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.

Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask questions, they press star and 1 on their national telephone. If you wish to remove yourself from the question queue, they press star and 2. Participants are requested to use handsets while asking questions. Ladies and gentlemen, we will wait for a moment while the question queue assembles.

To ask questions, please press star and 1.

The first question is from Sumangal Niretya from Kotak Securities. Please go ahead. Yeah, good morning and thanks for the opportunity. My first question is on the VHS division.

If one can elaborate, what sort of cost pressures are we looking at in this quarter and in the coming quarter from guidance? And we are running at almost rated capacity.

What sort of capital allocation are we looking at in this division given the return profile has been very subdued over the last few years?

So, should we expect to anticipate limited investments in future, focus on paints and other divisions or we would look to see some in some brownfield attractive expansion opportunities here as well.

So, yeah, so I think because cost pressure, the key input prices which is bulk and cost which is going to all these prices have moved up almost significantly more than, I mean, in the higher double digit, more than 10%. Of course, the VSF reliance has also improved, but the impact of input price hike is more than the impact or the gain in the reliance prices. As far as the cost-checks and prices are concerned, while the VSF distance gets affected by the higher cost, higher price, But we generally need more than that in our chemical business because more than 50-60% goes to the other customers. Cost of product goes to the customers other than India. So that is about the pricing effect. I mean looking at the current pricing scenario, I think the input prices continue to be at the elevated level. But as the demand of VSS is also increasing and the capacities are utilized at 89% in China and almost 100% here, I think there is a scope of price improvement. The second part about your investments, the board has already approved investment of 1050 crores. setting up the environment capacity, the specialty fiber in our career plant. The first phase of 55,000 tons per annum is already approved. The total capacity increase will be about 110,000 tons, involving two phases, first phase 55 and second phase 55. So we are allocating capital to VSS business also. specialty hyper site which shares I mean the higher prices you get premium in the specialty product so investment is going in that business understood understood so my second question is on one of the commodity agents they was so I just wanted to understand what

how is the competitive landscape in that building product and sales market and how is our positioning different from CIOPA peers because we do keep hearing aggressive growth plans by competition like in-product market, CW1, etc.

So, just some details on these will be very helpful. Sure. Hi, this is Sandeep here. Thanks for the question. As you rightly pointed out, I think there is a the space is fairly large if you look at the overall B2B building material as a market it's much much larger than all other sectors in more than one region and there are a few companies which are trying to you know drive B2B commerce within this space from our point of view I can't comment on competition from our point of view we remain committed to building a very comprehensive end to end B2B commerce platform that fundamentally solves for all the use cases there are whether it is a retail customer or whether it is a purchase customer and we've been doing that for the last one and a half years. In general, if you see the case where digital adoption has been fairly low and that's not because of non-availability of products or solutions but largely because there are multiple users for every transaction who are involved and the companies and the entities that are involved are different sizes and from one-person proprietors to a large entity which is even public and meeting the requirement of all of these entities and following them through technology is a fairly complex problem. We've been very focused on following the visibility part of it and our ultimate goal is to actually give almost like a B2C kind of fulfillment experience to B2B and we are well on our way in that. And other aspects of this is that There are multiple categories that are involved. If you look at breeding materials, there are more than 40-50 categories and each of them are very complex. So the scope is very large and we are just about getting started. So we have not even scratched the surface in our view and the runway to grow is ahead. Got it. Got it. Can I squeeze in one more question or should I join the queue?

I think you can wait now. Hello? Yeah, someone else, please.

