Grasim Industries Limited

Ladies and gentlemen, good day and welcome to Grazian Industries Q2 FY25 earnings conference call. As a reminder, all participant line 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 star then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Ankit, Head Investor Relations. Thank you and over to you, sir.

Yeah, thank you, Cesar. Good morning and thank you all for joining this call to discuss our second quarter financial year 2025 for Bourbons. The financial statements, press release and presentation are uploaded on the exchange and on our website. Our management team is present on this call to discuss our results and business performance. To introduce them, we have with us Mr. Harikrishna Agarwal, Managing Director and Mr. Bhavan Jain, Chief Financial Officer for Gratham Industries. Also joining with us on this call are Mr. Daryan Dugle, Business Head of Chemicals, Fashion Yarn and Integrative Business. Mr. Himanshu Kampanya, business head and Mr. Rashid Hargave, CEO of Archange Business, which is Birla Hussars. We also have with us Mr. Sandeep Komraveli, CEO of Birla Hayward, which is our B2B e-commerce business. For safe harbor, kindly refer to our cautionary statement highlighted in the last slide of our presentation. Let me now hand over the call to Mr. Pavan Jain for his opening remarks, post which we will open the call for Q&A.

Thank you, Ankit, and good morning everyone. We welcome you to the Grasim industry's winnings call for the quarter-ended 30th September 2014. At the outset, Aritabella Group and Grasim family wishes each one of you and your families a very happy Diwali and prosperous new year. Vikram Samat, 2081. Let me start with the macro commentary and then I will talk about the business environment and performance for the quarter ended, that is, September 24. The year 2024 is witnessing increasing complexities around geopolitical environment and supply and diversification. These complexities are creating broad imbalance around the world economies. Talking about major economies, the recently concluded election results in the U.S. are likely to put focus on growth, inflation and interest rates. After surprise 50 basis points rate cut delivered in September 24 by Fed, it further lowered its benchmark overnight borrowing rate by 25 basis points in November. This brings down the target range from 5.25 to 5.5 in September 24 to now 4.5 to 4.75. The rate cut was on the back of stronger than expected data on labor, inflation, retail sales, consumer sentiment, and the GDP growth. The U.S. GDP growth continues to grow over 2% for the last eight quarters in line with the September projections of summary of economic projections released by trade. Moving on to the emerging markets, China announced a higher purchase of 1.4 trillion U.S. dollars as economic support. However, the nominal GDP growth rate continues to remain impacted by the country's focus on stabilizing its real estate market, prevent financial hits, and prioritize industry development. Coming to India, multiple domestic growth indicators have shown signs of easing in recent months. Rural consumption momentum appears to have convincingly taken over urban consumption on the back of better farm activity led by the normal bond zones. While the IIP has recovered in September 24, India's inflation has touched 6.2% in October 24, which is highest in 14 months, and average FY25 inflation now leading at 4.8-4.9%. These are higher compared to RBI FY25 inflation expectations of 4.5%. Coming to our company, present across key themes of growing Indian economy, driving diverse opportunities remains the key pillar for delivering consistent growth at Graphene. Talking about our financial performance, for the quarter, consolidated revenue grew by 11% YOY to Rs. 33,563 crore, posting of YOY revenue growth, which highlights Gratin's consistent journey of growth, innovation and leadership. The standalone revenue for the quarter stood highest ever at ₹7,623 crore. Consolidated EBITDA stood at ₹4,042 crore, which is lower by 10% YOY, mainly due to lower profitability in cement business and initial investments in building Villa offers a leading brand in the Indian decorative paints market. Talking about fragmental performance, let me start with the building materials. Ultratech continues to outperform the industry growth rate. The company has added grade cement capacity of 9.9 million tons till October 24 in the current financial year and plans to further add 6.3 million tons, taking the total grade cement capacity to 162.4 million tons per annum by FY25. And of course this does not include the KSORAM and India Cement capacity as the acquisition process is underway awaiting regulatory approvals. The company remains on track to achieve great cement capacity of over 200 million tons per annum by FY2027. While there was demand slowdown due to elections, intense heat conditions and then longer duration of monsoons in most part of the country, realization also declined this quarter. Such increasing slowdowns do not impact the long-term growth hypothesis and we remain confident that Alkatech remains poised to ride on India's growing demand for infrastructure and urbanization. Our paint business under Gaand Vrila Opus continues to perform in line with our expectations. Utilisation levels are ramping up month on month at three plants commissioned in Q1, namely Vrila, Panipat and Chaiyar. We have also started trial runs at two more plants at Chamras Weather in Karnataka and Mahad in Maharashtra. Our 6th plant at Kharagpur Investing Hall is expected to go live in Q4 FY25. After successful launch of first advertisement campaign of Duniya Ko Rang Do, which established brand Vrila Opus in consumer's mind, we have now launched second campaign Naye Jama Meka Naya Tent. This ad