Grasim Industries Limited

Ladies and gentlemen, good day and welcome to the Q1 FY27 earnings call hosted by Aspi Patel Industries. As a reminder, all files and 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 this conference call, please signal an operator by pressing star then zero on your touchtone phone. I now hand over the conference call to Mr. Ankit Panchmatia, Head Investor Relations of Prasam Industries. Thank you and over to you, Mr. Ankit.

Yeah, hi, thank you. Good evening and thank you for joining Latham's first quarter financial year 2027 earnings call. The financial statements, press release and presentation are already uploaded on the websites of stock exchanges and our website for your reference. For safe harbor kindly refer to question statement highlighted in the last slide of our presentation. Our management team is present here on this call to discuss our results and business performance. We have with us Mr. Hemant Shukampanya, Managing Director, Aspi Patel, Anil Rustogi, Anit Kumar Jain, Sailesh Kumar Jain, Sailesh Kumar Jain, Sailesh Kumar Jain, Sailesh Kumar Jain, Sailesh Kumar Jain, Sirilocik Fashion Yarn and Insulator Business, Mr. Variraj Gulgarmi, Business Head of Sirilocik Fibres Business, Mr. Sachin Sahai, CEO, Birla Oppas Veins, and Mr. Sandeep Kumrawalli, CEO, Birla Pivot, which is our B2B e-commerce business. Let me now hand over the call to Hemant Sir for his opening remarks. Over to you, Sir.

