic way of looking at our overall change business. I think you have to see the big picture and I will take a minute to try to explain you the larger picture as far as paint business is concerned. Just like grass is a very strong player in the textile market, we are intending to become a strong player in the building materials market. And I am sure you must have seen building material market or overall sector is the second largest sector which constitutes about 9% GDP of the country.

On overall basis, it's about $300 billion. And currency paint is about $9 billion in size.

The building material industry is doubling in about 7 to 8 years time period. But paint is growing almost at 1.6 times the building material industry. And with multiple changes in trends on paint, our expectation is the market will continue to grow and there is a sufficient gap in the market for a strong national fair which can consistently supply material as well as make sure its presence is not only in urban but in rural markets.

So we are very optimistic of our results and we are not giving any guidance

As regards to specific cash losses, we believe that the market is ripe enough for a second player and large enough to be able to accommodate the capacity that we are building.

So, essentially, you are saying he may not be, I mean, he would be break-even, a bit of break-even quite early on than I was saying. I mean, that is what it comes out. Because the market is large enough for Anuta player, it means that he would not have much cash losses that is on my mind. And more, break-even could be much more nearer than what I would think at this point of time. Correct? Is that a fair understanding?

I will repeat what we have said specifically. Our team is profitable number two players and we will make every attempt to meet our objectives and missions that we have started to build our business on.

Thank you very much sir. Best wishes on this new initiative. Thank you. Thank you.

The next question is from the line of Motil Tagarwal from Motilal Oswal Financial Services. Please go ahead.

Hello. Good evening, sir. I'm Aditya. Yeah, yeah, yeah, please go ahead. So just one question regarding the B2B e-commerce business. Let's say you have about to launch full-fledged business in B2F by 2024. Can you throw some light like what is the current status and what kind of revenue and profitability we are expecting for FY24?

Just a broad-based number, sir.

So in regards to plan is I think it's quite... We will launch the full-scale platform in Q2 of this financial year. But it will be in phases. In the first phase, we will cover two states, which is NP and Maharashtra. Based on the experience, we will scale it up and then it will go for a pan-India launch in a phased manner. As regards to the profitability, as we have, I think, initially shared, it is not going to be profitable in the year one. It is a, I mean, the gestating period for the business. But the opportunity is very large in the sense the total market for the building material is more than $100 billion. The digital share today is less than 4%. There is a large opportunity. We have the kind of network available or the required strategy for the market to test through this B2B e-commerce tool.

Okay. Thank you, sir. Just one bookkeeping question. Can you share the BF by EBITDA number at the risk for the quarter?

BF by EBITDA? I don't think we give the BF by ESF separate numbers. For the risk cost business total number, we have already shared in our...

Yes, yes, the VSS number is there.

I will repeat that VSS which was negative EBITDA in Q3 is now positive EBITDA in Q4.

Okay, okay. Thank you, sir. That's it from me.

Thank you. The next question is from the line of Naveen Sadegh from ICICI Security. Please go ahead.

yeah thank you for the repeat opportunity just two quick questions one is on the working capital side see a huge increase in inventories not so much in receivables not so much in payables so is it a temporary thing or is it anything specific more got to do with increase in raw material prices or what could be the reason for the almost 500 crores repeat increase so Q4 there has been some

Demand slow down as we have said earlier also. So the inventory built up is a temporary situation. We hope that this should be back to normal in Q1 or Q2.

Understood. So it's largely using finished goods inventory which is just a temporary situation.

Yes, temporary situation.

And second, I'm sorry, but there is so much more interesting things, so I couldn't have it past this. Is it fair to assume that by Q4, we'll start seeing the buzz, be it advertisements, be it, like, you know, to make it more sound like a large nationwide player is coming. Is it fair to say that by Q4, we'll see a buzz around that or could be before that as well? Thank you so much.

So, you know, like we said that we will start rolling out our products in the market from Q4 and we will do what it takes at the right time in terms of creating the pulse. But obviously our intent is to create a lot of pull in the market and whatever it takes from all angles of sales and marketing will be done. But Q4, we will just start the products in Q4 so we will have to time our activities accordingly.

Sure, sure. Look forward to all of that buzz. Thank you so much.

Thank you. The next question is from the line of Prateek Kumar from Jefferies. Please go ahead.

Thanks for the opportunity again. A couple of follow-up questions.

Firstly, on B2B e-commerce, we are looking to have a website launched by 2024 which will serve to customers in Maharashtra and M.C.

Is that correct?

No, the website will be, it will be a universal website. It is not limited to the MPN Maharashtra, but our services, we will start in phases. So, in the Q2 of this year, we will start with MPN Maharashtra.

Hello. Universal website presence for both vendor and customer I mean both sides of that platform.

Yeah, yeah. We will have the customer. Basically, the vendors will be available. Whoever wants the batteries will be able to get whatever the product categories we are offering. They will get all the details. The customer segments, as we have told earlier, will be the MSME contractors and the retailers.

So, MSME customers and retailers would largely be located in Maharashtra MP to start with and vendors from where basically the sellers could be anywhere in the country.

Yes, sellers will be and whoever can service them will be available on the platform.

And when we say that they are already starting to launch like customer support, logistics and lending in the market,

So we have, I mean, we have almost closed the suppliers kind of contracts in some categories. The service providers like logistics also, that is also going on. The final agreements will be reached somewhere in this quarter.

Okay, it will also consume your like paychecks or working capital in a way.

CapEx is not a very large amount. It will be, of course, there is a CapEx going on. Right now, we have partnered with six technology partners already on board. They are executing the required technological solutions for the platform. So, there will be CapEx, but it is not going to be, the e-commerce business is not a CapEx oriented business, CapEx integrated business. We will have the inventories only for the part where the servicing is kind of very, I mean, critical situation.

Otherwise, inventories will be with the sellers only. Okay. Yeah, and just one question on VSF demand and exit of the FIH 24, FIH 23, you said it has been stronger than the quarter assets. So, will it be possible to quantify the same? I mean, your like last quarter was like a quarterly loss in VSF segments. Will it turn like positive only in March month that way and

No, the demand is increased every month of the quarter, but then there is lot of seasonality involved in vehicle business and in terms of demand also. And like Chinese New Year and the seasons and the spring, all those things play a very important role. So, yeah, demand was good in the fourth quarter. And currently, demand is a little bit weaker, but not too much difference. Not a big deal.

But our volumes have actually increased more in domestic segments as our domestic mix has increased 21%.

Some in domestic, but some in export also.

Okay. Okay. Thank you for this conversation.

Thank you. The next question is from the line of Rajesh Gajra, Informist Radio. Please go ahead.

Yeah. Hi, sir.

Can you please share the EBITDA margin, the total standalone EBITDA margin for the March quarter as well as the year-ago quarter and the year-ago quarter? Thank you. EBITDA margin for the March quarter. Just a minute, sir. For this quarter, Q4 of this year is 6.4% at the overall company level. I'm sorry, I did not catch that. What is the number? 6.4. 6.4%. Okay, okay. 6.4%. Right. And year ago quarter? Year ago. Year ago. No, no, no. Not the whole year. The March quarter of 2022. Yeah, yeah. Just a minute, sir. Hello. For FY2223Q4, that is the quarter grown by, okay, habitat margin, total habitat margin is 8%. And for two, four last year, what? Thirteen percent. Two, two, four.

Thirteen percent. Okay. Okay. Okay. Thank you very much.

Thank you. Thank you. As there are no further questions, on behalf of Grafton Industries, I conclude this conference. Thank you for joining us. Adhima now to finish your lines.