campaign focuses on superior quality of Vrila Opus products across interior, exterior and water-proofing categories. Geographic reach and dealer onboarding activities are as per plan and we are on track to exit this year with high single-digit market share in the Indian decorative paints market. Revenue of our B2B e-commerce business Viva Timat is gradually ramping up and remains on track to achieve $1 billion revenue in 3 years time frame as announced in April 24. The business has expanded its PAN India reach to over 375 cities across 26 states and union territories. All of its offerings are expanded to 35 product categories comprising of 40,000 SKUs sourced from 300 plus Indian and international brands. The business is continuously improving its revenue of digitalization by launching multiple tools for buyers and sellers and building a completely digital B2B ecosystem. As regards to revenue data of both these new growth businesses, you will please appreciate the industry landscape wherein we are the new entrant. You will please also appreciate that we are well known for sharing all relevant details at the appropriate time. For cyber business reasons, we have seen improving trends globally in demand for cellulosic fibers due to inventory normalization and better sustainability credentials. Stable demand scenario globally has led to YOY improvement in China CSF prices by 6% in Q2 FY25. Furthermore, in China market, the inventory levels have come down to 8 days in this quarter from 12 days in Q2 of last year. Domestic relations improved on bank on the increase in international prices. CSF business achieved highest ever purchase sales volume of 219,000 tons in this quarter. CS5 business remains impacted due to low-priced imports from China, though the demand marginally improved on the day of festival time in India. Moving on to chemicals, EFR at Southeast Asia caustic prices marked fifth consecutive quarter of improvement. Domestic prices of caustic also showed improvement during the quarter. However, EQ is lower due to oversupply of chlorine, leading to higher negative relations. Our washing soda sales volume were lowered by 4% YOY mainly due to maintenance shutdown of captive power plant at our largest integrated facility at Williatt. Chemicals business EBITDA was Q2F by 25 was up 16% YOY mainly led by chlorine derivatives and specialty chemicals. Financial services business recorded robust performance across different businesses with NGFC segment reporting revenue growth of 19% and housing finance and life insurance segment reporting revenue growth of 42% each on YOY basis. The company's omnichannel architecture provides customers flexibility to choose their preferred mode of interaction across digital platform, branches and virtual relationship management. The business G2C platform ABCD Abitubela Capital Digital, which went live in April 2024, offers 22 product categories and has more than 2.5 million ad customers. Total lending portfolio and average set under management stood at Rs. 138,000 crores and Rs. 154,000 crores respectively in the current quarter. We wish to also inform that the proposed amalgamation of Aditya Kapila Finance with Aditya Kapila Capital, which was announced in March 24, has received no objection from RBI. The amalgamation scheme now awaits approval from MCLT Andhrawa and is expected to get completed in next six months. In other businesses, during the quarter, our textiles business profitability was impacted by high input costs in within business. The business reported EBITDA loss of Rs. 17 crore. The renewable business capacity has surpassed milestone of 1GW. With the projects under implementation, the renewable capacity is expected to reach 2GW in the current financial year. The business has strong anchored clientele with Agitabira Group companies representing 42% of the existing customer force. On the CapEx front, the Board has approved additional CapEx for current financial year of Rs. 158 crore, of which Rs. 118 crore is for the capacity increase at the bulk plant at Harrier and Rs. 20 crore is for the normal modernization at Sextile plant. For AFI 25, the revised CapEx is Rs. 4700 crore, of which growth CapEx in new businesses is about Rs. 3000 crore. which is about 64% of the total profits. As you are aware, we have announced raising Rs. 4,000 crore via RISE issue in October 23. We have experienced an overwhelming response with subscription of nearly two times. Out of this, Rs. 2,000 crore is already raised and now the board has approved for second and final call on balance of Rs. 2,000 crore. The record date has been fixed as 13th December 2021. On the sustainability front, we are happy to share that our global ESG score from DJSI stands at its highest ever level of 71 with a significant improvement of 5 points and it brings us among the top 13% of the companies in the industry globally. We can now move on to Q&A. Request the operators to open the Q&A.

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 their touchtone 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 Nihir Shah from Nomura. Please go ahead.

Hi sir, good morning. Thank you for taking my question. Rashid sir, this is actually one of the things, the region, if you can give any insights on which regions are doing well for you and contributing to higher sales given that you already have a pan-India presence across the coast. Are all regions receiving a full range of products So that's the first question. The third part to that is on the painting machines, say if a dealer has you know already two painting machines, are they keeping yours as a third one or are you seeing any replacement happening there or are you completely doing what's called is there is just one painting machine you know or no painting machines. That's the first question. Okay.

