Ladies and gentlemen, good day, and welcome to the Borosil Limited Q3 FY 2025 earnings conference call hosted by ICICI Securities Limited. As a reminder, all participant lines will be in the listen-only mode, and there will be no opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Aniruddha Joshi from ICICI Securities. Thank you, and over to you, sir. Yeah, thanks, Lison. On behalf of ICICI Securities, we welcome you all to Q3 FY 2025 results conference call of Borosil Limited. We have with us today senior management represented by Mr. Shreevar Kheruka, Managing Director and CEO. Mr. Rajesh Kumar Choudhary, Whole Time Director. Mr. Anand Sultania, CFO. Mr. Rituraj Sharma, President, Consumer Products. And Mr. Balesh Talapady, Vice President, Investor Relations. Now, I hand over the call to the management for initial comments on the quarterly as well as nine months' performance, and then we will open the floor for question and answer session. Thanks, and over to you, Shreevar, sir. So thank you, Aniruddha, and ICICI Securities for arranging this call. I wish everyone a good afternoon. The Borosil team is delighted to be communicating with everyone again. I'm pleased to inform you that Borosil Limited's board has approved the financial results for Q3 FY 2025 and nine months' FY 2025 during our meeting on 7th February 2025. We have submitted our results and an updated presentation to the stock exchanges, and they're also available on the company's website for your review. This quarter, we have sustained our growth momentum driven by, I would say, not as strong as before consumer demand, but we've been able to, you know, execute across key categories, which gives us industry-leading revenue growth for both the quarter as well as nine-month, you know, period-ended sales. Our revenue performance remains robust, reflecting the trust consumers place in our brand. We continue to enhance operational efficiencies and ensure sustainable growth across all business verticals. I'm pleased to share that Borosil Limited delivered a strong performance in nine-month FY 2025 with revenue from operations reaching INR 837.6 crores, up from INR 715.1 crores in the same period last year. This indicates a 17.1% year-over-year growth, and as mentioned before, we are one of the industry's top performers as far as revenue growth is concerned. This underscores the strength of our strategy, operational excellence, and most importantly, the trust and loyalty of our customers. It also reflects our ability to tackle challenges head-on and make the most of new opportunities, with new products introduced as well as, you know, reinforces our Borosil's strong position in the market. As far as profitability is concerned, in nine-month FY 2025, the company achieved an operating EBITDA that is before investment and one-time income of INR 140.2 crores, up from INR 119.3 crores in nine-month FY 2024, which is also a 17.4% year-on-year growth, reflecting a continued focus on efficiency and growth. The operating EBITDA margin for nine-month FY 2025 stood at 17% versus 16.7% in the same period last year. One of the downsides for us in this year was the Uniform Code for Pharmaceutical Marketing Practices 2024, which restricts pharmaceutical companies and their agents, like distributors, wholesalers, retailers, from offering gifts. This has impacted our B2B sales, you know, which was a reasonable portion of our revenues, and that affected bulk orders and distributor engagements. To counterbalance this, we shifted focus to online sales, and that has experienced strong growth, although, you know, the loss of, a key channel, or sales in a key channel has definitely impacted overall sales growth. Also, given the switch to more e-commerce sales, the marketing expenses have also increased because of higher customer acquisition costs, and that has put some pressure on margins. As a result, the company has incurred higher A&SP expenses of INR 18.56 crores in nine-month FY 2025 and INR 5.74 crores in the quarter Q3 FY 2025 as compared to the same period last year. Diwali festival being a little bit early this year compared to last does not make the exact quarter-on-quarter sales exactly comparable, so I think it's better to look at the nine-month sales data versus specifically looking at Q3 or Q2 sales data, because of the one-month earlier Diwali this year. Additionally, other operating income includes INR 12.6 crores from shared service support income for nine-month FY 2025 and INR 1.2 crores for nine-month FY 2024, with the associated expenses captured under total expenses. Consequently, profit before tax for nine-month FY 2025 came in at INR 86.3 crores, up from INR 81.2 crores in nine-month FY 2024, which includes a one-time income of approximately INR 13.5 crores from sale of certain tenancy rights at Aarey Vihar office premises in Mumbai. At the same time, depreciation and finance costs have increased substantially by INR 27.8 crores, and this was largely due to the commissioning of our new Borosil Glass Furnace in the last quarter of FY 2024. The investment income was also lowered by about INR 1.4 crores in nine-month FY 2025 as compared to the same period last year. As a result, PAT for nine-month FY 2025 reached INR 63.1 crores compared to INR 60.8 crores in the same period last year. Furthermore, as for the Union Budget 2024, the discontinuation of indexation benefits on long-term capital assets, effective July 23rd, 2024, led to a reversal of deferred tax credit. This resulted in higher taxation for nine-month FY 2025, impacting profit after tax by 2.7 crores. Now let's take a closer look at both our category-wise performance for nine-month FY 2025. Borosil Consumer Division continued to expand across both glassware and non-glassware categories under the Borosil brand, along with