Yeah, I mean, just a quick one from the paint division looked like a very impressive growth for another quarter. So, I just wanted some color on operating losses. I mean, can we expect going forward the losses to further increase at least for some time or the pieces behind and some operating leverage to start reflecting on we moving towards great win. So, one of that and then, I mean, next year looks like all our plans will be firing. So, after our high single digit exit for this year, we some color on how we are looking at penetration and market share increase in effect and these things would be very useful. So, Mangal, this is Rakshit. So, as far as, you know, you are talking about operating losses, they are exactly as we had planned. So, like we said, we presented a game plan where we said that within three years of full-scale operation, we would want to break even. So, there is a journey. And what we are seeing this year is the part that was blank. So, nothing exceptional there. You also talked about exiting the year at high single digit. Yes. So, we are on track to exit the year at high single digit. But what we see next year, we see lot of opportunities for us to continue on the same track. So, we will continue investing on the brand. We are gaining market share quarter and quarter. Because I think it's a long journey. So fundamentally, trying to get more dealers to back more aggressively with us, opening more dealers, improving our dealer throughput on a core dealer basis, and obviously building Opus brand, where we have other initiatives also planned. So nothing will change. And as far as operating losses, like you said, we've talked about a three-year side course. Thank you. Before we take the next question, a request to participants. So please limit your questions to two participants. Should you have a follow-up question, we request you to rejoin the queue. The next question is from Naveen Radeo from ICICI Securities. Please go ahead.

Yeah, and thank you for the opportunity. So my first question was in the paints and B2B e-commerce segment. Now, it's really great to see that sequentially there is a material revenue jump, excluding the ultra tech, of course, and also heartening to see that the EBITDA losses have also reduced quarter on quarter, despite the sales going up almost like, you know, 543 odd crore combined segment, excluding cement, of course. So my question was to get some understanding on this. Can we say that as sales ramp up in the coming quarters, this absolute loss number or as a percentage of sales will only narrow and we have like, you know, we have peaked out in terms of losses in this segment. Is it a way to look at it? As you said, it's a journey, but at least directionally, are we on that part of reducing losses or it's too early to say that?

So, you know, I think the way we will put it is we have to break even after the first full three years of full scale operation. Obviously, there is going to be a parachute that will fall. And in that first year, it is going to be the heaviest year of investment. So, I think if you look at it this way, all of the journey continues and we know in which direction we will proceed. That's how I will say.

My second question then was on VSS. So we have announced the capex of 1350 crores. Now we are yet to deploy or complete the capex in paint and we have taken the VSS expense and I know that segment was demanding growth but I am looking from a point that new businesses are incurring losses. So is it a way that we are like you know to read it that we are confident that these losses won't balloon as revenues jump and that's why the comfort from the company or the confidence from the company to take this capex because you'll have to spend substantial amount next year 26 is what I'm assuming and I've also seen your PPC there is no change in capex guidance for 25 which means this capex will come in 26 so is this how one should read into it and just the question is what is the net debt to EBITDA then we have in mind which in a way will not be a threshold, so that even if it comes at the cost of slowing down some bit on BSS CapEx, but we will not cross that threshold.

Thank you. So, I think as far as the CapEx in paint business is concerned, we are almost done. I mean, we have already done 90% of the CapEx for the paint business. As told earlier, 5 plants are almost completed. 6 plants are getting completed in season. So, paint is, as far as setup is concerned, will be over maybe in type 2.2 of next year. As far as the date and the levels are concerned, as explained earlier, we will continue to have a guidance of not exceeding 3 to 3.5 of net debt to EBITDA. I think we will be able to manage that. Of course, the existing businesses' performance will have to match to the expectations. That is the one thing. But as far as the CAPEX plan is concerned, it is being planned keeping net debt to EBITDA level in mind.

Thank you. Next question is from Neil of Demoria from Annual Wealth Management.

Please go ahead. Good morning.