So, thank you.

Let me answer the first question first. So, yes, we are now present in India in all the regions. But as you would know, we first started with the north and south. And the eastern region was the last where we entered with our products. So, in terms of recency, the eastern region is maybe a couple of months behind. But what we can tell you from the trends of the last three or four months is that more or less all the regions are performing very well and they are all more or less in line. See, we are adding distribution growth which is happening symmetrically across all the regions, which is also getting us growth. So, I think it is very early for us to say if a particular region is outperforming any other region. There are small gaps here and there, but by and large we are happy with the progress across India. In terms of tinting machines, like we said, we had a very aggressive plan to place a very large number of tinting machines and we are actually absolutely in line with the plan, maybe even a bit higher. What I can tell you is that all the dealers who have taken our machines, in many cases, they have taken our machines as the second or third machine also. In some situations, they have removed a competition machine or, you know, put it in the backyard and using our machine more. Because we also have information about our machine usability. Because, you know, we are using a technology for the first time in the same industry that gives us live information of thinking. So, we are very happy that the large number of kenting machines that we have placed have made their place permanent in all ETs.

Got it. Thank you. Secondly, I wanted to talk a bit, if you can talk a bit on, you know, the third party certification that you spoke about, you know, which is confirming the first time. Can you give a little more insight on what that statement really means and what is a third party certification?

So, you see, we have launched a lot of products and, you know, we were very confident about the product quality that they have superior performance. So, we have gone ahead and tested some of our products with the NADL certified labs. One of the labs is GVM, which has given us the certification of performance, which also allows us to make some claims and support them.

Okay. Sorry to interrupt you, sir.

I would request you to rejoin the queue for your follow-up question. Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all the participants, please limit your questions to two per participant. If you have a follow-up question, I would request you to return the queue. The next question is from the line of Manoj Menon from ICICI Securities. Please go ahead.

Hi, team. Just a couple of clarifications on the change business. One, Brexit and team, if you could comment about you know, some numbers in terms of primary, secondary, revenue, let's say, collection efficiency, you know, some of those operating virtues, please. Thank you. Sure. So, Manoj, you know, while Bhavan said that he will share the financial numbers at the appropriate time, what I can tell you is that our operations are running very efficiently. We also measure sell-out from dealers. So, you know, sell-out measuring, unlike the FMCG industry, is a bit challenging. because the painting actually works in a different way. But we have two mechanisms. One is through our track and trace when a contractor scans, we know from which dealer has it come. So we are able to project the sellout. Secondly, we are also doing audits of a large number of stores and working backwards on the inventory line in the dealer. So what I can tell you is that our sellout is very high. At any given time, none of our dealers is holding more than a certain couple of weeks or three weeks of stock. So we are very confident that more than 55-70% of stock is already sold out. Also, you would know that we have tinting machine with synchronized line. So we have actual information across a very large number of stores. how much product is being printed, which also gives us an idea what is being sold out. Also from a connection efficiency point of view, we are very happy. See, we are adding a lot many dealers month on month and the cycle of payment from the dealers is pretty consistent and we don't see any outstanding line in the market which is of any concern. In fact, it is quite healthy and maybe better than the market now. That's pretty glad to hear. Second, the two sub-questions here, and that's the last one. One, you know, in an industry in which there is no MRP concept, right, it's only dealer-operated prices, I mean, okay, I'm thinking about the dealer's profitability in the context of you actually going wide, or the ability of the dealer to retain all the margins. Isn't this reduces because, you know, there is always a competing dealer nearby? Second top question here is the, any comments on your thoughts about inorganic, is it relevant or not even in the thoughts currently? Thank you. Yeah, so yes, on MOP, well yes, the consumer, there is no MRP on the pack as a consumer. But what we can tell you is that, you see, we have an offer for the end consumer which is in the form of 10% free. And I would also want to use this forum to give a clarification. Because some analysts and also some competition companies have been making comments when we have reduced the stock price 10% free promotion. I would want to clarify that 10% free on all emulsions across 10 and 20 liters exists panically. Now let me come back. The dealers are getting our products at a landed price which is far attractive as compared to competition. They are very happy. to sell it at a price which is more or less equal to the market leader. In some places, some smart dealers are also charging 2% more because there is 10% free. So, from a profitability point of view, the dealers are facing a challenge of profitability and they see Birla Opus as an important vehicle where they can actually generate better returns. So, while we are driving distribution and we have a very large number of dealers, we don't have any significant use of any price challenges here or there. So, we are quite confident that we are able to maintain that. Your second question, yes, you know, there have been news in the market about inorganic and things, you know, which have been coming in the past few weeks. But our CFO has already given clarification to SEBI that at the moment there is nothing happening like that. Okay. Thank you.