Thank you, Ankit. Good evening, good afternoon, or good morning, as applicable. Thank you to each one of you and thank you for joining the Grasim Q1 Financial Calls 2027. Let me begin with the headline. Financial Year 26 was a landmark year for Grasim and we continued the same momentum entering Financial Year 27. In Q1 FY27, we achieved highest ever revenues of Rs 48,716 crores. with a year-over-year growth of 21%. I remember not too far away, two years ago exactly, the quarterly run rate of revenues used to be around Rs. 32,000 to Rs. 33,000 crores and today we are already reaching about a quarterly run rate of nearly Rs. 50,000 crores, a whooping 1.5 times growth in quarterly revenues which is A two-year CAGR of 25%. I want to draw your attention to the consistency behind these quarterly numbers because a single strong quarter proves very little. This is now our 24th consecutive quarter of YNY revenue growth. What that tells you is that our performance is not resting on one business or one favorable cycle. The core, which is our cement, cellulose fiber, chemicals and financial services business are compounding. The new engines, which are our range and B2B e-commerce business are multiplying. I would like to draw an analogy here that this combination of core and growth business portfolio is doing what an all-weather portfolio is meant to do, that is deliver consistent returns. A key highlight this quarter is the accelerating momentum in our standalone business. Standalone revenues for the quarter 1 of 2027 grew at a faster rate i.e. 28%, year-on-year to Rs. 11,795 crores. More importantly, it's incrementally becoming a larger and more meaningful contributor to Graphene's consolidated growth journey. The Vita more than doubled with a 107% growth to Rs. 1094 crores. This clearly shows that the standalone portfolio is not only growing faster but also scaling with speed and improving profitability. Let me now start with some macros then we'll take you through the business one by one. The global economy continues to navigate an increasingly complex landscape. While inflation has moderated across several developing markets and central banks like U.S. Federal Reserve has maintained a cautious and data-dependent stance, inflation has eased materially from its feet. The Federal Open Market Committee has still reiterated that the path of monetary policy will continue to be guided by incoming data, particularly on inflation and labor markets. China continues to face a relatively subdued recovery led by weakness in its property sector and manufacturing activity, while Europe is witnessing modest growth amidst softer industrial demand. Geopolitical development has emerged as one of the most significant variables shaping business sentiments and global trade. The ongoing conflicts in parts of Europe and the Middle East coupled with the evolving trade policies and supply chain realignments have increased uncertainty across global markets. These developments have at times disrupted shipping routes, elongated transit times and created intermittent challenges around the reliability and pricing of key commodities and raw materials. Trade costs and energy prices have also witnessed bouts of government cities making procurement planning and Inventory Management significantly more dynamic than in the past. Against this backdrop, India continues to remain a bright spot in the global economy. More importantly, the RBI in its latest Monetary Policy Committee meeting acknowledged the resilience for domestic growth and revised its FY27 GDP growth forecast upwards to 6.7%. Reflecting confidence in India's underlying economic fundamentals. Strong domestic consumption, sustained public infrastructure investments, improving private capital expenditure and healthy financial sector fundamentals continue to underpin economic growth. Let me now start on business performance and starting with claims. Two years ago, the law of us started with a promise. A promise to not merely participate in the industry but to fundamentally reshape it. We articulated an ambition of building India's second largest decorative page company and more importantly creating a brand that would stand for quality, innovation, reliability and consumer trust. Today, just two years later, I am proud to say that Villa Office has already become one of the largest players by installed companies Manifesting Capacity and emerged India's third largest decorative paints brand by revenue. This quarter, Villa offers delivered revenue of Rs. 1,661 crores up by 64% year-on-year and 17% sequentially. We have cancelled our number 3 positions with market share gain of further 30 basis points sequentially that is on a quarter-on-quarter basis. And when you include villa-wide kutti, our combined share is now nearing the early teens. For considering the total market size of Indian decorative paints industry as highlighted in slide number 25 of our earnings presentation, we include reported revenue of all the listed paints and kutti companies. Plus for overall picture, we further include Segment-Wide Sales of Remaining Companies in the Organized Sector Estimating the Segment-Wide Sales of Wood Finish, Construction Chemicals, Decorative Paints, and Foot Paints, etc. Hence, our market share is representation of entire organized decorative paints industry. Let me be plain about what this means. In roughly two years, we built a revenue share position that took most Many decades. This was not an easy quarter to grow in. We absorbed a genuine and an unprecedented raw materials cost drop. We chose to manage it through phased price increases rather than one blank correction and the cumulative impact in Q1 FY27 was 8.8% and some of the price increase impact has flown to Q2 FY27. That decision narrowed our price depression with industry. Some of you will ask whether we have given up our value advantage. We have not and our resolve is unchanged. We will prioritize market share gains and we will deliver the revenues we have guided to. We are building a franchise, not optimizing a quarter. On profitability, losses narrowed during the quarter, partly aided by lower cost carryings Inventory and lower advertising spend compared to Q4 FY26 when we have invested heavily behind high-impact campaigns around the T20 World Cup and IPL. In the current quarter, i.e. Q1 FY27, we saw normalized advertising at its intensity. Having said that, our commitment to brand building remains unchanged. Advertising spend will continue to be elevated to demand generation opportunities with higher investments expected during the seasonally stronger period as we continue to build villas of earth into a powerful national brand. Our performance this quarter is driven by disciplined execution across five strategic villas. I want to cover them one by one. First, distribution is emerging as a powerful engine of scale. Villa Opus has rapidly expanded its presence to 12,100 towns with more than 55,000 dealers built at least once and 1,450 plus exclusive branded franchise retail outlets spread over 800 towns. This gives us one of the deepest and most visible market footprints in the industry, enabling stronger consumer success, sharper brand experience, and Faster Conversion at the point of sale. As per our estimates, this is now the largest organized trained retail network in India, a significant strategic advantage for a brand that is still in the early phase of its growth journey. Our institutional talent is also scaling with momentum growing 85% year-on-year and 11% quarter-on-quarter with nearly 11,000 project sites built during the quarter. Villa Office Products has secured 83 plus specification approvals from various governments and other departments across cities with a similar number under different stages of approval. With a robust pipeline of 47,000 sites at various stages of work, the institutional business is becoming a meaningful long-term growth vector. Second, our engagement with contractors and influencers is building advocacy at scale. Strong consumer demand and deep contractor connects continue to drive secondary sales with growing active contractors and painters applying Villa Office products during the quarter. This is an important validation of product quality and trust because every contractor or painter who chooses Villa Office is effectively putting their own reputation behind our brand. Our digital first contractor platform, Opus ID, is strengthening this relationship further by creating a more connected, rewarding and scalable engagement model. We continue to elevate the painters and contractors ecosystem through industry-leading schemes and loyalty benefits that remain unmatched. We are happy to report, until now, nearly 9,25,000 painters and contractors have applied