I have two questions on chemicals. So for the epoxy business, how have we been seeing the ramp up of the newly expanded capacities or let's say if you can say at what level of utilization the newer capacity is operating at. Also if you can share like how we are seeing the demand both on the liquid epoxy side and the specialty side of the business and Was Q3 seen a margin getting impacted because of volatility in the prices of bisphenol A and higher prices of caustic soda? Hi K. Rao, this is Jan. As usual, you understand challenges of chemical industry very well. So, I will start with the last question first. Can you hear me, Nira? Yes, sir. Now, let me hear you. Look, VTA and ETS prices have both been going up, as you know. Between the two, I think, average increase over the quarter has been about 13% and we have been able to pass on not all of the prices, so our margins have been under pressure. Partly also because of the FTA our country has with the foreign producers, who are able to bring in AER duty-free. And as you know, as an industry, we are hoping that the government will address this. Volume-wise, there has been marginal growth. We are trading off volume and margin. So in that sense, you can say that our quarter-over-quarter performance has not really been impacted. Maybe slightly lower, but not materially lower. Then if you get to your question on ramp up of our new plant, you know that there are many underlying products that fit in that plant. Whether that is liquid epoxy resin, whether that is polyester, polyamide. So I will not give you a break up buying product because as you can imagine that is sensitive from a competition perspective. depending on how we have commissioned those plants and what type of qualifications we are getting with the customers, we have been able to achieve about 25% wrap-up of the plant. Partly related to customer qualifications, partly related to some typical feeding problems that any new plant has. But we have continued to maintain our market share to the best of our knowledge. I hope that answered all your questions. So, just a clarification here. So, you mentioned that the margins were impacted and we have tried to pass on some of the cost increases.

So, in the initial round of this 25% ramp up of the newly commissioned capacity, if I am right in reading your statement, it's more on the liquid side where the realizations are lower and probably once the specialty volumes start kicking up, those good inch of our average realization then would take more than take care of the increase in the raw material price is the right assumption to make?

Yeah, that's the right assumption. As you can imagine, you know, BTHH prices mostly affect equity policy and as you know what those start to turn, then of course you will also see the positive impact of that. Thank you. Mr. Jumaria, we request you to rejoin the queue for follow-up questions. We move to the next question from Mihir Shah from Nomura. Please go ahead. Hi, sir. Thank you for taking my question. So, firstly, on Pains Business Congress, there seems to be a material step up on sales in third quarter versus what we saw in the second quarter. Can you talk a bit on how much of this would be from sellouts and what would be the dealer risk now? Also, if you can share your geographical split, i.e., you know, contribution from north-south, west-east, And lastly traction from exclusive dealers or large dealers and some small dealers. Tell me my first question. So I think you have multiple points in your question. So if I take the first one. So our sellouts are excellent. So when I say we have a system where we know exactly how many kilo liters of products were scanned by our contractors on the previous day. We actually get live data. And if I take a look at that, literally, you know, 65 to 70% of what we have sold in has sold out. And actually, the inventory that we have lying in the details is very empty compared to other companies, you know, where you have a large inventory line, our inventories are nice, and the dealers are happy, which was then the corresponding return on capital is excellent. So, from an offtake point of view, excellent. So, I think that's a great testimony to the fact that the acceptance of top products by contractors and painters is very good, and we are also very happy with the overall package. Secondly, I think you asked about the geographical split. So, you know, I think we work very hard across all regions. So we see that the response to Birla Upas across North East, West, South is excellent. If you ask me to put a number, it's difficult for me to put through, but I will say that if the best region is 110, then maybe the slowest region is 90. So there is no literal material difference. We are doing well across all the regions. And I think that's also because all our inputs that we have designed are more or less on an equitable basis. Our media reach, we have not left any part of India uncovered in terms of, you know, the deliveries, the work that we have done with contractors is spread across India. So I think we've taken the fact that we want to be a national launch to in terms of execution. From a teamer point of view, we had excellent response from most of the dealer classes. So, you know, the medium-sized dealers are giving us excellent response. Many small dealers are also backing with us. And we see in the last quarter, many large dealers are also now giving us a large part of the business. So, as expected, the momentum across all dealer classes is great. In terms of number of dealers that we are covering, I think we have talked about 50,000 dealers by the end of the first year. I think we are very close to, you know, that journey in terms of where we will end the first year. And I mean, corresponding to that dealer network that we have opened, all the elements of coverage that go along with that have happened after the plan. So, I think all in all, you know, the answers to your four questions suggest that you rightly said, the jumps in the business, because now we are also getting sales from shooting issues. It has been very, very relevant.