Thank you. The next question is from the line of Samangal from Code of Securities. Please go ahead.

Yeah, thank you for the opportunity.

So, my first question is more on a big picture strategy point of view. If you look at VSS division, it's running almost at rated capacity.

So, beyond basically whatever is the deburring making, what are the thoughts on capital allocation years from the next three to five years point of view? Given the commodity nature of business and low ROCs, do we believe that majority of fresh capital will get absorbed in new ventures like paint?

Yeah, so you are right about the VSX business. It is already operating almost at 100% capacity. You are also, I think we have shared the data and you are aware that the VSX business is growing at faster speed than the other textile hybrids in the country as well as globally. As the demand continues to grow, we will look at some opportunities. At present, we are working on the devotional making opportunities that we have already shared. The other lever is the export, which we are currently doing, though of course at a very low level, but that lever is also available for meeting the domestic requirement. I will leave the agroalgae to you. So, yes, this is a good situation to be and tropical annotations is an important metaphor for us. While new businesses have shaped well and they are in the process of developing into their full potential, we will also nurture existing businesses with basic driving force that we have to maintainable market position while maintaining profitability also. So all our new SAPAC systems are being formulated keeping this profitability factor in mind in a very important manner. So there are many diverse and we will examine all such diverse in expanding our SAPAC capacity for here in India.

Okay, understood. Sir, I have one basic question on the paint division. I mean, at the start of the year, we said high single digits exist. Actually, it was somewhere around 8.9%. So, I just wanted to know, based on how 1S has been, what is our business plan and a little bit of ongoing industry headwinds, is there any positive or negative things to our confidence?

And also now, given that we are well on the ground, And next three plants are also coming up. Some color if you can give for how should we look at H526? So, let me take this question. Firstly, you know, the mention about advent in the industry. So, yes, we have seen the results coming out from all the paint majors. As far as we are concerned, We indicated that we will exit the year at high single digits. We are well on that path. So, if we take a look at our sales for last quarter or if I take a look at my sale of September and my September is significantly more than my July because I am going every month, we see no reason to believe why we will not be able to exit the year at high single digits. Secondly, from an ignorant point of view, you see, there might be some slowness in the But I think there is a bit of exaggeration about headwind and slowdown from competition because if we add our number to the market, the market is actually a bit in the game. And we have also had a reasonably good October. So we see no reason why we should be shying away from what we have said that we will exit the year at single digit at the higher level by the end of the year. On FY26, that is our next year, That is a part of a journey that we have disclosed and, you know, that will happen. So, in fact, we would not want to mention all that right now.

Thank you. The next question is from the line of Sita Rathi from Morgan Stanley. Please go ahead.

Yeah, thanks for taking my question. My first question was probably in continuity to the previous question with respect to the pain division. Now, you just mentioned that the demand conditions are not as bad as it's been called out. If you could just elaborate more in terms of how it's working in favor for you when you're adding distribution at this point of time and if there is more color you can add in terms of why you're saying that the demand conditions are not as bad.

So, you see, like we said, we have sold a certain quantity Our standouts are excellent. Retailer acceptance is high. We are getting counter share which is very good in all the counters where we are present. The acceptance by contractors and dealers is also very excellent because the quality of products that we have launched is better than what exists in the market. So, I think we have been able to excite this big ecosystem with the entry of Zerla offers which is making the dealers very positive. And this is why we also see a lot of dealers coming and adopting us. So, if I see from our business point of view, yes, the proof is that we have taken market share from competition. There is, you know, it is extremely unlikely that I would have generated thousands of new customers who have started to paint who were not existing in the ecosystem. So, I obviously have taken market share. But, if we see the overall ecosystem, yes, there could be some flow down the market, but the market is definitely not invested. So that is how, you know, we will move the situation.

Very clear. Just to follow up to that, you know, the competitive intensity for sure has gone up from the existing players. Is there anything you are witnessing from your end which is, you know, making you make changes to your strategy going ahead? And my second question is also connected to that is that, You know, as we have all our capacity on board by the end of this year, this calendar year, what will be the focus area? I'm not asking for numbers here, but, you know, from brand building, distribution building, where would we want to be ahead, you know, in the next six months in terms of focus area?