our products At least once an experienced Birla Opus quality and lakhs of these contractors return every month to continue applying our products. At the same time, Birla Opus is gaining strong traction with architects and interior designers. With an AID partner network now crossing 4,400 active firms across 100 plus towns, making it the second largest AID network in the industry. With expanding influencer ecosystem, Strenthens our premium positioning and improves our ability to shape demand at the design and specification stage. Third, our product portfolio is evolving towards premiumization and sharper market relevance. During Q1 FY27, Villa Opus launched 10 new products to strengthen its exclusive range for institutional, franchise channels and regular products for dealer channels. These launches Deepen our participation in high potential segments and expand our ability to serve customers across price point applications and aspirations. With this, the portfolio has grown to 228 products and 1,945 STUs, giving will offers the depth and flexibility required to compete at national scale. Importantly, the premium and luxury portfolio now contributes Approximately 65% of shift value reinforcing the sense of our premiumization journey and improving the quality of our revenue mix. This also puts a fact forward that we did not buy shares at the bottom of the market. We won it at the top where brand preference is the hardest to earn and margins are most durable. Fourth, brand resilience continues to rise at a remarkable speed. We continue to build on our already number two position in unaided top of mind recall. With 90% plus brand awareness, the law of us is rapidly moving from being a new entrant to becoming mainstream consumer choice. This has been enabled by sustained, insight-led and innovative campaigns that are making the brand more visible, more memorable and more relevant across consumer segments. Our 10-question free paint proposition continues to be reinforced through newly launched three hard-hitting advertising films focusing on how Villa still offers higher consumer values in this inflationary paint environment. Separately, regional campaigns such as celebrations of Holi, Ganesh Chaturthi, Onam, etc. are helping us convert cultural movements into demand opportunities. This combination of national brand building and local market activation is strengthening consumer pull and enhancing the distinctiveness of builders in a highly competitive category. Paint Car, our organized painting services platform is scaling rapidly and is now available across 6,700 plus pin codes on a pan-nature basis. It is helping us bring a more professional, Transparent and hassle-free painting experience to consumers across India. To our knowledge, Paintcraft is the only organized painting services platform offering 6 months and 12 months no-cost PMI financing, making premium painting solutions more accessible at a time when consumers are increasingly becoming value conscious. Complementing this is Opus Assurance, are industry first service warranty program which strengthens consumer confidence with a trusted end-to-end service promise. Together, paint craft and focus assurance are helping builder offers move beyond product sales into a more complete consumer solutions model. The fifth strong pillar is manufacturing excellence. Our integrated manufacturing footprint of 1,332 million litres per annum Capacity continues to provide significant competitive advantage. This quarter marked our highest ever production with capacity utilization continuing to improve steadily across all six plants. The rapid scale-up of flow of goods continues to validate our strategy and execution capability. Every quarter, we strengthening our distribution and contractor ecosystem and enhancing brand preference and expanding our market share. What I want to take away from this retail narration is a clear fact. Revenue is up 64%. Market share has moved up again. Instruction sales grew 65%. The premium and luxury portfolio continues to pursue 65% of value. And our reach spans over 12,100 towns, 147 tech posts, 1,450 plus exclusive retail outlets. and 90% brand awareness. At the same time, even as the five differential industry pairs have narrowed, our competitive intent has not opened. We are here to compete, to build scale, and to win shares in a disciplined manner. The message here, market share gain and guided depth of growth remains our priority. Supported by widening distribution networks, rising strength in brand salience, Deepur Influencer Engagement and Manufacturing Footprint Build for Scale. We took a cost shock on the chin this quarter and continue to invest because we are not optimizing for one quarter, we are building Billa Offers into a Rs. 10,000 crore brand by FY28 and every leading indicator tells us we are firmly on that path. Now, let me turn to Billa Secrets, our 650 e-commerce system and and to what I think is most underappreciated story in this portfolio of graphene. Revenue for this quarter grew 75% year-on-year, 2,508 crores. Our annualized run rate continues to trend above 10,000 crores. Let me put that in perspective. This is a business we started from nothing and it is now written at a 5% Very few businesses in India have traveled that distance in such a short time. You will see that they do it sequentially on a quarter on quarter basis. And I would rather explain it than have you observe it. Three things happened. We were starting at a high pace. The Middle East crisis directed real volatility into community markets. and in response our customers picked exactly what disciplined procurement teams do in volatile markets. They bought the treasured base and optimized their inventory. That is demand timing effect, not demand loss effect. We saw no deterioration in the health of the platform. In fact, transactions kept improving through the quarter. Beyond revenues, what the quarter actually tells us that they underlined the platform what we have is tensing on every measure we track. Our revenue mix is getting better, not just bigger. We have added high potential attitudes across our three broad categories, building materials, non-ferrous and chemicals. And we continue to deepen these two strategies across new ones. That is what builds the principal platform. Ferrous only just builds the capital. Fiber levels more than doubled year on year. That is of a low base and I want to be honest about that. But fiber level is a margin lever in any marketplace and the direction of travel matters more right now than the absolute number. So Zuma traction remains strong throughout improving transaction counts, sustained new buyer addition and robust repeat purchasing from existing buyers. Repeat Patel is a metric we watch most closely because it is one a buyer cannot be persuaded into. They come back because the platform works and the new buyers are well certified across infrastructure, construction, manufacturing and industrial segments spanning both large and mid-sized enterprises. We are not substituted on any single end market. It is worth stepping back to remember what this business actually does Indian B2B trade in these categories has historically run on a phone call relationship and paper, opaque pricing, slow payment, and uncertain delivery. We are replacing that with an integrated digital platform. For a buyer, that means the ability to source quality products, compare prices transparently, access working capital, track deliveries in real time, and manage the whole procurement process in one place. For a seller, it means growing sales, improving operational efficiency, accelerating cash flows and reaching markets they would never have established on their own. Both sides get something they genuinely could not get before. That is why this platform is compounding every satisfied buyer brings sellers, every good seller brings buyers. Underneath the market place, We build a robust digital financing ecosystem, expanding working capital and credit solutions for both buyers and sellers through strategic partnerships with leading financial institutions. This is the piece I would encourage you to weigh most heavily. In V2V trade, credit is the real constraint, not catalog. By solving for working capital alongside the transactions, we make assets difficult to disintermediate. Talking about profitability, in this business our position is unchanged and our confidence is high. We are not chasing breakeven by shrinking, we are reaching it by scaling into a cost base we have already built. Till our pivot remains on track to achieve a better breakeven by exit of FY27. Now I hand over the call to our CFO, Mr. Hemant for his remarks on company's financial performance and remaining businesses. Over to you, Hemant.