Got it. Rashid Khan, quick clarification.

Any... Mr. Shah, I'm very sorry, but may be request you to rejoin the queue as there are several participants waiting at the turn. Okay, thank you. Thank you. Next question is from Shreya Bhatena from Oakley Capital Management. Please go ahead.

Am I on good?

Yeah, please. Go ahead.

Yeah. Yeah, so my question could be regarding the chemical division. So given there are so many capacities coming up in caustic soda, how do we place ourselves being the largest player in the industry? And secondly, on the epoxy reasons, so if you could... Could give your view on the tariffs that would be that are being considered in the US on epoxy resin from the Asian countries? Leave it to my two initial questions, sir.

So I'll answer your question in the reverse order. So while both US and Europe are looking at tariffs on epoxy resin, there are other jurisdictions such as Korea and China which are likely to be more seriously impacted as we look at what type of a gram file in India. So it's a little bit of, you know, India gets a little bit lower tariffs compared to what the other two major producers get. The net actually may benefit us. But this is a speculative amount because the final tariffs are not yet announced. Secondly, Gratil focuses mainly on the domestic markets. which we believe is healthy, growing and offers us a large capacity for growth. Exports make up probably less than 15% to 10% of our epoxy sales. So we are basically a domestic player as far as the optimists consider the epoxy. But if, for example, there is a significant arbitrage between what custom duty may be imposed towards other Asian players versus China, it may open an export question. Thank you. Your next question. Sorry. Yeah, one more question. There were two questions. Your second question was related to the larger Corsic companies coming in. I am assuming you are referring to the two big players which are doing an integrated play with QVC. Of course that is some time away. But look, there is a net demand for PVC in Asia. Today the Indian domestic industry, the Indian consumption of PVC is met by imports. So if a domestic producer for PVC comes in, correspondingly there will be pressure on operating rates of PVC plants in other parts of Asia. that may have a zero-sum game as far as caustic is concerned. And in either case, caustic capacity keeps growing, caustic demand keeps growing. So, you know, there may be a couple of years of hot pressure there. And you know, Jassim, very well, you know, we don't usually look at our strategies for more two years. We are a long-term player. We do not believe that we have any reason to be concerned about the caustic capacity coming up. The next question is from Purthi Pantaki from IIFL Securities. Please go ahead.

Hi, Lakshith. My question is on the paints industry and your performance.

So, I understand you are doing well across the board. But if you can give some flavor in terms of on a relative basis, where are you doing better in terms of the town tier class is it the large towns where you have a higher market share or is it the smaller towns and also similarly in the tiering of the paints by value so is it the top tier where your market share is relatively higher than the mid or bottom tier or is it the other way around Okay, so yeah, like I said, the response that we have is more or less uniform across four town classes. So to begin with, in the first few months, we had a very strong takeoff in the mid and upper mid-tier towns. But now in the last quarter, we see that we also have excellent reach in the metros, and like I said, we are already available in more than 5500 towns. So, of this measurement as we see, which is the true parameter of how the product is moving, we see that the product is moving across all these town segments. Obviously, maybe in the longer term, some development might happen which show that we are particularly more strong in one or the other, but at the moment, our input and our team is focusing equally on all these other schemes. Also, if I take a look at the product series that you have, you know that we are available in now all the product segments and we are also available across all the price points. We have... See, our product quality is so good that many of the economy products that we have in the so-called segments are actually, as per the contract, is better than any of the premium products being offered by our competition. So, we see that... We have good acceptance across price segments. We also see that our luxury products are getting very good reviews and people are buying them. So, we are still developing the distribution of the whole range because some of our products and ranges have just hit the market maybe in the last two months. But as of now, I can tell you that we are moving in an extremely healthy manner across all the price point tiers that we have mastered.

