Ladies and gentlemen, good day, and welcome to the Q1 FY 2025 results Conference Call of Kajaria Ceramics Limited, hosted by Equirus Securities. As a reminder, all participants' line 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 conference call, please signal an operator by pressing star and zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Pranav Mehta from Equirus Securities. Thank you, and over to you, Mr. Pranav. On behalf of Equirus Securities, I welcome you all to the Q1 2025 post result con call with the management of Kajaria Ceramics. From the management side, we have Mr. Ashok Kajaria, Chairman and Director; Mr. Chetan Kajaria, Joint Managing Director; Mr. Rishi Kajaria, Joint Managing Director; Mr. Sanjeev Agarwal, CFO; Mr. Kartik Kajaria, Head, Adhesives Division; and Mr. Nehal Shah, DVP, Strategy and IR. Now, I hand over the call to Ashok sir for his opening remarks, after which we'll open up the floor for question and answer. Over to you, Ashok sir. Thank you, Pranav. Good evening, everyone. It gives me great pleasure to welcome you to the quarter one FY 2025 Earnings Conference Call of Kajaria Ceramics. As already said by Pranav, joining me on this conference call are my sons, Chetan and Rishi, my grandson, Kartik, our CFO, Mr. Sanjeev Agarwal, and Nehal Shah, DVP, Strategy. Despite the softness in domestic demand, being an election-led quarter, our tile volumes in quarter one FY25 grew by 7.8% year-over-year, to 26.98 billion square meters. Going forward, we continue to maintain a positive demand outlook for the industry, for the tile industry. As far as our company is concerned, we are confident of achieving low double-digit growth, volume growth for the current financial year, driven by our extensive and relentless branding and distribution efforts. Our consolidated revenue for the quarter stood at INR 1,014 crore, indicating a 5% increase compared to the corresponding period last year. The EBITDA margin for the quarter was 15.01%. Our recently acquired Keronite unit, with a capacity of manufacturing 6 million square meters of GVT in Morbi, commenced production in quarter one FY 2025. We expect this unit to achieve optimum capacity utilization by quarter four FY 2025. The progress of Nepal project is on, and we anticipate commissioning of 5.1 million square meters of GVT and ceramic capacity by September 2024. On the export front, India's tile exports experienced an impressive 26% growth in FY 2024, crossing INR 20,000 crore, INR 20,175 crore, to be very precise, for the first time. In the first two months of FY 2025, Morbi exports, however, remained flat at INR 3,350 crore. It is worthwhile to mention that despite the recent initiation of ADD by the U.S. on Indian tile imports, the Morbi exports to the U.S. in April and May put together have still grown by 16% to INR 335 crore versus INR 289 crore achieved in the same period last year. With export momentum likely to sustain and rub off of strong real estate demand, likely to drive improvement in offtake for tiles in FY 2025, we expect the tiles industry to fare much better than it did in FY 2024. Now, for this quarter segment by its financial performance. Tile segment grew by 3% year-over-year, reaching INR 990 crore compared to INR 957 crore in Q1 FY 2024. Bathware segment registered 8% year-over-year growth in revenue, reaching INR 91 crores compared to INR 84 crores in quarter one FY 2024. The plywood revenue increased by 25% in quarter one FY 2025 to INR 18 crores as compared to INR 14 crores in quarter one FY 2024. Revenue from adhesives grew by 59% to INR 15 crores in quarter one FY 2025, as compared to INR 9.6 crores in quarter one FY 2024. The PAT grew by 16% to INR 90 crores in quarter one FY 2025, as compared to INR 108 crores in quarter one FY 2024. As of thirtieth of June 2024, the working capital days increased by one day to 59 days, from 58 days as of thirty-first of March 2024. With this, I take the opportunity of thanking you for joining us today. Over to Pranav for Q&A, please. Thank you. Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Mr. Rahul Agarwal from Ikigai Asset Management. Please go ahead. Hi, sir. Very good evening. First, just we wanted to start with the budget. Essentially, any takeaways, sir, for our industry and any changes would you see over the next 12 months? Budget, budget has been positive on 2, 3 fronts. One, lot of business will come from Bihar, lot of business will come from Andhra, and also the finance minister has announced an INR 1,000,000 crore budget for urban housing for the next 5 years for 1 crore citizens. So I think because when it's urban housing, that means the demand of tiles will further go. Got it, sir. I'll jump to questions on the company. Sir, you guided for a low double-digit volume growth, fiscal 2025. Any views on the revenue growth? Because, you know, first quarter, obviously, we have seen pricing compression. Do you see revenue growth to be lower than volume growth this year? I think it's slightly lower. The revenue growth should be around 8-9% compared to 11-12% of volume growth. And just to tell you that the prices are more or less stabilized. If you see the numbers of quarter four last year, that means of 2024, quarter four, and at 2025, quarter one, there is no pricing change, no pricing change realization. It's the difference is 0.5% only. So prices are more or less stabilized. Perfect, sir. Any comment on the gas pricing, sir? How was it in the first quarter for north, southwest, and what is the expectation? Gas prices more or less the same what it was in quarter four and quarter three of last year. There is no, no change per se. INR 39 on an average for the company? Pardon me? INR 37. INR 37, INR 37. Thirty-seven rupees. Yeah. For north, it is 37, for south, it is 36, for west, it is 36, and overall, it's 37. Yeah, it's not gas, it's about the combination of all fuels. Right. Any comments on gas pricing, sir? Gas prices are more or less same. No change internationally as of now. Yeah. And And the last question, we