our opalware range under the Lara brand. The Lara opalware segment, known for its modern design and superior quality, reported sales of INR 292.6 crores in nine-month FY 2025, up from INR 268.5 crores in the same period last year, reflecting a 9% growth. This was our lowest growth, growing segment, across the three segments we have. In our glassware segment, which includes Borosilicate, microwavables, lunchboxes, servingware, glass tumbers, and storage solutions, we recorded a very strong, year-on-year growth of 22.9%, with revenues reaching INR 190.9 crores in nine-month FY 2025 compared to INR 155.3 crores in the same period last year. The non-glassware segment, which has a range of small home appliances, insulated bottles and flasks, cookware, and other kitchen essentials, also performed quite strongly, posting a 17.8% increase in revenue. Turnover for this segment reached INR 340.9 crores in this year, nine months, compared to INR 289.5 crores in the same period last year. This impressive performance reflects the successful execution of our strategy to expand the Borosil portfolio, catering to the evolving culinary and serving needs of Indian households. It also reaffirms the strong brand equity and broader feel of Borosil across multiple product categories. Coming to the quarter ended June 30, 2024, the company successfully raised INR 150 crores through a QIP to facilitate the repayment, slash prepayment of long-term project loans, for general corporate purposes. Post-issue expenses of INR 4 crores, the entire net proceeds of INR 146 crores have been utilized. The company has utilized INR 107 crores for the repayment of working capital loans and INR 39 crores for repayment/prepayment of long-term project loans. Pursuant to the composite scheme of arrangement, during the quarter ended December 31, 2024, the company has also paid INR 93.07 crores to Borosil Scientific Limited towards repayment of loan, including interest. As on December 31, 2024, Borosil Limited has a net debt of INR 20.4 crores. Through portfolio optimization, we have enhanced efficiency and profitability, streamlining our offerings to focus on high-growth categories. Our premium product lines have continued to witness strong traction, reflecting evolving consumer preferences. We continue to invest in design, functionality, and quality enhancements, further strengthening our leadership in key segments. In addition, our initiatives in e-commerce and digital have gained strong momentum. By leveraging technology and consumer insights, we have effectively scaled our reach and engagement, thereby helping customers. At Lara, we believe dining should be a perfect blend of beauty and functionality, transforming everyday meals into memorable experiences. We launched our Premia dinner set collection, and it's a sophisticated new addition to our premium kitchenware lineup. The Premia collection combines exquisite aesthetics with practical functionality, making it an ideal choice for contemporary homes. Featuring intricately embossed designs, this collection brings a touch of timeless elegance and luxury to any dining table. On the marketing front, our campaigns have delivered a strong impact, reinforcing our brand leadership. Our integrated campaigns have helped us to deepen customer connect and expand market penetrations. We've seen significant engagement growth across digital platforms, which reflects the success of our content-driven approach. The focus on brand storytelling and consumer experiences will continue to be a strategic priority for us. Additionally, our media engagement and industry outreach have further strengthened our positioning. As I mentioned in previous calls, I want to reaffirm that since acquiring Lara in 2016, this flagship brand has been on a remarkable growth trajectory. Lara's success is a testament to our strategic vision, operational excellence, and unwavering focus on customer satisfaction. Sales for Lara have grown at a CAGR of 22% from INR 87 crores in FY 2016/17 to an impressive INR 358 crores in 2023/24. Similarly, our non-glassware segment has emerged as a key growth driver for Borosil. With a CAGR of 50%, sales have grown from 23 crores in 2016/17 to 387 crores in 2023/24. This achievement reflects a commitment to broadening our product portfolio and staying ahead of evolving consumer needs. The commissioning of our new borosilicate glassware furnace last year marked some major milestones for us. By expanding production capacity, we're not only meeting the growing demand but also strategically reducing our reliance on imports. This move aligns seamlessly with our mission to drive a shift from plastic and steel towards healthier, more sustainable glass alternatives. Our approach of combining product innovation with accessible pricing has resonated strongly with consumers, particularly in everyday use categories like lunchboxes, which have appealed across all age groups. As awareness of the benefits of glassware continues to grow, we see this momentum sustaining in the long run. Our key focus right now is to broaden and strengthen our brand presence. We are committed to transitioning consumers from plastic and melamine to glass storage and opal, while also encouraging greater adoption of microwavable products. To diversify our portfolio, we continuously introduce new innovations, including high-grade steel products and home appliances. Our ultimate goal is to establish Borosil and Lara as the go-to brands for modern Indian kitchens, catering to every storage, preparation, cooking, eating, and serving needs. We are highly confident in the medium-term outlook for our business. While we may experience periods of slow growth and cautious customer segment, sorry, consumer segment, which are natural in market cycles, our long-term growth potential