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.