hear propane seems like it's a bit cheaper versus gas at Morbi. Are we seeing any price disadvantage or there is no material change? No, no, more or less they are the same. INR 1-2 difference doesn't make much difference, because that's how they are pricing each other. Okay, perfect. Got it. Thank you, Ashokji. I'll come back in the queue. Thank you. Thank you. you. The next question is from the line of Jyoti Gupta from Nirmal Bang. Please go ahead. Yeah, good evening, sir. I believe good set of numbers. What surprised me was the volume growth. I mean, as per my district, this quarter had not been great, yet an 8% growth. I believe the second quarter would be a little dull because of the monsoon. So do you think we'll be able to make... We'll be, we'll be somewhere around mid-teens in terms of volume growth? Second is, as per my understanding, the gas consumption of 75 MSM has not come down. Is there any change in this quarter where the gas consumption has come down? If not, then do we expect the production to be at same levels, and therefore, the third quarter and fourth quarter should see a pickup in demand? See, volume growth for the quarter, which is now, should be close to about 11%-12%. That's number one. This quarter? Yeah. Quarter two, you're saying 11%-12%? Yeah. Nice. Okay. Yeah. And secondly, the question on gas, which you asked, there is not much change in the price of gas. Okay. And third, sir, on the container side, I understand that, you know, the material which is used for exports cannot be actually sold in the Indian market, typically because of the, you know, you know, the expectations, you know, in terms of... But do you think shortage of containers will in any way impact the domestic market now that we are seeing pickup in demand, and, hopefully it's going to sustain in the next three quarters? 11%-12% second quarter is a very good, you know, number. No, no, this question- I hope. Yeah, just to interrupt, this question keeps on coming, whether export material can come to the domestic market- Yeah. which I've always answered in the manner that a dealer... Suppose I am a dealer. I am keeping a material of Kajaria or Somany or someone else. I cannot keep on changing. If I am a dealer of X, and I have displayed that material, somebody comes to me, offer at 10-50% less, even then I cannot sell because I cannot display, it will not sell. So basically, export material cannot go to the domestic market, and some of the people who are making for export, they are basically making it for export market. Yeah. Okay. Okay. Okay, sir. That will be all. Thank you. Thank you so much. Yeah. Thank you. The next question is from the line of Shaleen Kumar from UBS. Please go ahead. Thank you. Thank you for the opportunity. Good evening to everyone. Sir, I must say, good set of volume growth. That's a positive surprise for all of us. So I noticed one thing that, you know, despite weaker realization, our gross margin has been, you know, improved. And now you are looking forward for a better growth volume in Q2. So, assuming that the realization stays here or improve from here, so is there a scope for margin to improve from here as well, gross margin? Can we think about that? We are looking at a 15%-16% EBITDA margin, as we have said previously also. Mm-hmm. We are maintaining that right now. Because our priority is to sell volumes in the market going ahead, while keeping our projected margins... Shaleen, as far as gross margins are concerned, I think it's at 38.5% this time, which is 100 basis points higher than year-over-year quarter. Right. I think, I think you are alluding to this, right? Mm-hmm. Yeah. Yes, yes. Yeah. So with respect to raw material cost, I think the raw material costs are significantly lower compared to year-over-year, and that keeps changing because of our sourcing mix keeps changing. Mm. So one should not weigh much into this quarter, but as far as gross margin is concerned, I think it should be in this range ±1%. Even if we, even if, let's say, some realization improvement happens, you know, we should get some benefit out of it, right? Is it, is it fair assumption? Yeah. That will further add to the growth margin. Right. The second thing, your manufacturing number was higher than the sales number. So when you allocate the cost, is there some part of the cost which is already coming in, in this quarter from those manufactured tile, or you proportionate it? I mean, for example, I could see that your power and fuel cost was up, like, 10%, right? So, how should I think about that? The power and fuel, the growth what we see here is largely because of increase in production, which is gone up by 13% during the quarter. So then this effectively means then we have taken part of that cost in, in this one too, right? Right, because that, that's where we are stuck today. Right. So, I mean, correspondingly then it will not be same for the next quarter because we already have a stock with us. Yeah, but if in the next quarter, the stock again remains, the incremental stock comes into play, then again we'll have the same situation. So again, it varies depending on where the stock is. Right. Well, basically, I was looking at the avenues where we could have a, you know, there's a case for a margin improvement. And the third element, sorry, again, I think coming back to the same point on the cost, on the employee headcounts, I mean, can we, can we understand how much is the increment phase and how much is the additional headcount base? Because there's again a big jump over there, so, and sustainability of that. Actually, Shaleen, what had happened that last year, same quarter, we there was a mistake. We did not take the increment in the quarter, so there is some difference because of that. Yes. The Sikandrabad plant we started, we capitalized the salary in the last quarter. So this time, the additional 3.5 crore salary has come from the Sikandrabad and around INR 2 crore from the other Kerovit Global and all. So this will be the with the rate for the all the