remains strong. Our strategy is focused on expanding our consumer reach through targeted initiatives, launching innovative products that cater to evolving customer needs. We also plan to optimize our supply chain and marketing efforts to drive maximum impact. With that, I would like to throw the floor open to questions. Thank you. Ladies and gentlemen, we will now begin with the question and answer session. Anyone wishing to ask a question may please press star and one on the touch-tone telephone. If you wish to remove yourself in 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 Resha Mehta from Green Edge Wealth. Please go ahead. Yeah, thank you, and compliments for the revenue growth considering the muted macro demand. The first is on the sourcing. So if you could, you know, just, and I'm fairly, you know, new to the company. So first on the sourcing, if you could just clarify that, now glassware, with the furnace that we have, is everything 100% in-house or, you know, how is it for each of the segments? If you could elaborate for glassware, non-glassware, is there anything that we insource or everything is outsourced? And what would be the China sourcing component over here? And for each of these segments, if you could also comment on what would be our utilizations for glassware and opalware? Okay, so thanks for your interest in the company. I'll answer this question from multiple perspectives. As far as I'll go segment by segment, as far as opalware is concerned, 100% is, you know, in-house manufactured, and there is no, you know, external sourcing. Coming to glassware, glassware has three separate product categories. One is pressware, which is entirely made in-house after the addition of our new production line. Second is blownware, which is a very small segment, maybe only 5-7% of our overall glassware sales, and that is imported, and that will continue to be imported. And the third is what we call tube-made glass products, which is actually manufactured by Borosil Scientific. So, and that is purchased from Borosil Scientific. So these are the three, you know, categories. So I would say glassware, and even the glass, the blown glassware is not bought from China. So glassware is 100% either made in India or then some quantity comes from other, you know, geographies, but that's, you know, hardly 5%-7% of the total glassware sales. As coming to non-glassware at this point. Sorry, sorry, just, just sorry to interrupt. Just the last one you said, what is it that we, you know, get it manufactured from Borosil Scientific? Which one is that? These are our glass bottles and our Vision glasses, some storage containers. And I mean, from an overall revenue or a manufacturing standpoint, that would be how much that is basically sourced from? So that, we don't share that data, but I would say the vast majority of glassware is the pressware production, which is entirely made in-house. As coming to non-glassware, it's 100% outsourced at the present moment. It used to be mostly coming in from outside of the country, but I would say in the last, you know, two years, we've now about 30% to 35% made in India. 65% is imported still. With various BIS norms coming into play, I would say if I had to take a bet, in the next three years, this will become 70-80% in India and maybe 20% outside of India. That'll be the shift. And we are also evaluating our own production versus outsourced production here. I think we'll be taking a call very shortly on CapEx in this area because, as you can see, the market is growing, and we've also, you know, done reasonably well in the segment. So, overall, the insourcing is definitely the theme, and made in India is definitely the theme that we see across this range. And coming to capacity utilization, I would say on opalware, we are roughly at about 85% capacity utilization this year. In glassware, as far as the pressware is concerned, we would be closer to 55%-60% capacity utilization. So there's a lot of room for growth in both these, you know, product categories. The other areas, there's no real, it's not, you know, on the non-glassware front, there's no capacity utilization anyways outsourced, so it doesn't make sense to, you know, have any number on capacity utilization. That's, yeah, I think that answers more or less all your questions, but some data we can't share. Thank you. A reminder to the participants, anyone wishing to ask a question, may please press star and one. The next question is from the line of Aniruddha Joshi from ICICI Securities. Please go ahead. Yeah, sir, two, three questions from my side. So, first of all, just wanted to understand regarding this ban on the innovative metal bottles, etc. So, what is the current situation? Means, the SMEs are, I guess, allowed to import right now, but till what time they might be allowed to import? And, again, means, in India, I guess the capacity to produce the products that are getting consumed right now is very limited, the high-quality production capacity. So what can be the ultimate solution over here? So that is question number two. Secondly, now that can be a very big opportunity for a successful brand like Borosil because we can gain market share as smaller stock unorganized players may struggle to set up the new manufacturing units as early as Borosil. So what is our strategy in this market? And lastly, if the steel bottle market itself may, in a way, decline, can that be taken over by glassware bottles? Okay, so look, as far as the, I'll answer the last one first, and the answer is no, because steel has a totally different, you know, requirement. So I don't think glass can replace steel from an application or from a use perspective because people go to the gym or, you know, sitting in the train or, you know, going in a bike, to work, unlikely that