Thank you, Mr. Himanshu and good evening everyone on the call. Let me turn now to solvastic fibers and I want to start with why this business matters more today than it has ever. Cotton is running into hard limits, land is finite, water is scarce and yields are plateaued. That constraint is have opened up what we call the cellulosic gap. A structural shortfall, the world has to fill with something. And cellulosic fiber is the natural answer. It is biodegradable, it is environmentally friendly, and it is one of the most sustainable fiber in the basket. On the demand side, our Leva brand is pulling the entire textile value chain towards cellulosic. On the supply side, our lyosil expansion is progressing as per plans. The earlier announced Rs. 1350 crore Phase 1 project of 55,000 per annum is completing its detailed engineering and civil work is progressing as per plan. The recently approved Rs. 3094 crore Phase 2 project of 110,000 PPA is moving through environmental clearance. Now the operating environment. China remains the swing factor for this industry. And the signals there are constructive. Operating rates and inventory rates tell us that the supply side stayed disciplined through the quarter. Talking about financial performance, CSF sales volumes were down 4% year on year. Two reasons for volume degrowth. Plant maintenance and reduced production. and Subdute Dunst in Deand. Speciality Fibre moved from 21% of the sales mix to 27% led by Exforce. Revenue grew 12% year on year to Rs. 4530 crore despite lower volumes driven by strong global prices, rupee depreciation and favourable product mix. Epida roughly doubled. Some of that is a low base but a meaningful part in the specialty share doing its work. Let me move to chemicals. The first thing to understand about this business is that it is not one business. It is three and they are reinforced each other. Caustic soda prices in South East Asia exceeded the quarter at $4.83 a tonne up from $468 we saw a year ago. Our eco-realization followed the same path up 6% year on year to Rs 37,955 per ton. Volumes were softer and that is largely due to plant maintenance effect. Chemical segment revenue of Rs 2,640 crore grew by 10% year on year driven by improved realization in caustic, chlorine derivatives and specialty chemical. Within revenue mix, caustic soda came down to 49% while specialty chemical rose to 30%. Higher share of specialty chemical was aided by price increase that was passed through due to higher input costs. EBITDA of Rs. 491 crore up 16% growing faster than revenue driven by all round performance across businesses. So the story here is straight forward. A leadership position in the base business funding a deliberate march downstream. As CPVC got recently commissioned and ECX commissioning happening in quarter 2 of FY27, Chlorine integration is expected to reach 68% by exit of the current financial year. Let me turn to building materials. When paints and B2B are already covered by Mr. Himanshu, let me cover cement, starting with capacity. Because in this business, scale is strategy. We added 8.7 million tons of grey cement capacity in the quarter, taking total grey cement capacity across India and overseas, Consolidated sales volume grew 12% year on year to 41.31 million tons. Double digit volume growth at this scale is not small thing. The result flows through cleanly to consolidated EBITDA which is also up 12% to Rs. 5,146 crore driven by volume growth and by lower logistics and power cost. On energy, green power mix has risen to 45.6% up 23% year on year, with total renewable power capacity now 1.4 gigawatts. On the retail front, AltaTech building solutions outlets continue to grow with total number of outlets now at 5,802 up nearly 1,000 stores compared to last year. AltaTech gives healthy cash flow to us in the form of dividends. Aditya Birla Capital delivered a strong start to FY27. The performance reflects the strength of its diversified financial services platform, with lending, insurance and asset management businesses all contributing to growth. The overall lending portfolio grew by 32% to nearly 2,20,000 crores, while housing finance crossed the Rs. 50,000 crore milestone. Growing 50% year on year. On the insurance side, the business continues to build scale across both life and health. While the asset management business benefited from strong AUM growth and improving market share. Importantly, the company also strengthened its growth platform by raising Rs. 4000 crore of equity capital including participation from international finance corporations. positioning the business well to accelerate growth while maintaining a strong balance sheet and robust asset quality. Dasim invested Rs. 2880 crore at Rs. 356 per share, maintaining its stake in Aspi Patel on a fully diluted basis. Our smaller businesses are contributing more than their size suggests. Renewable business revenues grew 59% year-on-year Textile business grew 26% and insulator business continues to serve the power sector in expansion. These businesses sit directly on the same structural themes as the rest of our portfolio. The energy transition, aspirational consumption and infrastructure build out. Coming to capital expenditure, the standalone plan for Aspi 27 is expected at Rs. 3,157 crore. Nearly 45% of this capex is dedicated to growth capex. The total spend in quarter 1 stood at Rs. 375 crore which is nearly 12% of the budget. On balance sheet, as profitability improved, consolidated net debt to PTM Evita declined to 1.45 times as on 30th June 2026 compared to 1.62 times in the same period last year. On standalone level, net debt increased to Rs. 9,899 crore. This is largely due to timing difference between recent investment made in June 26 in Aditya Birla Capital and dividend to be received from Alta Tech in August 26. Now we open the floor for Q&A. Thank you. I request operator to please connect for Q&A.