quarter, roughly. Yeah. So sir, basically, our costs are hitting us because we are kind of starting new plants, and the benefit of them in terms of revenue will come with a lag. Right? That's the way I should think. That's great. Yeah. Yeah. Hence the depreciation is also a little higher. The revenue will also. So in this quarter, the quarter has been finalized because of the selling and the corresponding revenue has not come in the sales in this one. Correct. Correct, correct, correct. So basically, yeah. So understood. Understood. Understood. No, it's a great show. I think, I think momentum has come back. We look forward to see, you know, Kajaria delivering double-digit volume growth. And, thank you. That's it, that's it from my side. Thank you. Thank you. Before we take the next question, we would like to remind participants that you may press Star and One to ask a question. The next question is from the line of Praveen Sahay from PL Capital. Please go ahead. Yeah, hi. Thank you for taking my question. So the first question is related to the, the product mix, PVT, GVT, ceramic. Is there any, material change versus the last, Q1 FY 2024 to this quarter? It's more or less the same. No, no major change. Okay. And, The only change what has happened is GVT mix has gone up a bit, while the other two segments, the mix has been a bit down. Okay. Okay, got it. Secondly, on the Nepal JV, why there is a delay in the commissioning from June to now September? There were very heavy rains in Nepal, you know, so because of that, we delayed the expansion, but now everything is in order. August, we plan to light up the kiln, and by September, the production will start. Okay. And, last question related to the non-tile segment. So there is a good decline in the EBIT margin in this quarter. So, why, why is it so? And, when the, you know, we will see improvement in this segment? In the bathware segment, the first quarter margins were low because we just started the new plant of Kerovit Global on March 30. But, you know, sanitaryware plant takes 5 to 6 months to commence production properly. So first quarter was pretty poor on the production. From this quarter, the production will pick up, and from the next 6 months, October to March, it'll give you good results. So this was the reason why even second quarter will be a little muted in terms of bathware, because of the loss of the new plant. But that will all be from October, that will be compensated. And in terms of plywood, the first quarter was, the loss was higher due to increase in timber prices in the market, for which we've taken a price increase on July 22 of 3%. But timber adhesives, the profit was much higher versus quarter one last year. Okay. Okay, got it, sir. Thank you. I'll come in with you. Thank you. The next question is from the line of Dhananjai Bagrodia from ASK Investment Managers. Please go ahead. Hi, sir. Congratulations on the good results. I just wanted to ask broadly, for your breakup of revenue between, like, metros and Tier One and rural, do you have any broad-based breakup? Basically, we can give you a rough idea. Yeah. North is 35% of our sales. Uh-huh. South is roughly 13, East and West are 17 each. Uh. If you go to metros, like, we can say Delhi is 3%. I can give you a statewide breakup if you want, but that's a rough number of our loans. Of course. So what would that... Just rough, roughly, just 'cause we don't understand. So you said North and South, both are 30, 30 each. 35 and 30. 35 and 30. Just to understand, like, would you have a broad base in terms of metro and Tier One? 'Cause right now, we are speaking about how rural and rural- Metro is close to about 15% overall. Mm-hmm. Tier One would be about 31%, 32%. Okay. Tier Two will be about 31-32%. Uh. Tier Three will be about 14%-15%. Uh. Tier Five will be the rest. But the Tier Four and below will be the rest. 15, 30, 60, 75, 90. So basically, the remaining will be 10%. Yeah, about Tier Four and below should be about 7%-8%. Okay. So since the last three years, we've not had strong volume growth per se, 'cause metro was the one which was leading in housing. Now, the government again focusing back on Tier Two and Tier Three in terms of improving their market scenario, then we will be the biggest beneficiary of that, right? That is where the action is. For the last 2, 3 years, that is where the action is. In Tier Two, Tier Three? Tier One, Tier Two, Tier Three, that's where the action is. Why didn't we have such strong volume growth if that action was out there predominantly? That's why it started, no? With this quarter, the volume growth has started with 8%. Mm-hmm. Overall, it's annually, we'll be looking at about 11%-12%. So there's a lot of growth will come from these areas. That's also Tier 2, Tier 3 have just started picking up. Is that right? No, they are there for the last 1 year, 1.5 years. Not that. Overall, the demand in India was not there, right? Overall, the industry, as we discussed even last year, the industry was flattish. Uh. We grew by 6%. This year, we are foreseeing the industry to be at 5%-6%. We'll outpace the industry by 11-12 to 11-12%. 6%. At 6%. So we'll be plus the industry. Sure. And, just to have an idea, how would exports be then? Like, would there be any impact now? Industry grew from INR 16,000 crore to INR 20,000 crore. Uh. At Kajaria, we don't export much. We are, our main focus is domestic market, so our export has also been flattish. No, no, I understand. But I think for the industry, how would industry's growth be in exports? 