they will carry a glass bottle for fear of breakage. So, but the, we have, frankly speaking, no alternative but to, you know, decide to make this product in India, and I think very shortly we'll be doing that. We do see some short-term challenges in terms of revenue growth. I think we've alluded to that in the past also, but I think these are short-term challenges. As you rightly kind of you know highlighted, there's actually a very strong medium-term opportunity for us because when we set up the manufacturing plant here, we are likely to be doing it in a much more organized way than you know let's say smaller players. And I hope that will you know give us a long-term reason to win in this category in a big in a bigger and better way than we have. So whatever we do, we'll be doing it with some large-scale in perspective, large-scale in mind. And I expect that the short-term headwinds will you know we'll be able to let's say overcome that from a medium-term perspective. We have imported more products in the short run to avoid or to, let's say, reduce the impact of the sales, you know, slowdown, but yes, there will be some small short-term impact, and we're actively working even today to increase our domestic sourcing. The challenge is that we can't even, you know, just go ahead and choose any vendor. We really have a lot of quality control mechanisms which are in play to make sure we give a quality product to the end customer. So we can't compromise our brand, even if we have the cost of losing sales, even in the short run. So there are certain challenges that I think in the medium-term even. I'm not even saying long-term, but even in the medium-term, I think it's a fantastic opportunity for us. And it will only help us increasing our sales and increasing profit in the medium-term. Okay, sure, sir. Understood. Very helpful. Second question on the small kitchen appliances. So we have entered multiple kitchen appliances, obviously at the top end or premium end of the market. So what is the current revenue run rate and whether the products are available pan-India or we are still present largely in metros and tier-one cities? And how do you see this business panning out? We see there is some stress at the bottom of the pyramid, and overall, other kitchen appliance companies have also reported muted growth rates over past two, three quarters. And even e-commerce is the only channel which is doing well in that kind of market. So how do you see the market panning out? And what is the, in a way, three-year roadmap for this business as well? See, on non-glassware, you can see the growth, 18%. Okay, 17.8% to be precise. It's on page 13 of the presentation in nine months. So I can say that we non-glassware primarily comprises of three categories. That is your kitchen appliances. Second is the Hydra, the bottles. And the third is the steel serveware. And steel serveware is still quite small. The other two categories are, let's say, the dominant, you know, more or less equal in share from non-glassware. So I would say we have scaled reasonably well in that segment. And I think the mass premium segment where we operate, we are not really spending too much money in advertising for this category. Of course, we spend a lot of money advertising overall for the brand, but for this specific category, we don't really spend much money. It's more dependent on customer pull. Hopefully, you can see, you know, reviews on Amazon and, you know, other social channels. You know, you'll find that people generally have a good view of our products. So we are a quality-led, you know, you know, company in terms of, you know, the feel of the product, the performance of the product has to really help customers give word-of-mouth, you know, feedback to their friends and relatives. We have been quite successful over there. So I don't see that the muted growth from this is something for us at this scale to really be too concerned about. The larger challenge even here is supply chain because of, again, BIS issues. Even in appliances are, you know, getting larger and larger. Although we have successfully transitioned a lot of this range to India, to made in India, there are a few products which still are not, you know, the ecosystem, the vendor ecosystem doesn't exist in India. So, but I think we'll be able to find solutions here. In terms of the supply chain, the supply chain for the steel bottle is more critical at this stage, at least, compared to the appliances. But overall, I believe this market has substantial potential. We are available, like you rightly mentioned, more in metros, but actually, you know, we are seeing the penetration increasing in terms of number of retail outlets in which our appliances are available. But I would say it's still the tip of the pyramid. There's a huge number of places where we are not available. Our team is working diligently to add those areas wherever it makes sense. Online, I think we have a fairly good, you know, presence, even here. On the trade side, I think there's still a lot of work to do. Okay, understood. Last question, and then I will join back in the queue. What is our current channel-wise mix, let's say in nine months, FY 2025? General trade, even modern trade, e-commerce, including our own website, and other e-commerce. Also, what is our strategy on quick commerce? Lastly, we have seen there is a lot of stress in MFI channel also. One is Borosil present in the MFI channel. And again, I mean, is there any impact we have also observed in that channel? Also, in case of CSD, some of the companies have said that there is inventory correction happening, and that can lead to relatively lower primary sales, while secondary sales may remain healthy. So again, what is our impact due to the changes in CSD norms per se? Yeah, that's it from