Thank you very much, sir. Ladies and gentlemen, we will now begin with the question and answer session. Anyone who wishes to ask a question may press star and 1 on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use hands up while asking the question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Naveen Sahadev from ICICI Security. Please go ahead.

Yeah, good evening and congratulations on good set of numbers. I'll start with two questions. One in pain. Of course, it's been a journey so far. But sequential growth, because year on year I'll not compare given we are in the ramp up phase. Sequential growth of 17% is appearing broadly at par I would say to most of the pain companies that have reported performance. Of course, there is a reduction in losses too. So my question was, how should we look at the journey incrementally? Because this quarter, like I said, is broadly at par on a QOQ basis. So is it fair to assume that, will it be fair to assume that growth is more mature and we'll focus on breaking events earlier or If required, we'll continue to keep the push and first achieve the revenue target. How should one look at it?

Thank you so much, Naveen. So, you're absolutely right. The sequential growth compared to listed companies is at a similar level at the listed companies. But you have to see what is special about quarter one, which is not a normal quarter. This quarter, most paid companies have increased So it gave opportunity to the channel partners to stock up. The revenues this quarter reported, high revenues reported by the industry has a component of consumer sales and a component of extra channel stocking which will even out over a period of time. Being a new operator, we don't have the power to be able to get extra stocking in the channels which the old operator based on their past trends are capable to get more stock in time. This is the only factor which has dramatically changed in this quarter. So it is better to see revenues on a longer term basis rather than on a specific quarter basis. So nothing changes. Our commentary has been very explicit. We continue to with a resolve to be able to deliver the 10,000 crore revenues.

Thank you. So my second question then was about the AB Renewals business because we tend to talk a little less about it. You did mention Pivot is the underappreciated business so far, but I think also maybe AB Renewals needs some more slides in the presentation. So because of the recent transaction that we did, the broader question here is like, you know, if you can get a complete outlook of this particular segment in the sense, If the entire 9.3 gigawatt of the capacity target will be up and running or available for the full year 29, if everything is booked under PPAs, what would be the potential debt levels, what is the infusion Gratin may require to keep it a subsidiary at 51% or more. If you could just help us understand the AB renewal perspective, I think it will really benefit everybody. Thank you.

So we would like to... Organize a separate session for all the analysts who are interested in AVRenewals. We have a separate management team of AVRenewals and it is best that they will give you the complete guidance. While it fits, Grafton is a major investor, but it is best to answer with them. I will, for the timing, ditch this question. and definitely for Naveen and also for other like-minded people who want little more details on Hiveen Universe, organize a separate session.

Right. Thank you, sir.

Thank you. Next question is from the line of Kateek Kumar from Jefferies. Please go ahead.

Yeah. Thank you, thank you sir, congrats for fantastic results and thank you for sharing the segment level information on new businesses. With in pace, particularly the EBITDA losses also nearly halving versus passive quarter, will you also like revisit like timeline status on profitability or whether there has been any change in the expectation of turning profitable on a full year basis in FY28?

So, our persistent stance has been that Once we reach 10,000 crore, we will become profitable. At this point of time, we are not changing their stance.

Sure.

And also, again on the renewable value, you talked about you do a separate meeting there. Including the equity contribution towards decent acquisition and how do you see capital employed expected to evolve in 2027-2028 versus Rs. 1200 crore as of FY2026? Because this number is

We need some modeling for the corporate in terms of cash flow.

So coming to capital employed, capital allocation of Grashim, we are already working in the current quarter, we have invested in our financial services business. We are right now undertaking expansion projects of our CSO business and cash outflow for the current financial year on account of CapEx is 3157 crores.

But I think your question was pertaining to renewals. Graftim contribution will be a small number and will not have a material impact as far as Graftim is concerned from its own cash flow. That is what we can speak about to you. So you don't need to share cash flow requirement from Graftim or the ABF or the renewal business. Exact number we will share with you outside.

Sure, that's thanks for clarification. Lastly, could you also discuss the royalty payable to Brinda Holdings particularly in context of similar arrangement being based by peers such as in that group?

What is the question?

So royalty payable, so the peer entity is talked about 0.25% of sales. Is this similar applicable from FI 27 onwards for Grafim also? That's right.

Yeah, it is applicable for Grafim also. It will be 0.25% of standalone revenue starting from June.

I want to take a minute to be able to give you the logic why this is important from an overall perspective. As the Aditya Billa Group, the parent grant to us is the most valuable asset and a source of competitive advantage. It's an intangible platform that systematically builds trust and reduces friction and enhances long-term growth potential of our group companies. So, because of this, I think their current model where we were earlier, we are transitioning from purely family-driven stewardship to structured governance model which is consistent with global best practices for founder and family branch of comparable scale. We were very happy that for a long period of time, the family was not charging us for this brand and it is an appropriate time that this is getting charged. And it is at a very reasonable level of 0.25% of revenue with an upper cap that has been built in. And this becomes applicable now from 1st of June.

This other cap is 225 crores. 225 crores for yourself and Antitech also because it's your subsidiary.

No, no. Grafim will be paying on stand-alone revenues. So, if you take stand-alone revenues, impact will be around 100 crore rupees.

Sure. Thank you. I'll get back to that.

All the subsidies, just to clarify, all the subsidies will pay as a brand value under their line of business. Whereas with AB, The renewals, whether it is Aditya Dilla Capital, whether it is Ultratech, all will be on their own.

The Aspi will pay for its standalone direct business. I hope you clarified. Sure, thank you sir. These are my questions.

Thank you. Next question is from the line of Praneet from Kotex Securities. Please go ahead. Raneet, your line is unmuted. Raneet, can you hear us?

Hello, can you hear me?

Yes, we are audible.