Okay. So, let me first mention on the competition intensity. So, we have already in our CA book imagined competitive intensity and it is more or less playing out for that. So, it is not a question of surprise for us, but yes, that what we had assumed that how competition will behave is happening exactly after that. Also, let me add that the level of competition in the paint industry as compared to other paint industries was very low. It was a question of, you know, a market leader doing something and everybody else following it like 5-6, you know, like 5-6 or 100. We have kind of broken that comfortable ecosystem and I think it's for the benefit of the consumers. because there is better product, there is more choice. And I think it was bound to happen. So from a market reaction point of view, obviously, if you read the results of competition, you know, they talk about higher trade discounts, etc. You can see that reflecting on their P&Ls. So it is the result of what we have done. If you ask us, going ahead, going ahead, our playbook is same. We will continue driving distribution. We will continue driving handler share, as you say. our counter share among all dealers. We still have a long way to go in terms of distribution because the market is very big. We are also going to complete our portfolio. There are some products which are still entering the market which are going to enter. We are also focusing a lot on opening speciality franchise stores. All these initiatives which we have put will keep continuing and our revenue will be driving top line, driving market share. But obviously, like we have said that, you know, we want to be profitable at the end of the whole three years. So, that is the long-term view. So, there is no change in that.

Thank you. The next question is from the line of Neera from Amgen Research. Please go ahead.

Yes, sir. Thanks for the opportunity.

I have two questions on chemicals. So, first is on the epoxy side. I think we have seen some deep in the sales this quarter. So, was it because of lower sales volume or was it because of a change in the product mix because of which our realizations would have been lower? So, neither.

As you know, generally, Monsoon has a slower period for construction and a lot of epoxies go into the construction sector. So, that is primarily the driver. It indirectly also affects windmill installation because the level of windmills that happen... elections that happened during monsoon so there has neither been any structural slowdown in the industry nor any loss of market share if anything we believe that we have either maintained or improved our market share got it and sir your thoughts on putting up a new integrated complex for epoxy and ECH also wanted to understand from you like when we export out our epoxy volumes to the geographies various geographies On what basis do we compete with them? So is it more on the product differentiation or it is more on the price do we compete with them?

Nirav, you have asked a big question.

I will split your question in two-three parts if I may so that I can make each underlying point clear. So as you know, some anti-dumping has been announced on ETH, right? Yeah. Which will impact the epoxy chain. I am sure you are wondering what the impact on that will be and I think that is triggering your question. So, first of all, as you know, we are already running an ECH project which will get commissioned next financial year. So, that makes us more or less 80% integrated already as far as the ECH is concerned. So, you know, then we will have maybe some 10-20 kilotons that we will buy externally. In our existing site in Vilayat, we already have space for further doubling our ECS capacity. We have the environmental clearances in place and we have already started doing the engineering work on that so that we can generate capex estimates etc. and take it to the work. Which means that in a reasonable time frame, not only would our reliance price be completely integrated into ECS based on existing capacity but actually we will have some 10-15 kt surplus left which we can trade, sell etc. And as you know this gives us a completely integrated situation because we are backward integrated into caustics, we sometimes have some of our own small fraud units as well you know, we make our own ECH, we go into epoxy, we do epoxy formulations, reactive diluents, all of it, right? Correct. Third, as you also probably know, but I would like to remind you, is we have also acquired the land in Vilayat next to our existing chemical factory in Graz. And we have possibility to further double our epoxy capacity. As you know, the epoxy market grows somewhere between... 1.5 to 1.8 times GDP in the longer term, right? Which means the epoxy market will double every 5 to 6 years. So, if you just work backward and if we want to maintain our market position, we will easily also double our capacity in that time frame, right? And we will not lose our market position. In fact, we will grow our market position.

Now, let me come to your part on how do we compete.

So, you know, there are different ways we compete. We have a large patent portfolio. We are India's largest epoxy player but we have also been in this business as a group for over 40 years. So we have a portfolio that we offer which includes liquid epoxy resins, it includes reactive diluents, hard nerds, powder coating materials, etc. So we compete primarily based on a differentiated product portfolio. understanding applications of end customers and not so much on price. And epoxy end applications are highly critical in terms of performance requirements. I will give you a very simple example. Largest part of cars in India will be coated using a formulation which will contain our epoxy. Car companies will give you guarantees on the body of the car, right? So you can imagine that when an automotive company, you know, wants to formulate any type of new epoxy formulation, it's not just about price, you know, it's about proven track record, proven performance, and you offer that entire package. So, you know, you asked a question, but I thought let me split it into different parts. There is a value check aspect, and then the next question aspect, right?

I hope that answers your question.