'Cause, see, if exports become weak, then they'll start dumping in India. But as long as exports grows in a way where they don't need to dump in India, then we are through. See, firstly, let me just clear a concept. They don't dump it in India if the exports work. They close their factories. Okay. Dumping is dumping, number of times clear, that dumping in India is not easy. Okay. It's not a switch and off button that you can just supply to people and then suppliers suddenly shut the supply, right? Yeah. They don't dump in India. If the exports don't work, they shut down the plants. Okay, understood. But... Okay, sure, sir. Fantastic, fantastic set of results, and thanks, best of luck for everything. Thank you. Thank you. Thank you. The next question is from the line of Utkarsh Nopany from BOB Capital. Please go ahead. Yeah, hi, good evening, sir. So my first question is on the tile capacity utilization. So, like, in the presentation, we have mentioned that we are going to dispose of two ceramic tile lines at Gailpur plant from July onward. And if we adjust for this capacity, then we operated at around 96% rate in the June quarter. So my question to you is, like, if we are quite optimistic about the demand scenario, then what is holding us back to come up with a large expansion program in the domestic market, as we are already operating at a pretty high rate, and we also have a strong balance sheet position? That's what we are gonna do, because that's the need of the hour, and that's what we do every year. When it's going to be announced, and how much time it could take to commission? One minute. If you have to grow at 11 to 12, 15% every year we have to put up capacity or do some outsourcing. So it's a question of a right balance which we are looking at, and once we dispose these two lines, which are very old, 26-year-old, we'll put up a new capacity there, but that capacity putting up takes 6-7 months before we can put up that capacity. Okay. Then a connecting question to this is, like, our tile outsourced tiles volume share has gone up from, say, 18% in FY 2019 to around 25% at present. So where do you see this share to settle down over the next two to three years? And if you can also provide some clarification whether there is any difference in the product quality and margin profile of our own JV and outsourced tiles volume, or all are same? It all depends on which market you are catering to. If we are catering to North and East, we would like to have our own capacity. If we are catering to West and South, we will partly use for West, but the West is outsourcing, and South will expand our capacity. We have two plants there, Southeast Asia and this, Kalahasti. See, margins are always better in our own manufacturing plants as compared to Morbi. Margins will always be better. Okay. And so, sir, the Outsourcing going forward. We cannot give you the numbers right now, only we are 2-3 of projection, but it will be a mix of both manufacturing and outsourcing. Okay. And sir, my last question is on the Nepal operation. So whether we are going to consolidate Nepal operation going forward, or it would be shown separately as share of profit from GB going ahead? And can you please provide some sense regarding how the ramp-up of the plant is expected to happen in second half of FY 2025, FY20 26 and 2027? So it will be shown as, share of profit of associate, which is below the line. Okay. And how the plant ramp-up is expected to happen? Let it start first. Let it start first, and then we'll review. Can't say what will happen tomorrow. Okay, thanks a lot, sir. Thank you. Thank you. The next question is from the line of Keshav Lahoti from HDFC Securities. Please go ahead. Hi, sir. Congratulations on good set of volume number. Just want to understand on volume front, how has been it like, whether June has been quite healthy versus possibly April and May? How should we see the monthly trend, and how is July going? April was not good. May was better. June was, June is slightly better, and that's what we see that the trend moving better from here on. Understood. Got it. So there has been some price hike by Gujarat Gas in July month, so will it have any impact on margin? How should we see that? The price hike was just INR 2 per SCM, and the impact is not there that much. Understood. Got it. And one thing you said, the average fuel price was INR 37 for this quarter. So last quarter you mentioned it as INR 39, or was it flat or marginally down this quarter? Last quarter, the fuel was INR 39, average INR 39, and this quarter is INR 37. Yeah. Understood. Got it. It is quite clear now. Yeah, that's it from my... Just one last question: How much is your Nepal sales right now, in volume terms, in FY2024 or maybe for this quarter? Yeah. It's not a very major number. See, right now, since we are exporting from India, our Nepal sales will... It's not a very major number. We are selling what, about 70-80 thousand square meters a month. When the plant comes, we have to sell about 400,000 square meters per month. So, you know, the real game will start when the plant comes into, once the plant comes into production. The current duty also very high, in the range of 50%-55%, so it'll be much more competitive, and we can get more volumes. That's the whole purpose of the plant. Got it. So it can add a new layer of growth to the company, the Nepal market. Understood. Thank you. That's it. Thank you. Before we take the next question, we would like to remind participants that you may press Star and One to ask a question. The next question is from the line of Vinamra Hirawat from JM Financial Ltd. Please go ahead. Hi, sir. Am I audible? Yeah, yeah. So I heard you say, you know, Morbi can't easily dump in India. So, you know, regarding the U.S. tariffs, we shouldn't estimate any change in volumes or realization guidance in tiles if the U.S. expected tariffs of 400%-800% go through? See, first of all, where this number has come from about the additional duty? As far as the additional duty is concerned, even it comes, it should be, it will not be more than 10%-25%. That's number one. Number two, India is very competitive per se. Number three, just to give you some statistics, in the month of June, Russia has overtaken, taken America as number one market, USA is number two. So a lot of markets are opening up because India is a very competitive player in the international market. So don't think that alone America will do anything great. It's the whole world which has opened up to India, and there are 