Right. Secondly, I just wanted to understand in terms of the market share, the exit market share for this year, you're targeting a high single digit. Would you be sort of for FY26 looking at something like a mid-teens kind of a number?

So, you know, I think we will talk about that once when we enter next year. At the moment, you know, we are focused on a very strong February and March to see that we exit with healthy, you know, like we said, single unit mix, high single unit share. Also important, you know, one comment that I would want to make is that while the rate market has been slow, in our assessment in the last quarter, the market has been like slashed or maybe minus one. But we have gained share and I think the meetings with all the companies have happened where they have shown on a stand-alone basis that they are all negative by reviewing the option about the mid to low market but nobody has talked about the fact that a lot of that gain has actually come to the lower portion so I think I would want to build upon that and say that yes we will make great and high signal digits and like we said next year also the intent would be to see a gain share quarter and a half and see where it is Thank you. Next question is from Prateek Kumar from Jefferies. Please go ahead.

Yeah, good morning. My question is on VSF chemical segments. There are two segments combined that BIDA has like in large range found at 500 to 700 crores for a while.

Recently, I mean, particularly in VSF leadership position and high operating rates of China, why the company is unable to pass this higher cost it came as a big change on a quarter to quarter basis and on live sale particularly we are like going ahead with this large topic so what is the EBITDA contribution of live sale in this frequently for all EBITDA which we had just for this section one I think as far as why they are not able to pass on the cost increase to the customer to see it's a

The demand and supply equation is also played out in the local markets and that is true for I think many segments. Sometimes the regional market is much more than the increase in the cost because the demand has been very, very high. Two, in terms of current liability capacity for us is very limited while we have a very large market share in the country today. It's a very small capacity compared to what's happening locally and compared to the traditional DSS capacity in India. So, I think we have seen that the LIASR contributions today and EBITDA percentages are much higher than the contributions and margins provided for the traditional VSS category. That is why we are investing in a new LIASR capacity which promises much higher EBITDA and VSS.

So, the passing on of higher RAMFAR and cost in pricing in VSS, that will happen in

the current quarter Q4 you mean and my other question is on paints basically just wanted to check on because you are like fourth plant under trials and fifth quarter so is this contributed anything to your WIP revenue like the way you said in Q1 performance yeah so you know like we we have commercialized four plants and Samraj Mahesh was commercialized in November, but Chambaraj Nagar was operating for a few months before November under trial. Similarly, Mahad, which we had to commercialize in this quarter, has been doing that production since two and a half months and is ramping up. So, all that production of Chambaraj Nagar pre-November and of Mahad till now, obviously is going into sale.

I think in the last three months, you have been able to effect loop by the three months. Despite the challenges from the initial demand from some time, seasonal initial demand from November, one in the months of sometime in November and one also from February. So, some extent we have been able to pass on and we are attempting to see maximum policy months in November.

Thank you. Next question is from David Shah from Amendment Park.

Please go ahead. Hi, Dean. Thanks for the opportunity. My question is about some things.

Patrick, you called out that unlike players, you are not seeing macros low down. Just wanted to know, would you still say that versus when we started the year, the macros are slightly difficult where you would have thought it would play out?

And second, if there is any truth to that, would you consider going moderate on the capacity expansion or will it be as you had planned earlier?

No, no. So, let me clear. So, I said the market has been flat for the margin negative. So, obviously, it is lower than what it was anticipated. But what I meant is that some of the companies have talked about the market being minus 5, minus 4. So what I'm saying, the market is on that negative. The market is flat, but obviously the market was growing in single digits before that. So there is a slowdown. As far as our capacity expansion is concerned, I think we are fully committed to starting our six factories. So there is no question on that. With Ramraj Nagar's commercialization, 856 million liters installed capacity has come online. Mahaj Kharagpur has 236 when it comes up so the 1332 in-store capacity is a commitment and there is no change in that you know this is a long term view and we better be practicing for a long term business remains very attractive perfect thank you yes second question are you seeing any higher interest from institutional buyers realistic developers any insight or any conflict on that So, you know, we also have our institutional segment and we are also ramping up well there. But as you would understand, to open up institutional clients, because, you know, there are projects that are already committed and there are clients that are already entered, happens with a lag as compared to retail buyers. So, we see that there is good traction which is developing and obviously, the institutional segment buyers have also liked our quality. You also know that for institutions, for many government institutions, you have to first do the listing before they start buying. We are also, you know, doing that process very well. But there are some more listings that are pending. But all that is happening at the moment. Thank you. Next question is from Amit Porowit from Renara. Please go ahead.