Absolutely. And the second question is on the presentation slide where we have shown that there is an upward pressure in VSS due to the increase in the prices of sulfur, caustic and pulp. So just wanted to understand from you like when we compare our ECU and other players ECU which they have reported for Q2 I think ours is far better in number. Was it because more of our caustics getting sold due to the contracted volumes with the group companies or was it because more of the flakes each year sold this quarter and this is moving up the overall ECU? And second bit to this is let us say if we are seeing the price increase in the caustics for the VASF division, how much of price increases would have happened in October and November over and above the Q2? Thank you so much. Okay, so I'll answer a little bit of your question, not all of it because some of it is sensitive as you can imagine. So look, we optimize our caustic portfolio across on a pan-India basis, right? Because we are the only significant or perhaps the only real pan-India player in the caustic industry. You know, everybody else has a regional focus. which essentially means that we have a different way to approach pricing than many of our competitors. Secondly, as you know, we have capacities of lies, flake, etc. We also look at the export market and very often we have very quick market intelligence on what is happening in global markets that allows us to take quick practical decisions.

We have always a a mix of spot and sale. So, you know, it becomes quite complicated to unravel our echo in terms of what is a geography effect, what is a lie effect, you know, what is a spot versus contract effect.

And, you know, that is something that we, of course, will not be fully transparent about in this setting. Except to say that we are usually very price conscious. in the sales market, being the largest caustic players, we are the most to lose when caustic price reduces. So, we are usually the one that tries to maintain price discipline the best we can. Now, Eco has another kind and that is chlorine and you know it's always a balance between caustic and chlorine. The more the caustic demands, the more pressure there is to sell chlorine. So, you have seen that in the current quarter, chlorine has moved further negative nearer to the chemical industry tax prices every day. But net-net, a better EQ is a positive for Jarsim as a company since much smaller percentage of our plastic sales are within the company. So, net-net, a higher EQ is a net positive for Jarsim. Now as far as intercompany transactions are concerned, they are primarily arm's length. Actually even within our business it is arm's length. Within chemical business also it is arm's length basically. That's a very fundamental group principle. We never deviate from that. So you can always assume that any transaction not only between chemicals and GSF, but even within chemical system at Aspen places. The group is very consistent in that.

Thank you. The next question is from the line of Avish Roy from Luwama Wealth Management Limited. Please go ahead.

Yeah, this is Avish Roy. My first question is on Kutti. So, I wanted to understand if there is any big change in terms of pricing and quality here Because other paying companies are saying that some players are selling below positive gloss margin.

So, selling at negative gloss margin. And they have also reduced the quality of footy so that it makes sense from a overall business perspective.

So, if you could comment who has done this and if you could comment if this has actually happened.

The footy business is managed in the Inditech domain.

And I would request that the same question should be asked in the Inditech. but you would be aware of the development I am aware but I think this is not the right forum to answer the question ok then I will come to paints which I think clearly very high interest is there so sir you will anyway comment in the next 3 months because exit will come in the next 3 months

So wanted to understand if some clarity can be given if around the 250 core revenue in paints has been done in Q2 and around 2% market share because in any way in 3 months you have to give the numbers because it will be exit.

So if you could give some color on these calculations plus in Q1 there was a WIP component in paint. Is that still continuing? Is it still very large compared to the number which I mentioned? So some clarity on the revenue and if possible on the EBITDA also. Okay. So, like, you know, Bhavan said we will disclose the numbers fully and fairly at the appropriate time. So, I don't know from where you have calculated 250 crores for the quarter. So, I would not want to comment on that. Like I said, we are in line to deliver, I think, a legit market share by the time we exit the year. So, you can do some calculations on your own to find out. But on the TWIC, see, we capitalized our first three plants in Jaya, Ludhiana and Panipat on 30th April. So, whatever was manufactured in those plants till now, which has been sold in the period July or September, will still go into CWIT. Also, our Kamraj Nagar factory which started in this quarter, whatever it is manufactured, it is still under draft. So, obviously, the CWIT is still a buy and, you know, in reporting, it will be reported separately. So, that is a fact. As we keep commercializing plants, whatever we manufacture will start coming in the book.

Thank you. The next question is from the line of Kosi from IIFL Securities. Please go ahead.