my side. Thank you. Thanks, Aniruddha Joshi. You said one question will last end there, huh? Anyway, to answer your questions, I would say that as far as the percentage share of channels is concerned, we don't share that data. And I would not like to share it either. We want to reach the customer. The basic strategy is that the customer is who we care about. How to reach the customer that the customer chooses, you know, whether he or she wants to buy online, wants to buy on quick commerce, wants to buy on trade. That's the customer's prerogative. We have to be everywhere, and wherever the customer decides to buy our product, they will find it there, so that's actually the strategy, not necessarily speaking quick commerce or e-commerce or those are just means to the end, and those channels, every time there's a change in their own competitive intensity, their own desire to kind of penetrate the market, so we just follow those trends. We are not making those trends, but yes, to substitute plastic in the kitchen, to substitute, let's say, you know, melamine for serveware, these are the strategies that we have, and the channel is just a means to achieve that end. As far as the question of the channels is concerned, of MFI, rather specifically, we are not directly present in MFI. And therefore, you're right, there has been some, you know, at least what I've heard is that there has been some stress there. We have not been impacted because we didn't have much revenues from that segment. Not to say we won't participate in the future, but at the moment, we don't have much revenues directly. Maybe some of our distributors would be doing it, on their own independently, but nothing direct. Coming to CSD, you're absolutely right. You have good research. There has been some correction in stocking at CSD. But, you know, these things happen in business every two, three years, something or the other happens. So sometimes something grows a bit less, sometimes it grows more. I would say that's just a general business, you know, case, so I would not highlight it. The one thing which has to be highlighted, which I also shared in my opening remark, the gifting reduction in, you know, B2B for your pharma companies, this has definitely impacted not just us but the whole industry. That is something which is one of. I do believe that eventually this should come back. But at the moment, I would say that if I had to pick one thing in the whole year, that was the biggest impact from a sales perspective for us in this year. Other things are business as usual, whether it's increase of quick commerce or decrease of, you know, any other channel. Those are just normal things. I would not say they are. They are really, from a larger trend perspective, not that meaningful. Okay, sure, sir. That's very helpful. Thank you. Thank you. We'll move on to the next question. That is from the line of Dhaval Shah from Girik Capital. Please go ahead. Yeah, hi. Thank you for the opportunity. Very good growth in non-glassware, compared to the industry. So, sir, my question is with regard to the brand extension, you know, in terms of getting more products and, you know, to support our growth going forward. If you could, you know, tell us more about it. Also, opalware now seems to be hitting full utilization, and we are already at INR 400 crore annual run rate. So how do we get growth going forward from the Opal segment, and also the newer categories, which we had spoken about? So how do we get growth for the future years? Yeah, so, we are actively working. So, okay, let me talk about categories first. Although we ourselves say opalware, actually the appropriate definition for that is not opalware. The appropriate definition is dinnerware. We say as opalware or let's say servingware is the appropriate definition for that category. Now, in opalware, we do see more competitors coming also maybe in the future. But there is still a lot of scope in the broader category of servingware to substitute plastic, melamine, even bone c hina. So we are actively working on other materials, and hopefully soon we should be able to launch some products. I don't know how, you know, how the scale will work over here, but that's certainly something we're working on. We will be launching, you know, in the next few months, new products in the general dinner or servingware segment. We also have other products, other categories we are working on, which in the non-glassware space, which I believe we will also probably look at launching in the next three to six months. I would say that new categories will drive some percentage of growth. Obviously, when you launch a new category, there's no guarantee of success. We have succeeded many times. We have also failed many times. We keep trying. I believe that, you know, if we do the right process, we should have, you know, a fair share of successes. But I would not like to comment too much on that because it's still work in progress. And hopefully that should also cover some percentage of, you know, say losses that happened in the short term coming from things like BIS implementation. So I would say that opalware, let's not look at opalware growth. I don't have any answer for you specifically that how opalware will grow, but I do have an answer on how servingware will grow. And I have always maintained that overall as a company, we should have a 15%-20% kind of medium-term CAGR, which I still, you know, believe that we can achieve. Although in the very short run, there may be some challenges, owing to BIS, but I would say we should be able to overcome that. And if you look at historical numbers from 2016 till now, even through COVID, we have grown at, you know, better than 20%. So, while of course the base grows higher, I would say that 15%-20% is achievable, when we