178 countries which India is exporting tiles to. Okay. Okay, nice to hear that. My next question is on, you know, GVT, PVT and ceramic. As I understand, GVT is growing the fastest and commands a price premium. What is the expected volume growth for the next couple years in GVT? And do you expect GVT, you know, and a better more premium product product mix, to drive higher realizations going forward than what they were this quarter? See, all the three have, all the three verticals have to grow to get the, you know, consolidated number of 11%-12%. GVT might grow a little faster than ceramic and PVT, but they all will be growing. And yes, as the value, you know, as the product mix changes, as we sell, sell more of the value-added high-end, high brick tiles, your, your, margins are a little better, but that should be offset by the volumes. Our first starting priority will be to, deliver our volumes. Got it. I just have one more question on your bathware. If I heard you correctly, I think we grew at 8% in bathware. Are we seeing higher volume growth here in line with tiles in the second half and in FY 2026? Yes, we definitely will, definitely will. It will be a good, double-digit growth for sure end of the year, and we'll see the numbers increasing from here. Okay, I'll get back in the queue. Thank you. Thank you. The next question is from the line of Ritesh Shah from Investec. Please go ahead. Hi, sir. Thanks for the opportunity. Sir, Sir, couple of questions. One is, if you could provide us an update on implementation of Salesforce automation and DMS. How far are we? That's one. Second is, are we already opting for channel financing? If yes, to what extent of sales does it get covered, and if you have any plans over here? So in terms of Salesforce automation, it has already become live. It has been sent to all our sales team force in the last month, and we also started tracking the movement of the people. In terms of DMS, we just launched, did an initial launch for the top 50 dealers across the country last week, and we're going to go live in the first week of August, where they can see the stocks online, place orders online. So first week of August, it's gonna go live. 900 dealers. To 900 dealers across the country. Channel financing. On channel financing, 50% dealers are already under 4%, 3%, and 170 dealers have already come under channel financing, and we hope to have at least another 300 dealers in channel financing by next 2-3 months. Sir, thank you, thank you for the answers. Sir, how do you see the velocity of sales actually change for us as we implement sales force automation and DMS going forward? How is it likely to benefit us, sir, if you could just educate? See, it is not driving the velocity of sales, it's about improving the quality of the time the dealer spends and our people spend in the market. Today, we can track how many architects they are wasting, how many dealers they are wasting. Are they wasting time going to the same dealer, how many times in a month? It improves the quality and efficiency of the team as well the dealer community, basically. Let's say a dealer phones the guy four times for placing an order, he can now just punch it, punch it online to give us the plan directly. It's all about improving the efficiency and the speed and the quality of time management, basically. Okay. On channel financing, as we rope in more dealers, is it likely to impact sales or can it be an incremental lever? It will, it will help in improving sales. It is helping those dealers to grow faster. Okay. Fine. So their orders get stopped if the payments are stuck, right? Once you get in channel financing, then the orders are not getting stuck. They are clearing their orders, and the orders are being cleared, and they're paying the finances. Right. That's useful. And sir, is sales force automation and dealer management system something unique to Kajaria, or is it something an industry practice? Like, are we the first movers for ceramic industry? Nobody is doing it. There are a lot of industries in the building industry who is doing it. Specific to ceramic, are there Morbi players or other companies in the- Ceramics, we are not aware, but we learned it from meeting new people, that a lot of building material people in the industry are doing it, dealers, Asian Paints. So we adopted it. Being Kajaria, being number one, we had to go for it, and we did it. Sure. That's helpful. So second question is on government orders. I think this was one particular focus area to increase volumes. I think you had indicated setting up a dedicated team during the analyst day. Are there any numbers over here? What's the scale of improvement, and what, what can we expect over here? You will see a positive trend in government orders, from this year more. Right now, the team was only north, now we have all India focus team. Okay. Sir, any number and percentage of- We are treating it as a separate division to help us in increasing our government orders. Okay. Sir, will it be possible for you to quantify what percentage of our total volume is government orders right now, to what extent we'll be comfortable with, say, year down the line? Into the world. The whole idea is to get more of the government share. It will all resulted in our overall, overall volumes. We'll quantify it at the end of this financial year. Okay. Sir, just last question. Can you detail the fuel mix, basically for North? From what I understand, we have biofuel, we have RLNG, and biofuel was nearly like 30%, by fuel, by energy. Same thing basically for Gujarat and South, if you could please provide some color. No, in north, it's biofuel is about 30% plus. In Morbi, there is no such thing as biofuel. They are using coal for firing and spray dryer. And for south plant, we are using partly mix of biofuel and coal. Sir, last question: What will be the differential on biofuel versus Gujarat gas? Pardon me? Sir, what will be the pricing for biofuel? Basically, when we say INR 36-INR 37, biofuel is at what cost? Is it like very, very