Hi, just on the industry demand part, so the way I am looking at it is that all the companies have reported and the five listed companies are a very large part of the overall industry. And the aggregate sales growth of the five listed companies excluding Graphim in Pains is 1%. Given that pricing is YOY negligible, it means that the volume plus mix is around flat to 1% or maybe 2% at the most on a YOY basis. And if your market share exit FY25 is high single digit, it's obviously lower than that right now. So, let's say a mid single digit kind of a share. would put the industry growth at somewhere in mid single digits itself. And that's clearly much below what the industry has been doing for several years and much below what your own expectations would have been when you decided to enter this space. So, what are your comments on these? So, Kvarti, you know, so you obviously done some number work. So, like you said that yes, the market seems to be having a slowdown. But like we said, as a new player, we are on track with what we had intended to do. So, obviously, there is market share gain or replacement from competition happening with us. So, that is absolutely. So, you know, but does that change our optimism or look out for the industry where we went? No. I think this industry, you know, medium to long term is going to get healthy growth and there is room enough for all players to grow. And even for us, you know, to go with our business plan. So, I think Just a couple of quarters of a bit slow down and a demand slow down. I don't think that changes anything. Right. Second question is on the rebating. So while we are able to keep track of the price increases that paint companies do, and I think there was one in August and one in July and so on. So there have been like 2% kind of price increases. that circular which goes out to dealers only part of the equation of the price increase effectively right the other equation is the amount of rebates and the amount of the discounting etc done by the companies and they are invoicing to the dealers either in the immediate invoice or at the end of the month quarter etc etc So, can you, since now you are an important part of the industry, can you give us some kind of idea on what is the rebating, discounting, incentives, etc., sort of how much has it caged on a YY basis? What I am trying to arrive at is the effective pricing ethnics. And we are able to see, as I said, the price lists sent and that part of the equation. But the other part of the equation of the floor pricing is something that I just wanted to get a handle on if you are able to help in that at an industry level. So, what we can tell you at an industry level, what we have seen, while there is some price increase that has happened, which is basically increasing the data prices, but at the same time, the matching discounts, whether it is in the form of monthly credit notes, quarterly credit notes or discounts to special dealers has actually gone up and has actually gone up more than the price increase which is why you see a net effect on the P&L of these companies which is negative and that has a relation to the fact that the intensity of competition is going up. So, the trade discount has gone up and has gone up in various ways. There are various ways in which bank companies settle deals in the form of dealer incentives or upfront discounts or backend discounts or credit notes or quarterly or annual promises. So, obviously, there are many reasons. Does that answer your question?

Yes, sir. Thank you. The next question is from the line of Pratik Kumar from Referees Group. Please go ahead.

My first question is on your leverage solution. On a failing basis, your net debt to EBITDA is at like 4x. I know 2000 crores was some warranted, it is supposed to be pending for second half. But where do you see your leverage on an active basis on 6000 crores last quarter at this level or on a negative EBITDA basis?

I think I did not hear your question clearly. So about the leveraging, we have guided earlier also that we will be having net debt to EBITDA of about 3.5. So I think we are on track to that and the pending CAPEX etc. which is to be done in H2, we have already announced the balance this is the second and final call of the rights issue which we will be taking into account.

Okay, I have a question on change suggestion of anti-carbation.

Is the cost for the CV traveling vanitas moved in to queue for the for the vacancy? Can you repeat? Sorry, I was just saying that is the CWIP revenue of first quarter in same segment, is it booked in second quarter revenue?

Hello, please Prateek try to understand. What has been already booked as revenue part of CWIP will continue to stay as part of CWIP. It cannot be transferred like to the revenue of second quarter. In second quarter also there will be some part of revenue which is going as CVIP. As we are commissioning three more plants during the current financial year, whatever is produced during trial runs, when that gets sold, that will continue to be part of the CVIP and not the main revenue.

Okay. And one other question in the segment. This 10% three volumes revenue When is this scheme generally you are expecting to end or continue till what period? So, I would want to ask you why should I give an answer like this which helps my competition? We will continue it till we swap it. And again to clarify, it is totally on and it is available everywhere and it is doing very well.

Thank you. The next question is from the line of Amit from Ellara Capital. Please go ahead.

Yes, sir. Thank you for the opportunity. Sir, just on the point that you highlighted that you are in the process of putting up more products and at the junior level. So, where we would be in the journey based on whatever plans that you have in terms of the currently we have 129 products with 900 SKUs. So, where would it be? Would it be 80%, 70%? How should the company think about it?

So, you know, we, by September end, we talked about 129 products and we had talked about in the first phase of launching about 125 products. Also, we have reached about 900 SKUs. We had talked about 1200 SKUs. Yeah, if you take some of those multiple sizes or in other relationships, then the SKUs go a bit more. But I would say that more or less about 83 to 85% of our portfolio is there. Other elements which need to complement it are entering the market at least in November.

And the service efficiency at the dealer level, I mean, I'm sure you have the systems in place. I understand in the initial part, there would be some hiccups in terms of availability of now. What would be the scenario anyway to check or if you could share? in terms of whatever the availability of the product.

Yeah. So, like we said, you know, we have set up a network of depots. By end of September, we had 114 depots operational. We have also added to that in October. Obviously, the effort is to service dealers which compete with the market dealers. Obviously, small hiccups as we did not have a sales history of what is there and what depot was there and, you know, we had to do some movements here and there. But by and large, we are able to keep the commitment with mainline town dealers and also upcountry dealers in terms of what we had promised. And the service level is good, but the service level is also improving. So if you take a look at the service level number, we are much better in October and November than maybe what we were in August and September. And it's continuously improving. So as a process of continuous improvement, I think the investment that we have done in depots and technology, which is absolutely up to date, is helping us catch up very fast.