look at, you know, new category launches as well. Got it. Noted. Sir, now two questions on this topic, sir. So one is now, when we say about newer category of product we get into, I mean, so in the dinnerware, you have a lot of, you said bone china or maybe something else. So in terms of positioning of the product, so we have glassware, I mean, borosilicate glass, so though not as a pure dinnerware, but at the premium end of the pyramid, and then we have opalware. So the newer category would be priced below that or somewhere in between. So as I can understand, we will be occupying more shelf space at the retailer end. How the pricing would work, because, yeah, giving the premiumness of Borosil as a brand, you know, in the consumer's mind. Yeah, there I have other questions. Yeah, this one please. Okay, so as far as what you mentioned that glassware is the high end or premium, that's not entirely correct. It's probably a mass premium product, slightly higher than mass premium, but there are also other products which are even more premium than glass. We could be, you know, we are evaluating entering into even further more premium categories, as one option. In principle, we don't really go after markets which are too low in cost. That's not like, say, melamine. That's not the idea to get into those kind of categories where it's not good for you or not good for environment, not good for health. So we'll not enter those categories. The idea would be to look at categories which are good, you know, our tagline is performs beautifully. That's the, so products that have high, some high performance and they must look good also while, you know, performing. So that, that's something that, so those are categories where we will enter. I would not like to give too much away at the moment because it's still work in progress. When we launch it, we'll definitely, you know, talk about it. But it's not necessary to say that glass is the highest end. There are even many categories which are more premium than glass. Or conversely, there are categories which are cheaper than Opal, but also are healthy, and which are, you know, which you may be looking for some disruption, so those are also categories we can think about. But I would not like to, you know, comment more on it till we actually have a firm launch of those products. Got it. And now the other question is on the margins front, so two things here, so one is that, this quarter, the margins were clearly below expectation of the investors, so there must be some line item which could have, you know, seen a lot of inflation, a lot of one time maybe, so I would like to understand in detail about it. Second, in the short run, is there some cost or some BIS regulation as one of it could be, which could put further pressure on the margin? Over a longer-term period, two-year period, we are aiming to have a 20% EBITDA margin at a company level. In that journey, what should we be expecting? Yeah. I'll refer to EBITDA margins because going after PAT doesn't make sense right now because our depreciation has skyrocketed, which is always expected given the CapEx invested. If you look at EBITDA margins, we are roughly around 17.5% EBITDA margins. As mentioned already, this is not a gross margin issue. It's an EBITDA margin issue, okay? Gross margins, which we don't share of course the data, so you don't have it. But our gross margins have actually been growing. Even this year, we have, you know, grown at least two percentage points in gross margin across the whole, you know, all the categories. The challenge has been, you know, so, as I mentioned earlier, there's been a change in channel mix and advertisement expenses, you know, for online have increased, which has caused, you know, contributed to this. The second thing is because of the, again, this forced a change in channel mix, things like institutional sales, which are relatively more profitable, because, you know, normally these are large volume orders. They're more efficiently producible, and they are delivered at one location. So, you know, freight costs are lower and so on. Plus manpower costs are lower because, you know, you don't, these are large key customers. So the, the loss of the pharma, you know, let's say orders have definitely contributed to some reduction in margin. Now, I would say that's a temporary phenomena that should reverse itself. So, we look at the gross margin, and the gross margin is more, I would say, indicative of any, you know, challenge, let's say, in the category itself, which we don't see. So the number which we have, I've also always mentioned that in the next, say, two, three years, can we increase our EBITDA margin to beyond 20%? I think that is very much on the cards. There will be short-term blips. It's never a straight line, you know, increase. So we are going, we are going through one of those blips. I'm not too, you know, given the fact that gross margin is improving, I'm not too, you know, worried about it. BIS-related issue which could come would be in terms of higher sourcing cost and thus some pressure on the margin. Is that what you mean? I don't think, see, that the higher sourcing cost would be applicable for everybody in the whole industry, okay? So in my opinion, that would, that should not reduce margins because the product price may go up and the total demand of the product may suffer to some extent if you increase the price, okay? I don't think the margins will be impacted there. Your revenue growth may be impacted for sure. And in the short term, if you're not able to get the full supply chain in order, you have fixed overhead, which you'll not be able to absorb, okay? That may be, I mean, the short-term margin impact will only come from overhead, not from the actual gross margin of the product. In the long term, the