competitive? It's about INR 22-INR 23. Yeah. This is very useful. Thank you so much, sir. I'll join back with you. Appreciate it. You're welcome. Thank you. The next question is from the line of Shubham Aggarwal from Axis Capital. Please go ahead. Okay, sir, thanks for the opportunity. First question, can you share the revenue or volume mix of PVT, GVT, and ceramic tiles in Q1 2025 and 2024? The volume mix is, ceramic is 43%, PVT is 23%, and GVT is 34%, and the revenue mix is ceramics is 38%, GVT is 37%, and PVT is 25. This is for Q1 2025, right? Correct. Can you say for 2024 as well? In 2024, it is 44% ceramic, 31 GVT, 25 PVT. For volume mix. Revenue is 38 ceramic, 36 GVT, and 26 PVT. Yes, sir. Oh, all are the same, basically. Right. So actually, the reason for asking this was that I noticed that the gross margin has expanded year-over-year, and this has happened despite there being a realization decline and you having a largely similar revenue mix from in-house manufacturing. So what has actually driven, you know, help you increase the gross margin significantly? Then generally, these are the things that help you increase gross margin. Yeah, sir. So as we just commented on it, raw material costs were lower, but again, you can't actually compare that with year on year, because the outsourcing mix, everything keeps changing. The gas prices were favorable, but because of the increase in production, that is not seen there in the gross margin, but that also helped improve our gross margin. And on the EBITDA margin side, the employee cost is one cost, which has led to shaving off the gross margin advantage, which is not coming to EBITDA margin. Right. Right. Right. Okay. And, and so the outsourcing mix is also very similar. That's what I was thinking, because everything is very similar year-over-year. Still, there's margin expansion. I'll, I'll, I'll circle back on this, no worries. I'll take the second question that I had in mind. This is regarding the gas cost. Now, I actually calculate gas cost as a per, you know, as a per MSM of production. Now, gas cost per MSM of production has actually increased quarter-over-quarter for you by about 9%, despite there being a... Because you, you mentioned that the gas cost, average cost, gas cost per SM has declined from 39 to 37 marginally. But power and fuel cost- Yeah, but power and fuel costs as a first, power and fuel cost per MSM of own production has actually increased 9% quarter-over-quarter. Just trying to understand, am I seeing it right, or how, how should I see it? So Shubham, quarter-over-quarter, the gas prices are same. So overall gas price was INR 37, and now it is INR 37. Full fuel price, which is a combination of all the fuels. Yeah. So it's still flat, 37. The fuel prices have come down from INR 39 to INR 37 on average. Okay. Okay. And if you could highlight what's giving us the confidence, you know, that. If you can highlight, give us some more color on what's giving you the confidence of the 12% odd volume growth over the rest of the year as well. Maybe I believe that some of it would be coming from diversification into a new revenue segment, let's say, one, Nepal, and the second being the government orders that you're now picking up, which you weren't picking up earlier. Mm-hmm. Is that the right way to think? Like, the new distribution channels that are opening up or the new geographies that are opening up is helping you? It's going on in all the areas, whether it is projects, whether it is government projects, whether it is retail. So everywhere we are putting all our efforts, so we are looking at a combination from all these. The combination of everything, we look at an 11%-12% volume growth, as long as the industry also grows at about 5%-6%. Which you are reasonably sure that you're seeing those, that growth having come back sustainably? We are positive. We are optimistic and positive about it. The first quarter, you know, with an 8% volume growth, at least we know that things are in the right direction. Okay. Got it. I'll just verify two numbers now. One, I missed your channel financing share. Like, what percentage of your revenue is channel finance at the moment? We have given you some data. Rest, you can get later. No, I actually missed it. If you can repeat it, sir, that'll be helpful. You mentioned in the same call, right? Recording later. Yeah. You listen to this conference recording later. Okay. Okay. I'll listen to it. Okay, got it. And, your share from government orders, you mentioned it will increase to 45% by the end of year. Did I hear that right? No, no, no, you did. I think, I think we didn't say all that. You please listen, you will have all the answers. I missed out a few portions. Yeah. Okay. Thank you. Thank you. That's all from me. Thank you. Thank you. The next question is from the line of Udit Gajiwala from YES Securities. Please go ahead. Good morning. Udit, you may go ahead. As there is no response from the current participant, we may move to the next participant. The next question is from the line of Sneha from Nuvama. Please go ahead. Good evening to you, and congratulations on good volumes. Just, a couple of questions from my end. If you were done around 8% growth, what would be your rough estimate for the industry? How would our industry fare in the same current quarter? Industry should have also grown by 3%, 3%-4%, I would say. But, things are looking positive on the ground, that much I can tell you. The numbers, more numbers will clear later, because, you know, first quarter, as we all know, was an election quarter. June was very hot. Looking at everything, I think what we have done is, okay, and industry should have done slightly better, but I think things will be more clear at the end of the second quarter. ... Okay, so you mean the growth has come back to it, for the entire industry and not only Kajaria? Exactly, exactly. Understood, sir. What about exports? Would exports also have, you know, grown? Because what we understand is exports has taken slight hit because