Thank you. The next question is from the line of Bhavin Chheda from Enam Holdings. Please go ahead.

Yeah, good morning, sir. Good to see the ramp up on the Birla Ofer side.

Just a few questions on the paint business. If you can share the number of distributors and retail touch points currently in the paint business and also the number of printing machines which are already in store? So, yeah, good to speak to you again. So, like we said, we don't have distributors. We are, you know, in a direct model. And we have talked about hitting about 50,000 dealers by the end of the year. So, we are on track to be able to hit that number. And significantly, a very large number of those dealers have been given pitching machines. I would quote it. So, you say you'll be hitting 50,000 by the end of the year, right? Yes. And currently already we have a Pan India presence, right? Your presentation mentioned 4,300 rounds. Yeah. Okay. Okay.

Okay. Thank you, sir. Yeah.

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

Yeah. Thank you for the opportunity. I wanted to understand on the Birla pivot business, as to how should one look at it given there is an ambitious growth plan there it's not a billion dollar sort of revenue so how should one look at losses in this particular segment of the of the revenue because it's largely a trading model if if because i it was also uh mentioned that the business might be incurring losses in the initials and will look to turn profitable only after having reached the benchmark of a billion dollar sort of a revenue. And also, in this quarter, revenue was given blocking of what I mean on the pick-up prices, so where are they at? Some color on that.

Thanks. So, Naveen, as regards to the your last point of the revenue numbers I think in my opening remarks we told that we will share all the details at appropriate time we are what we are sharing is that the business is growing well we are expanding the reach geographically we are expanding the product categories etc this is a low margin trading kind of business The business is ramping up as per our expectation or I would say better than expectation. That is the current status. As regards to the EBITDA profitability, we have shared the guidance, long term guidance. I think we are on track. Sandeep, are you there on the call? Can you share anything more?

Yes. Yes, Pawan. Hi. Nareen, thanks for the question. You know, in terms of our profitability, what we showed earlier is that our aspiration is to hit a billion dollars in three years and at that scale, we will be profitable. We are very well on track to achieve that. Right now, our focus is on scaling up our customer base, building up, you know, platforms that will support the entire end-to-end, you know, commerce transaction and that's what we are focused on.

Thank you. The next question is from the line of Rashid Chopra from Citigroup. Please go ahead.

Thank you. Just one question and then we'll continue with the last one. From a quarterly runway perspective, in the last quarter you had given us a 550 crore number, so are we significantly better than that in this quarter, if you don't want to quantify it?

So, Rashid, I think what we are is that we are ramping up month on month. The business is growing. We are expanding the reach. We are heading the new categories, new customers. We are enhancing the mutual platform for the business. So that is what is happening. And of course it is growing month on month. and it is like it is I am told it is I think it is beyond our expectation we are able to finish in this business Thank you The next question is from the line of Jay Doshi from Kotak Securities Please go ahead

Hi, thanks for the opportunity.

My first question is, could you give some color on the quality of dealers you engage with and what would be your penetration in the top 500 dealers of the country? So, Jay, you know, we have been able to engage with dealers across the India and of all sizes. So, you know, dealer classification is whether you call them A class, B class, C class. So we have a uniform slip-up of all dealers. We are also engaging with the top dealers of India and whether you want a bracket of top 500 and top 1000. Some of the larger dealers might be slower to give us higher counter share but that was only to be expected. But otherwise we have a fair representation our ability to place printing machines and our ability to start being across dealers of various glasses in fact. Understood. And second question is, look, if you are confident of 7-8% or high single digit market share in 4Q and you may be somewhere in low to mid single digit right now, so is this 200-300 basis point market share gain per quarter that you may be expecting in December and March, is contingent entirely on the B2Cs a big scale up in project business to help you get to that number by end of the year. My understanding is right now you have negligible play in the project space. So, you know, we have, we are building up a project team. We have started getting good projects. But as you would understand, that project has a slightly longer gestation period because the discussion and the solution of accounts takes a longer time. But we are on even on projects. We are still on our plan to be first most significant player this quarter and next quarter. But the momentum of the Indian business itself is very good. So, you know, the overall mix is going to play out, but we are quite confident of the number that we are talking about.

Thank you. Ladies and gentlemen, due to time constraint, we will take that as the last question. I would like to thank the management of Traceum Industries. On behalf of Jassim Industries, that concludes this conference. Thank you for joining us and you may now disconnect your line.