Okay, I think there seems to be some... This is Jay Doshi from Kodak. Hi, thanks for the opportunity. Just one question... With reference to, so as per my understanding, you know, some companies in paint industry have a very strong seasonally strong March quarter depending on how their schemes are in terms of absolute sales, while some companies tend to focus more on the June quarter. So, when I look at salience of March quarter versus June quarter, it will vary from company to company. And so, in context of that, what is it for grassland? Because if I look at the last year, generally you have a very solid March quarter and then June quarter absolute scales is not meaningfully higher and then it scales out again in December and March quarter. So, should POQ metric be a relevant metric from March to June? to compare market share for Birla Opus versus rest of the industry. And that was one question. And second question is you started on a YOY basis when I looked, you know, you started with a very strong 64% growth. So, does this give you confidence that at full year level you should be able to you know at least do 50% or more on a YOY basis full year FY27 over FY28. I understand your FY28 sorry FY27 over FY26. I know your guidance is 10,000 crore but to help if you could give us some you know broad indication of FY27 as well. And thank you for the additional disclosures.

Thank you Jay. Yes on a YOY basis we are guiding over 50% revenue This is the second part of your question. And for us, as we are in a high growth model with a low base, a specific quarter is not so critical. But there is obviously, our model is, which encourages dealers to not only participate during the quarter, but also have schemes that close during the year. So, which will naturally, there is some additional sale that takes place at the end of the year, which builds up. So, as quarter on quarter revenues build up, annual sales will definitely grow. So, while I would not say a particular quarter is going to be better than other quarter, but the model that we build is a traditional model that we are doing in all businesses. We would build programs which will encourage dealers to participate on a monthly and a quarterly basis. But the aggregation of all this revenue during all the quarters will also get in some bonuses due to at the year end. So our loyalty program has been designed for annual programs as well. I hope this will give you a sense of how our revenues will stack up.

Sure. Thank you so much. Thank you.

Thank you. Next question is from the line of Rahul Gupta from Marvin Painty. Please go ahead.

Yeah, hi. Thank you for taking my question. Two questions. When you say the payments of 0.25% of revenues, is there a cap there like we see for Hindalco at 225 crores or there is no cap on that? That's my first question.

Just now there is a cap, but in our case 0.25% will be a smaller amount.

Cap is 225 crore, but as of today we are quite far from that.

Yeah, so in that case, would it be lower or the higher amount of the...

Taking an estimated amount of 50,000 crore revenue for grassing. 0.25 will work out to 125 crore and the cash is 225 crore.

Got it, got it. That's helpful. My second question is on change. Now when you talked about around 9% quarter on quarter price hikes reflected into first quarter, was there any benefit from change in discounting or incentives as well during the quarter or volumes grew by around 8% quarter on quarter price? and also when you talk about pricing benefits flowing into second quarter, what kind of rollbacks have you seen in the quarter till date and how are volumes trending at the same time? Thank you.

I think it's a little complex question that you are trying to address. Let's go back from the basics. The raw material costs has increased on a few year basis anywhere between 20-25% and as a percentage of revenue between 10-14% depending on the month. But we were carrying older inventory and the older inventory has now been aged out and most of our is now at the newer inventory for the raw material. The price increase was not taken in a single shot. It was taken at multiple levels during the quarter and some of it will flow into the next quarter. As I mentioned at the start of the question answers that the quarter one had a combination of consumer sales and stocking up of dealers because they saw the benefit to take additional volume before the price increase took place which is for the industry. Quarter 2 is unlikely to have that because the dealers are bringing down their renties going forward. So to be able to make proper estimates of volume which is all consumer driven is going to be a little difficult between a quarter 1 and quarter 2. But I think by quarter 2 it will all even out and most likely the market stock will come back to its normal levels. So also quarter 2 typically is a weaker quarter. because of monsoons and once the seasons change, we are expecting good volume growth to be returned back. So while these are our estimates, I can't give anything beyond this at this point of time.

Got it, got it. This is very helpful. Just coming back to the first quarter, just trying to understand, given you had in the previous quarter highlighted that You were looking to remove your 10% higher volumes in some of the products like primers. I'm just trying to understand that when 70% revenue growth came in quarter on quarter, was that also on back of removing some of these incentives or outside of price hike everything else was or not?

So, 10% removal of primer took place in the month of January and most of which was accounted for in the quarter 4 itself. So, there is very little impact in quarter 1. I hope that's clear.

Thank you so much for all the rest.

Thank you. Next question is from the line of Pranshi from City Group. Please go ahead. Thank you. Just a couple of questions.

On the renewable side, you had mentioned that the impact on cash flow because of contribution will not be significant. Is it possible to quantify or give a range?

10,000 crores. Okay.

That's one. Second, on the chemical side, the kind of resilience that we have seen in this quarter, how do we think about going forward?

Sorry, your question is, is the result sustainable in this quarter, right?

Yeah, I am going forward.

So look, it's really difficult to predict the market these days. As you know, the Gulf War is creating all kinds of strange situations. For example, there are three refineries, large alumina refineries in the Gulf not operating, which is substantially reduced to alumina at one. You also know that free stock prices for petrochemicals, which are, you know, raw materials which are used by our clothing customers, They are literally changing overnight. There are shipping shortages. There are container shortages. So we are following a very simple approach. And that is, you know, we have almost a daily pricing mechanism based on the commodity prices of the day. We try not to take a very large position on either raw material inventory or finished good inventory. So to keep over this kind of approach. We cater to what is genuine demand of the customers. and we ensure that our pricing hygiene remains consistent with the commodity price of it. To be honest, beyond that, it is really difficult to predict the market. Having said that, the second quarter, we will of course be selling material from stocks which we purchased in the first quarter which were more expensive. So there will be pressure on the markets. But, you know, it's a bulletin. Understood.