of, you know, anti-dumping duty talks on U.S. No, no. Anti-dumping is a very small thing. People are not really understanding that part. The serious problem is the freight rates because of the Hamas-Israel problem, which has gone up sky high. They have slightly come down from what they were at the peak, but still it is very, very high. So that's the thing which is causing exports to slightly come down. The moment this problem gets resolved or some solution is found, exports will pick up again. The freight charges have gone up very, very high. So it's not America. America is a small issue. Understood. So the real issue is the freight rates. Once it comes down, we'll again starting growth coming back. Exactly, exactly. Understood, sir. Thanks. Thanks a lot, sir. I'll get back with you. Thank you. Thank you. Thank you. All the best. Thank you. The next question is from the line of Rishabh Bothra from Anand Rathi. Please go ahead. Good evening, sir. 2, 3 question. To take from the last question, what are, is our lead distance in terms of, transportation? We have 3 factories, 2 in Rajasthan, Gujarat and 1 in Rajasthan, and another 2 in the one- We have eight factories right now, not for tiles. No, but eight is in different states. So I was mentioning of Rajasthan and Gujarat. Oh, 8 is 3 factories, not in different states. 8 are tile factories. Okay. What is the lead distance? I wanted to understand? Lead distance from where? I mean, from the eastern factory. One is located in the south and one in the east. What is the question exactly? What are you asking? Our maximum distance,... “kitna hai travel ka, transportation ka?” Transportation, distance. You are putting a very confused question. South factories are catering to South India. The maximum distance transportation from any of the locations. Let's say, Distance, sir. See, the question is. My question is: How can we reduce that, whether a new plant is to be set up in that particular state or otherwise? No, you leave it to us. You can't take all those calls. We are eight factories. Please get your data, datas right. We are eight factories, two in South, three in West, and three in North. Okay. Those eight factories are, you know, properly distributed to all over India. Okay, fine. Second question is, we have 90% of the revenue coming from tiles and 10% from the remaining segments. What is our growth plans for those segments? It's basically a tile company. Next 5 years or so, you will see revenue should be between 85%-86% of tiles, and rest will be from other verticals, like what we have today. But we want to grow those segments as well. We don't want to hide it off. Yeah, yeah, of course, sir. Of course. Okay, fine. I'll come back to you. Thank you. The next question is from the line of Amit Purohit from Elara Capital. Please go ahead. Yeah, congratulations, sir, and thank you for this opportunity. Sir, just on the growth, we've been growing ahead of the industry, and you would attribute it to what? I mean, would you attribute to distribution expansion or existing markets also doing well? How do we think about that? And I mean, you highlighted that the smaller towns are doing better, but just wanted to get your insight. So as mentioned, we are basically working on all fronts. We are, you know, strengthening all our fronts, whether it is a retail channel, whether it is a projects, whether it's government projects. Everywhere the action is on to make sure that we do our desired volumes. I'll give an example, like in the retail front, we just opened a, you know, a dealer of ours opened a 20,000 sq ft showroom in Hyderabad. Mm-hmm. Mm. Right? So everywhere the things have to be there, everywhere, then only the volumes will come, right? Sure. Sure. We are, our resources are there in all the fronts, whether it's distribution, whether it's projects, in terms of branding, to get that market share, to increase our volumes. Sure. And, sir, how does one think about over the next 2 to 3 years as the volumes comes back? I mean, we have seen a very high kind of margins earlier, as well, in the range of FY16, FY17, we were clocking somewhere around 19% kind of EBITDA margin. How does one think about, given the context that, there are many players which have entered, and this category does see competition, coming and realization do get impacted. So, can we think about over the next 2-3 years, somewhere when the volumes recovered to mid-teens or so, would a margin outlook of 17%-18% is a is a possibility, or you would probably look at high teens kind of a volume growth, and keeping the margin same? What do you think, you would- We have already given a three-year vision at our annual meet in the month of May. Sure. Where Kajaria would be after three years, number one. Number two, we have already given an EBITDA guidance of 15%-17% for this particular year. Yeah. As we go forward, you will see how things shape up. Sure, sure. But, I mean, you think there is a possibility as the demand improves, the margin obviously would improve? ... See, we have to work on a combination of both volumes and margins, as we want to, you know, do better than the industry, so we have to do our volume growth as well, and the margins will be resilient to it. But as we discussed, 15%-17% looks quite doable, and we also have to do our volume growth. Okay. Thank you so much. Thanks. Thank you so much. The next question is from the line of Saurabh Jain from HSBC. Please go ahead. Thank you so much for the opportunity. My question is relating to your Nepal plant. Now that the plant is expected to getting commissioned in September, can you make some comments around how would your distribution strategy would be like? What kind of number of dealers are you looking to add? And, some more color also on your marketing initiatives for that local market. That will be very helpful. Okay. So just to give you a background, our capacity will be 5 million square meters of ceramics and GVT. The total market of Nepal is roughly INR 2,500 crore. We are looking at a 10%-12% market share