Grasim Industries Limited

Ladies and gentlemen, good day and welcome to the Classroom Industries Q3 FY25 earnings conference call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the call, please signal an operator by pressing star then zero on your phone. I now have the conference over to Mr. Ankit Panchmatya, Head, Investor Relations, Grafton Industries. Thank you and over to you sir.

Hi, thank you. Good morning and thank you for joining Grafton's third quarter financial year 2025 earnings call. The financial statements, press release and presentation are already uploaded on the website of StockExchanges and our website for your reference. For safe hardware, Kindly refer to cautionary statement highlighted in the last slide of our presentation. Our management team is present on this call to discuss our results and business performance. We have with us Mr. Pawan Jain, Chief Financial Officer. Mr. Jayal Dhokla, Business Head of Chemicals, Philanthropic Fashion Yard and Insulator Business. Mr. Natchi Sargavel, CEO of Vela Opus, our Bains Division. Mr. Wajiraj Kulkarni, Incoming Business Head of Stimulantics 5.0 and Mr. Tendrik Komraveli, CEO of Birla Pivot, our B2B e-commerce business. Let me now hand over the call to Mr. Pavan Jain for his opening remarks. Post-minute, we will open the call for Q&A.

Over to you, sir. Thank you, Amit. Good morning, everyone, and I wish you all a very happy 2025, which marks half-way point in the current decade. and quarter century mark of the 21st century. Let me start with macro commentary and then I will talk about our businesses and financial performance across each segment for the quarter ended 31st December 24th. The year 2024 was largely characterized by positive developments like disinflation, resilient growth and improving corporate mobility. Elections and rate cuts dominated second half of 2024, which are expected to influence the global economy, shaping market dynamics for the foreseeable future. As we enter 2025, rising policy uncertainty, protectionism and geopolitical tensions signal a more volatile and fragmented global economy. As highlighted by our chairman, In his visionary reflections for 2034-2035, we will be embracing a U3 world which is uncertain, unpredictable and unorthodox world in 2035. As per the latest IMF World Economic Outlook report, global growth is projected at 3.3% in 2025 and in 2036, both below the pre-COVID historical current century's average of 3.7%. Advanced economies are projected to grow at 1.9% in 2035 and 1.8% in 2026. And within the advanced economies, the US is expected to grow a little faster with projected growth rate of 2.7% in 2025 and 2.1% in 2036. Diverging growth and inflation dynamics could result in varied monetary policy approaches by central banks across the world, leading to widening rate depression. Emerging markets and developing economies are projected to grow at 4.2% in 2025 and 4.3% in 2026, with India leading the projected growth rate at 6.5% in 2025 and 2026. Since September 2024, Chinese policymakers continue to focus on delivering a series of stimulus packages to inject new life into their struggling economy. The newly imposed tariffs by the US on China could derail the PBOC's efforts of reviving the economy. India will continue to be amongst the fastest growing economies in the years to come. The recent budget announcement has shown continued focus on infrastructure development and also creating environment for boosting consumption. Further, after a gap of nearly five years, RBI has unanimously decided to reduce the benchmark repo rate by countryside basis points to 6.25%, delivering a less restrictive monetary policy. Coming to our company, we continue to leverage our diversified business portfolios, capitalizing on India's growth stories. With a proven check record of creating large-scale businesses and capacities, Grassland is well prepared to meet the increasing demand of the growing Indian economy. Emulating this growth momentum, we are happy to share that Grassland's consolidated revenue grew for the 17th consecutive pastures on a YOY basis, registering a CAGR of 15.5% over the past four years. The trading element consolidated revenue struck its highest level of almost 1,000,000 crores. For Q3 FY25, consolidated revenue grew by 9% while YOY had to beat 34,793 crores. The stand-alone revenue for this partner stood at highest level of Rs. 8,120 crore. Consolidated EBITDA for this partner at Rs. 4,668 crore is lowered by 9% YOY mainly due to lower profitability in investment and initial investment in building Villa Opus, a leading brand in the Indian decorative paint market. Talking about segmental performance, let me start with building machine segment where we have built up the size and scale to contribute means in each part which fits Bharat. Our target remains on trade to achieve domestic grade cement capacity of over 200 million tons per annum by FY27. The India cement limited open offer was concluded in the current quarter and the integration was completed. The acquisition of Sesoram Cement Business is awaiting approval with regards to transfer of mines in Jalagana and Karnataka. The integration is expected to be complete in the current financial year. Demand across all sectors, that is individual house builders, infrastructure