And this on DSF, you know, the sequential increase that we have seen in the EBITDA, so volumes have declined. You know, what has been the boom in the pricing domestically as well as cost and cost sequentially?

So, one in terms of cost, we have seen a surge in some of the input prices, say of sulfur and partially caustic. Volumes were down because of two reasons. One, we took a planned maintenance in one of our largest plants in India. There is a certain preventive maintenance schedule that is ongoing. Two, there is also a slight drop in the downstream demand in India. But thankfully the demand in outside India was good, so we were able to export, increase exports. Of course, at a margin, realization slightly lower than what we do domestically. So, the prices went up because of two reasons. One is international demand was good. International prices went up, especially in China. And cotton prices went up, polyester prices went up, largely because of the geopolitical environment and dollar getting stronger versus rupee. So, we were able to pass on significant increase in our input prices to the marketplace in terms of pricing. So, we are holding on to that position as of now and yes, Any external event dramatically changes the situation with respect to demand, dollar, euro and rupee exchange price and what happens in China.

So, sequentially, what is the domestic realization increase?

Domestic realization increase has, I mean, we do not exactly share the prices, price or realization numbers, but I think if you see the earning presentation we have shared, the increase is similar to what you see internationally.

Thank you. Thank you. Next question is from the line of Nirav Jumudia from Anvil Belt. Please go ahead.

Yes, sir. Good evening and thanks for the opportunity. Sir, two questions. So, one on the chemical side. Sir, if you can just help us understand like out of our total volumes of close to around 284,000 tons, how much was the contribution from the Flaker and how If you can just help us understand historically what used to be the difference between the lye and the flake prices and because of all this geopolitical situation whether they have expanded recently?

So we normally don't disclose the ratio between our lye and flake production. So unfortunately I will take a pass on that answer. What I can only say is that Our approach is to maximize our electrochemical unit margins and then based on that we choose the right product mix that we want to go to the market by making sure that all our contact customers and we have several contact customers whom we have given volume committees to build up on this. But other than that, you know, we will margin maximize our product mix.

But... So hypothetically there is reason that because of the inward capacities of caustic which are coming up here in India and let's say there could be some correction in the prices of caustic. So what internally we are doing in order to reduce the impact of any fall in the prices of caustic. So if you can just list one or two parameters in terms of potential benefit from the measures that would be very helpful.

Yes, so there are two things, right? First of all, whatever new capacity is coming into India in caustic, which is PVC late, is relatively small compared to the traded volume of caustic internationally. So, our thesis has always been and it continues to remain that it will be international market prices that will drive domestic price parity. The second point, of course, is whatever capacity comes in for PVC will substitute PVC import So, we don't see any net caustic capacity addition to the global markets because of the extra India PVC capacity. Because the PVC operating rate will be driven by PVC. Now, what we mainly are doing is chlorine integration. That is the main source of value generation for us. and you have seen that we have already inaugurated our CTDC plant. In fact, we made our first commercial treatments. We made a stock exchange declaration also yesterday. We are in the process of commissioning our ECH plant. So, we will continue with our effort on chlorine integration. We are not unduly, you know, pessimistic. about long-term caustic prices. We continue to believe that the domestic market will trade at import parity.

Perfect. So, second question on the epoxy side. Like, what we see is like we have close to 18 to 20% top-line growth both on a sequential and on a YOY basis. So, if you can help us understand, was this purely led through the realization passed through the cost-price increases or There was a volume growth also this quarter, which is to have these top line numbers.

I think the price realization has been the bigger part of that. We have seen the raw material prices go up, which has forced us to increase prices. Of course, there has been some volume effect, but it is mostly price realization.

And how do you see the markets in terms of epoxy predominantly from the export market like a Europe and second USA and also because some of the players have recently announced the capacity for epoxy here also in India. So how do you see the market shaping up over next 2-3 years in terms of refilling up the capacities which we have recently expanded on. Thank you so much.

We are already operating at decent utilization rates. I believe that our utilization rates are higher than the industry standard in India right now. So that is not something we are worried about. About the extra capacities that are announced or will be announced, ultimately what will drive the epoxy business is two things. What is demand and what is your value proposition to the market? You know, just having capacity does not increase the size of the end market, right? We believe that we have the broadest epoxy portfolio in the business We have the best customer service, we have the best IT, and we will continue to maintain our leadership share and we will grow with the market. Now, as regards exports, of course, there are all kinds of other factors when it comes to exports, whether that is the uncertainty of the tariff situation in the US, whether it is about the demand slowdown in Europe, and nowadays more and more Availability of shipping and logistics. But our primary growth market remains the domestic market. We believe we are the market leader. We believe we have the best portfolio to provide complete solutions to the industry. We provide great technical service. We have dedicated application development resources. And we believe that this market share depends upon your ability to provide solutions to customers and not driven by capacity.

Perfect sir. Thank you so much and wish you all the best.

Thank you. Next question is from the line of Siddharth Mehrotra from Kotak Securities. Please go ahead.