Thank you for the opportunity. My question is around paints. So, just wanted to comment on the recent trends that you have seen probably for the industry growth, say, between Jan and Feb. And second, just wanted to get an insight on if you could share probably our penetration level in a dealer. The idea is to understand maybe a dealer is pointed way maybe six months or three months back. how would any data point on that just to understand how the ramp up is happening for old leaders getting appointed.

So, Karthik, your first question was about the market growth and something about Canberra, is that your question?

Yes, yes, yes.

Jan has answered. Yeah, yeah. So, you know, Jan, Samar has come on the market and the skies have opened up So, Mr. Navy's ad was, as I hear from the dealers a bit later, but very easy to say, how will it go, whether the quarter is going to be significantly better or similar like last quarter. But yeah, you know, when the skies open up and then there is thunder, all that actually starts happening is what we heard. As far as dealer time, talking about A+, B+, C+, you know, the way What have we defined the dealers? So as compared to four or five months back, I think that comparison is also a bit unfair because our coverage four or five months ago was half of what we are today. So obviously we have added dealers of all types. Like I said, we are getting good response also from the large dealer and the mid-sized dealer. And I would say that we are quite equitably present across all the C-classes, they go to off-takes from all these C-classes. But trying to compare it with where I was 4-5 months back would not be the right balance we should have at the moment because the answer we found discussed was that we had a lot more dealers than us.

Yeah, just actually I was referring to some dealers which would have been appointed say 4-5 years, so same dealer, if that is possible to share that data.

So, what I can tell you is that with dealers, who were appointed by us four or five months back, most of them have stuck in youth and then who goes on some Monday to Sunday. It's a very healthy thing. Thank you. Next question is from Neet Bhatt from NK Research Services.

Please go ahead. Hello, I'm Raghavan.

Yeah, please.

Yeah. Sir, my question is regarding TPVC. So, we are getting total capacity of 100K turns and along with that, we are also doubling the capacity to 150 and DCW also has 50. So, my first question is regarding, I wanted to know what is the current demand in terms of turn in India and outside of India and what will be the demand scenario in next 2-3 years?

So firstly, this business actually is done together with Lubrizol. So what will be sold in the market is a Lubrizol CPVC under the brand name Temprite. There is a certain business model with them which is covered by an NDA. Lubrizol has committed to India the largest CPVC plant. that they have anywhere in the world and that's actually at our location in Hiroshima. From what I can tell you, and I can only disclose very limited because this business is together with somebody else, is that they seek healthy demands for this. CPVC is a material of choice for plumbers in India. Lubrizol is forward integrated in India to confirm it. And globally, they are by far number one in this category. So, you know, Gratian together with Lubrizol have very high confidence both in the market size, its growth, and our joint ability to provide a product that is significantly superior to most other players in the industry. Thank you. Next question is from Jayadoshi from Kotak. Please go ahead.

Yeah, hi, thanks for the opportunity. Our estimate is that your market share may have improved by about 200 basis points in, you know, paid segments from September to December quarter. So is this improvement driven entirely by, you know, the B2C business or have you seen a good scale-up in the project's institutional B2B business?

Okay, so I assume this is for the paint business. Correct. Okay, I did not hear that. So obviously the retail business as you say has ramped up and the institution business is also picking up in the last three months. So for me to say if the 2.2 hundred basis points that you are talking about have come from this segment, I would say obviously it's a total share here. But retail is obviously running ahead of institutions for the reasons that I gave in the last time.