sector and urban housing growth has been improving and domestic cement, grey cement volume grew by 11% YOY in the quarter going by. However, the realization was lowered by 10%, though there was sequential improvement in realization by 1.5%. Our sales business under Birla Opus brand continues to gain market share in the Indian necrotizing paint market, backed by rapidly expanding distribution network and deep-frogging brand visibility backed by superior product quality. With commencement of commercial production at Shamraj Nagar in November 24 and Mahat expected in this quarter i.e. Q4 as by 25, Villa Opus would be the second largest player by installed capacity in the Indian decorative prints market which is poised to grow in double digits over the next decade. Our 6th plant at Kharatpur in West Bengal is expected to go live in Q1 as by 26. had Cyclone Dhana-affected construction institutions. The advertisement campaign, Duniya Ko Ranjo, and Naya Jumalita Naya Paint, has been successful with an outreach to more than 70 crore Indians. Addition of dealer network remains on track, which is evident from the fact that Villa offers its second most legible paint brand in India now. B2B e-commerce business BuildUpEmerge continues to attain higher revenues quarter on quarter. BuildUpEmerge is constantly enhancing its user experience, driving the digital adoption in the B2B ecosystem. The business has added new product categories, expanding its total addressable market in the B2B building material state. With focus to enhance revenue from the private labels, the business has launched Zilla Pivot Barfair expanding its private label portfolio beyond tiles and plywood. Our core businesses, namely cellulosic fiber and chemicals, continue to provide stability to overall earnings profile. Global demand for cellulosic fiber business continues to remain stable with improving price changes. Over the past decade, cellulosic fiber industry has grown almost twice the growth rate of competing textile fibers that is cotton and polyester. Moreover, within Feminocid Fiber, FlyoPail, a third-generation specialty fiber, is the fastest-growing specialty Feminocid fiber compared to Gray and other generations of Feminocid fibers. Innovation-led, specialized applications coupled with customers' ever-increasing demand for improved sustainability credentials we believe that Lysol growth process could further improve. Also, as our current capacity is being fully utilised, the board has approved setting up of 310 kTPL ISL fibre capacity at Harrier Karnataka in 2000. The first phase of 55 kTPL will be registered by mid-27 at an investment of Rs. 1,350 crore. Improved demand condition in China helped by pre-Chinese New Year demand has led to higher operating rates at 89% and low inventory of aid base in China. China CSF prices for quarter 3 are substantially higher by 2% and 5% higher YOY days. Domestic relations improved line with increase in international prices. Our cellulose fiber volume stood flat on YY basis. However, there was sequential decline due to production loss of the capsule plant in Kharat and seasonal demand weakness during the quarter end post-execution season. Genco's business revenue stood at the highest level since Q1 of 2024, led by continuous improvement in domestic prices in line with global corporate product prices. Our continued negative chlorine relation due to oversupply has partially offset improved caustic relation not getting fully reflected in eco-realization. Caustic soda and sodium growth are muted at 1% YOY due to lower production at VLAP restricted by lower power availability which is expected to improve in coming quarter. Chemical business EBITDA for Q3 FY25 was up 25% YOY, mainly made by higher reduction in positive soda prices and improved profitability in chlorine derivatives segment. Financial financial business under Archibela Capital reported all-round growth across different businesses with focus on driving quality and profitable growth by leveraging data, digital and technology. NGFC segment reported revenue growth of 10% and housing finance business grew by 45% YOY. The total lending portfolio which includes NGFC and housing finance loan books grew by 27% YOY to over 146,000 crores. Given the competitive intensity and ranging cost of borrowing, the NIM for NGFC business declined by 88% YOY and net interest income for housing finance business declined by 43% this year, impacting the overall profitability. Life and health insurance segment reported YOY revenue growth of 5% and 38% respectively. Amalgamation of Adiptimila Finance with Adiptimila Capital announced in March 2014 has received approval from shareholders. The amalgamation scheme now awaits approval from and is a successful case completed by March 25. In renewable business, installed capacity continues to ramp up with cumulative installed capacity at 1.2 gigawatts, up from 37% from day 94 megawatts in March 24, and another 0.8 gigawatts is under advanced state of commissioning. With the progress under implementation, The capacity is expected to reach nearly 2 gigawatts by end of current financial year. The business and strong anchor clientele with RBCB Russell company representing 37% of the power of state against the existing portfolio. We can now move on to Q&A.