Thanks for the opportunity sir. So just wanted to check given that there is a slight mismatch with respect to the Alphatech dividends coming in So, do we see this as the peak net debt for us or do we see net debt going to higher levels for us?

We will be maintaining our net debt below 2.

Net debt to a beta below 2 for the entire year, is that correct? Yeah.

Okay sir, so in that respect, could you just throw some light on how will we structure our equity contribution to the renewables transaction? At renewable, we will be investing not more than 1000 crore in the current financial year.

Okay sir, and what will be our stake in the renewables venture once this transaction is consummated obviously?

Yeah, the transaction will get consummated somewhere in December. and GIP will be participating the equity portion for this transaction will be contributed by Aditya Birla Group, Grasim as well as GIP and we will have a separate call on this so where we can clarify more in detail and I think we should wait for some more time till the transaction is consummated. But from Grasim contribution in the current financial year will be less than 1000 crore. And let's process that here. Secondly, sir, on the VFF margins, sir, given our commentary, especially on the operating rates, which are at fairly high levels, do we think these margins are sustainable, say, for example, over the next five, six quarters?

Or is it too early to sort of predict that given the volatile commodity situation?

I wish I had the answer. But nevertheless, you know that this industry has been cyclical, but we have a very, very strong position in India. Irrespective of the global operating rates, our operating rates are very, very high. You know, they are almost close to 100, except if you take maintenance shutdowns, which also have to be taken. So, I think it will all depend on how the input prices play and how the demand grows. Quarter to quarter, there will be some kind of variation. But in India, we are positioned to hold a very, very strong position. All that put together, we have a very strong position and as we discussed earlier, the cotton is limited availability, so that will be substituted by our current VSF or the new Lysol fiber that we are increasing our capacity. So it's good now, but of course, you know as an analyst you would have studied these trends for a very very long period of time. We are getting bigger, we are getting stronger but of course there will be some headwinds in some quarters.

Understood sir. Thanks for this sir. Thank you.

Thank you. Next question is from the line of Naveen Sahadev from ICICI Securities. Please go ahead.

Yeah. Thank you. Thank you for the opportunity. Two questions. One is, I was reading across that Lensing, which is a global maker in BASF, is phasing out some capacities of the specialty fiber and also I think exiting Indonesia market, which is feasible. I think either they're looking to sell or shut it down. So if you have any idea of that and what could be possible potential impact of that, is it likely to be positive is my one question. I have one more quick answer for this.

Yeah, one, of course, we do know what is in the public domain with respect to what some of the international competition announces. There is a small, see some of these capacities that our competition is shedding are very small, high cost capacities in our assessment and in high cost countries. So, it is very difficult to make fiber at competitive prices cost in those countries. So that's a certain call that they have taken. But in our case, we want to strengthen our portfolio of specialty products, both for the domestic market and exports. As far as what's happening in Indonesia is concerned, yes, that affects the global supply demand for the conventional viscose fiber. And any capacity drops is for the competitors always a good news. So, to that extent, you know, we would be able to, when the equation of supply demand stabilizes globally, if we need to export out of grassland, then it will be useful because the prices would be at higher level. That's our current reading and assessment.

Understood. Thank you. My second question was about pivot. So, two parts to this question is, first, having reached a sizable scale, like almost 10,000 crores, When is the break-even? Because earlier guidance to this was, break-even guidance was on achieving a billion dollar sort of revenue. So, is a break-even anytime soon is one part of the question. The second was, how much of our sales are directed or from the UBS stores, which is a fairly large chain of our subsidiary? Thank you.

Thank you, Rangan, for the question. As mentioned in the opening comments, our current estimate is that we'll exit this year at EBITDA break-even. I know you mentioned we had earlier given the guidance that at $1 billion or 8,500 crores we will be break-even, but that timeline got shifted slightly. We have front-loaded our investments in people and technology and all of that has obviously helped us in achieving a higher revenue run rate. If you look at it We've grown 75% year on year and our estimate of when we'll actually hit the 10,000 crore run rate is also fast-tracked because of the investment that we made. And we are on a good path and we are fairly confident that we'll exit this year at a bit of a delay. So that's your first question. On the second question, we looked at three segments fundamentally for our business. One is of course our projects business where we have raw material procurement that is directly supplied to all the sites where the execution is happening. The second one is manufacturing entities where we supply raw materials to all of the smaller and medium sized manufacturing companies and third is retail. Retail is also a very important portfolio in our overall channel mix primarily because you know we We do a lot of finished goods or finished goods categories within this channel which are at a higher margins and that helps us in our overall margin as well. UBS is a big part of our retail. Retail overall would be about 15-20% of our mix. In that, UBS is about 70-75% of our current revenue. So, we are... and we supply a whole host of categories there and a large part of our catalog there is also our private labels in tiles, fly and bathware which actually go into the UBS stores. It helps them diversify their mix beyond selling their cement and that is inherently why they keep coming back to us because it helps them retain their end customers also. So that's the response on the second question. I hope that answers both of your questions.

Absolutely. Excellent. Thank you. Thank you so much.

Thank you. Ladies and gentlemen, due to time constraints, that was the last question for today. On behalf of Aspi Patel, Aspi Patel, Aspi Patel, Aspi Patel, Aspi Patel, Aspi Patel,