once we get fully operational. In terms of dealer distribution, we are already exporting to Nepal as Rishi said, between 70,000 or 80,000 square meters per month. So we have a decent distribution network, but we've now strengthened the team in Nepal, and we are trying to increase our dealer network much more, do the branding, increase more dealers, and do some local advertising also to get the Kajaria brand more registered out there. So as we keep on moving along, we keep on strengthening our local network out there. That's our strategy. Even now, do you have your exclusive dealer partners in Nepal, or is it sold more to multi-brand? No, we already have our Galaxy dealers in Nepal who are exclusive Kajaria dealers, and we're looking to increase that number to much more. Can you share those numbers? What is today, and what are your expectations in terms of number of dealers, please? We already had a dealer base when we started the plant, when we talked about our plant in Nepal. Currently, we are at about 50, 60 dealers, which will increase to about 100 dealers in the next three months. Okay. 50-60, you are almost, like, doubling to, in the next 3 months. Yeah. The moment the plant comes, everything changes, right? Yeah. Because your price will be much lower as to what you're giving right now. So we'll increase our dealer base, and we'll strengthen our branding. We are very sure that we'll get our numbers. The 5.1 MSM, correct me if I'm wrong, almost 1 MSM would be like cannibalization. Is that the right understanding? Because what we'll be exporting from India, that will be done away with, and, so incrementally, net, net, about 4 MSM of net addition will be there. Is it the right understanding? Yeah. We have to, we have to, quadruple or make our sales five times what we're doing right now. But that should all happen because of the price advantage. What we are selling right now is with all the duties and everything, and when we reduce the price, so the dealer will be much, much lesser. Yeah. Okay. And also, can you also elaborate a bit, what kind of marketing initiatives you are, you know, going to take in that market? What kind of interest you are evoking, and if there are any plans to rope in a local Nepalese-based celebrity, you know, any insight will be useful. Nothing on the cards as of for a local Nepali celebrity. As we mentioned, once the plant comes in, price will become more competitive. We can give the dealers smaller loads, the rotation cycle will increase, the distribution base will expand. That's how we'll sell our capacity. It's very similar to India. Nepal is very similar to India. Our strategy, whatever is working here, we'll use the similar strategies there. Okay, understood. And, if one question, if I may ask, you are aspiring to do about 150 MSM of tile sales by end of FY 2027, which is like a 12% kind of an annual growth. Can you also, tell us what kind of dealership expansion ambitions do you have to achieve this kind of volume growth trajectory? What will be the number of dealers you would want to have, in the next three years? For the total company level? Yes, of course. So, so it will be a combination of both. We are right now about 1,800 dealers as of March 31st, 2024. So every year, I think with this, we'll add about 10%, which is about 200 dealers every year. Okay. Almost like 15,700 kind of a number in the next three years. Also, I think a lot of our existing dealers also open more showrooms and increase volumes. So it'll be a combination of both. Okay. So the number of showrooms- We also have 415 exclusive dealers who only sell Kajaria. Yeah. The main thrust will be to open more exclusive stores also of Kajaria. Okay. Okay, understood. Thank you so much. Thank you. The next question is from the line of Rajesh Kumar Ravi from HDFC Securities. Please go ahead. Hello. Sorry, am I audible? Yeah. Yeah. I, my question pertains to this, startup in the freight index, container freight index. You know, what is your thoughts on this becoming, exports from Morbi becoming less attractive and, you know, that impacting, meaning the supply in the domestic markets? So nothing like that will happen. In this first quarter, even this, despite the freight increase and the freight, this transit time, the Morbi exports have been flatish. So whatever they did last quarter, they did the same last quarter, FY 2023-24, they did the same in 2024-25. And they're gonna soften as we go along, this, freight rates and all. So things will get better. They, they'll, they'll come back. Okay. Because we are seeing reports which forecast that the freight index may further shoot up, and that is why this concern that, you know, and most of the freight rate, which has gone up, may not have reflected in the freight cost in Q1. If it shoots up, it is not happening only for India, it shoots up all over the world. As I said earlier, India is the most competitive player along with China in the international market. If exports have to take place, which it has to, India will be a very large player along with China in the export market. Okay, okay. Any idea what sort of volume growth you did in month of June, you know, any ballpark? Was it double-digit volume growth? June was double-digit volume growth. Okay, and that is the- As I said, April was tough, lower. May was better, and June was even better. That is why you're looking that this quarter, the volume numbers should remain in double digits? Yeah, that's what I have already said. Great. Great, sir. That's all from my end. Thank you. Thank you. Thank you. Due to time constraint, we will take that as last question. I would now like to hand the conference over to the management for closing comments. Thank you very much for having this conference on behalf of Kajaria, on my also personal behalf, and thank you all for doing it. Thank you all the participants who have spared their time to be part of this conference. Thank you very much! On behalf of- Thank you. Equirus Securities, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.