impact will be dependent on what, you know, how efficiently we can make the product in India. And therefore, how little an impact it will be. There will be definitely some impact to the end customer in terms of higher selling prices. But you know, how we can limit that impact. But I would say, I don't see any margin impact because of this in the medium term at all. Only revenue growth impact. Hello? Yeah, go ahead. Sir, when are the BIS norms kicking in? They've already kicked in. Okay, okay. So is there some quota in terms of reduction of imports or how is, or how is it? No, there's no quota per se, but, you know, whatever you've imported, you can sell. But fresh imports are challenging. Understood. Okay. Thank you very much and good luck. Thank you. The next question is on the line of Aman from Svan Investment Managers. Please go ahead. Yeah. Hi, sir. Thank you for the opportunity. So my first question is on opalware. We haven't grown much there in this quarter, and since we have launched some premium products recently, does that mean there was volume loss in this quarter? No, actually volume growth is higher. The premium products is just a small percentage of overall sales, at least at the moment. There's no volume loss. In fact, volume, like I said, volume growth overall nine months, revenue growth is 9%. Volume growth is probably slightly higher than that. But the, again, I'll just repeat, the main issue was because the loss in the institutional sales, which has impacted the revenue growth of the organization. And because most of that has come out of the opalware sales. I see. My second question is on utilization of glassware capacity. So when do we expect to reach the maximum capacity there? Well, you know, no, we have overall given three years as the, you know, let's say the time frame in which we should utilize the whole glass capacity. But we hope to do it in two. Let's see. It's only year one which we are going through at the moment. So, you know, depends on the market. I mean, we are not really having a lot of tailwinds from a market perspective at the moment. So we would hope that, you know, we have some more tailwinds. And if things go well in terms of our new product development, even in glassware, I hope, I do hope that we can do this in two years. But in any case, it should not be longer than three. So it's fair to assume like FY 2027 we should be able to completely utilize this, right? Yeah, absolutely. And do we have a number for steady-state EBITDA margins then? Yes, we have already indicated that we expect somewhere in the 20%-22% EBITDA margin overall. Right. And my other question is again on other expenses. So other expenses are coming higher this than last year, like you mentioned. But in our Q2 call, we were expecting some normalization in ad spends from this quarter on, right? So are we expecting ad spends to stay elevated for some time? If you could give us some timeline there. Yeah, like I said, the challenge has been the channel mix because the ad channel, you know, e-commerce has become a larger share. So normally for e-commerce, you have to spend more, you know, advertising money to keep sales growth alive. And that, because of the B2B business reducing, the ad spend has kind of been impacted in a negative way, meaning we have to spend more. It's hard to give you very short-term input on this in what will happen in Q4, Q1. In the long term, we have always indicated that at a certain scale, ad spend should come down, and that will also be a part of the operating leverage, which I still expect. It is. It has to happen. But, unfortunately, in the short, very short run, in quarter on quarter, it sometimes gets impacted. But I do expect our ad spend used to be 10% at some point. Now it's down to 8%. And, hopefully, you know, over the next two, three years, it should come down to 6%. I think we should be able to maintain that. And you, you just said that there was some slowdown on some of the channels. Is it like a broad-based slowdown? Like in all the channels, have we seen some slowdown or how do you see? Yeah, generally you can see data now across. There has been a general consumer slowdown. I mean, if you, it's not just restricted to kitchen products. If you look at, you know, numbers shown by most of the consumer-facing companies, I don't think there's been really very aggressive growth. So in general, there's a slowdown. And specific for us, there was a slowdown in the B2B, you know, channel. Right. And, another question I have was on, so would you have a numbers for us, for change in margins when it comes to importing bottles versus, let's say, sourcing them from India? No, no, no. At the moment, I can't share. I mean, that's too early. It's too early. Yeah. And how much do these bottles contribute to sales? You see, the non-glassware is one third of our sales, if I'm not mistaken. And this is a, these are a large chunk of non-glassware. It's about, I see, 40% of our sales. Yeah, it's about half of that. Let's say 20%. So 20% or so. Yeah. The last question I have is on, so we are doing about 20 crore in depreciation every quarter. Can we expect this number to come down next year since the second opalware furnace might be near fully to full depreciation, right? No, no. The, the depreciation takes about five, seven years, if I'm not mistaken. So this number will be around this 20 crore, for the throughout next year, right? Next year. Yeah, yeah, yeah. Depreciation is not a bad thing. It's okay. Yeah. Sir, do you have any CapEx plans to be shared with us for next year? At the moment, I have nothing specific to share. But like I told you, as thematically, we will have to put the most likely the capacity for the bottles here in India. And that will have some CapEx. I don't know the exact number, but my sense is somewhere in the INR 50-INR 70 crore range would be the CapEx. 