Sure. And, you know, when you mentioned that secondary sales, retail sales is about 65% of primary sales. So, if you exit the year with, let's say, exit the month of March with high single digit growth, so we should understand that even from a retail sales, high single digit market share, from a retail sales perspective also, you may be clocking 5% kind of market share. Is this understanding correct?

No, so like I said, we want to exit the year in March in high single digits. So 5% is just middle. So we expect to do more than that. Very clear. So 5% is not high single digits, it is mid single digits. So we will be doing better than that when we exit in March. And we can already see that where we are today in that region. We are on course to keep that working. Thank you. Next question is from Naveen Sahadev from ICICI Securities. Please go ahead.

Thank you for the follow. Sir, are we sharing the CAPEX guidance for FY26 piece?

So, Naveen, our budgeting process is on. So, we will be sharing the FY26 CAPEX guidance most likely in Q4 call but depending upon whether we will be able to complete but not before that.

Sure, sure and if I could just ask one question related to paints that will it strategically will it make sense to have putty business under us either acquire it from the subsidiary or maybe create a new one for a better synergy and a coordination with the business or you think the current arrangement is good enough and needs no change? Thank you.

So, you see P comes on the ultra tech and it is doing well and we would not want to comment on that but it is running the reactive and that is the way it is running.

Helpful. Thank you.

Thank you. Next question is from Neeraj Demodia from Annual Wealth Management. Please go ahead.

Yes, sir. Thanks for the opportunity again. Sir, my question is on the chemical side. So, like if you can share how much was chlorine negative this quarter, either this last quarter?

Yes, so for the reporting quarter, chlorine was about 7,000 and a half thousand negative. Okay. Okay. So, the prices continue to be under pressure. So, as you know, plastic prices globally... whereas about half of that was written up by a negative flow rate. Until demand in the chlorine consuming sectors like agro, pharma, etc. We do expect chlorine to continue to be negative. I would not call out a specific price for this quarter, I do know that is sensitive. But you are in the market, you know that Q4 chlorine is more negative than Q3. My question is that with this chlorine negative rating expanded, how has our web portfolio performed? Because there it's a direct beneficiary of whatever what we produce on the website. So, have we seen the profitability on the website improve in Q3 vis-a-vis last quarter, last year or even on the sequential basis? If you can share your thoughts. Yes, Nirav. The answer to that question is absolutely yes. And you will note in our press release that You know, we have said that our increased profit is because of higher cost of prices and improved profitability of our chlorine derivative business. Would you like to participate, sir? I would not want to participate. You know my chlorine integration level, so you can kind of make a guess. Absolutely, absolutely. The guess will be pretty good, knowing your expertise in this. Thank you so much, sir, and wish you all the best. Thank you very much. Thank you. Next question is from Mish Bud from NK Research Services.

Please go ahead. My question came on CPVC. As you can see, CPVC raising price has came down from 200 dollars to 135 dollars. So, I wanted to know the reason behind this and how it will impact us.

Yes, so our project with Lubricol is in execution phase right now. So, we expect mechanical commissioning, mechanical completion and commissioning to start somewhere in future, I can say. So, at this moment, you know, we do not have direct impact to BPC price. And having said that, as I mentioned earlier, this business is in partnership with Lubrizol. Lubrizol is the real partner who is going to be in the front for selling the BPC. The arrangement between us is confidential, but what I can say is we would not be affected by the volatility in CPPT. Graphene would not be affected by the volatility in CPPT.

Okay.

But we will have the favorable benefit as CPPT demand grows. As you know, CPPT is a highly preferred material for the plumbing industry. Thank you very much. Due to time constraints, we'll have to take that as the last question. On behalf of Craftsman Industries Limited, that concludes the conference. Thank you for joining us, ladies and gentlemen. You may now disconnect.