50, so INR 50-INR 70 crores for bottles for next year. Yeah. This includes working capital and everything, so yeah. The next question is on the line of Akhil Parekh from B&K Securities. Please go ahead. Hi, thanks for the opportunity. Sure. My first question is on the opalware. I mean, you have mentioned the reason for, you know, weakness in sales in opalware, mainly because the gifting phase has not happened. Would you be able to quantify how much is the impact or maybe broadly, how, how big was gifting as a percentage of all these? I would say it's cost us at least, at least about 10% of revenues of our Opal revenues. Okay, okay. And this is like a permanent loss, I believe, right? I mean, it's not going to come back next year because of this? There's some change now. There's a, I look, I don't know very well, but I think there's some change now. So maybe we'll expect this to bounce back. But I, it's not clear to me yet. Prior to putting it in the EBITDA. So when we, when we get orders, we'll tell you. Sure, sure. And sir, can you mention that the capacity utilization is already at 85%, right? I mean, and we know that it takes a lot of time for a glass facility to come on stream. So theoretically speaking, I mean, shouldn't we have already started building a new facility or is it that the channel level inventory in opalware is right now at a higher level and it might take more time for that capacity to get absorbed? No, no. See, firstly, we are doing de bottlenecking for our current capacity. And when we re, so our furnace is, one furnace will be down this quarter, one furnace will be down next quarter for rebuilding. When we rebuild these furnaces, we will increase our capacity by roughly 10% as it is, okay? So our capacity will go from 100 units to 110 units in this coming year, just by simple de-bottlenecking. Then, we have another potential to further de-bottleneck, which could maybe increase it from 110-120 units, about two years out, okay? So effectively, we have room to go from 85-120 in the next two years, okay? In this interim, we do see, you know, competition maybe increasing here. So, we should then evaluate whether we want to focus more on this category or look at other categories within the dinnerware segment. We see some opportunities there as well. So, at this moment, we are not ready to commit to any further opalware capacity increase except for the 100-120 sales journey, which will happen just with very minimal CapEx and will happen organically in the next couple of years. Okay. Okay. It's a bit surprising to hear that competitive intensity has gone up in opalware. because we always thought that it's very difficult to have opalware capacity and the business is very complicated, and the market size is not big enough for the other players to kind of enter into this segment. Would you be able to comment on which are the players? Because our channels just in past, like a year back, were indicating Milton probably is trying to enter into this segment. Is that correct? Or maybe if we can throw some more light on competitive intensity part in it. So, as you know, your assessment is right in that there is very few players can play in the segment because of the challenges that you already mentioned. But there are at least five players in India who can do this. Out of these, three are already playing. So we have, you know, our understanding is that a fourth player is coming in this segment. Okay, okay. Fair enough. It's coming. It's about to come. Okay, okay. But if we don't expand in opalware, I mean, excuse me, my ballpark assumption is that 50% of our operating profits are coming from opalware segment, as a percentage of total. And if we don't grow in that segment, our margin trajectory won't get impacted because of that? No, that's not correct. Because glassware also will actually may have even better margins than that. And we are growing aggressively in glassware. And glassware capacity utilization, as I already mentioned, is, say, 55%-60%, long way to grow. And we can further expand capacity quite organically over there, I would say, in a relatively low CapEx manner. So, I would not, you know, go jump to that conclusion that opalware is the only one that's, you know, a profitable glassware also will drive that, so we have other levers also. There are, in non-glassware also, other product categories which we can start working on and then also get into manufacturing there, so there are many levers to increase the margin. opalware is one, glassware is the second, and the BIS implementation will also open up at least one, if not two more avenues for, you know, margin expansion. Again, the reason I don't talk much about it is we should prove it and then talk about it. So, you know, no point in giving something and then every, you know, everything takes time, so anything new we do does take 12, 18, 24 months to see results. So, in the very short run, which you know I you know that's it's not likely to happen. But in the medium term, all these market changes may give big opportunities to existing players. Sure. And just two last questions, if I can squeeze in. One is, so capacity-wise, like glassware and opalware is completely in-house sourcing, right? And non-glass is completely outsourced at that point? Broadly put, yes. Okay. And in the pressware facility, the end product would be drinking glasses or is it the glass lunch boxes. Lunch boxes. Okay. And these are largely imported at this point of the time, if I'm not mistaken. No. We make it all here now, huh? It used to be imported now. I mean, so it's more of an import substitution plus domestic growth. I mean, that's what I'm hearing. That's right. That's right. Okay. Okay. Okay. Great, great. Nice speaking and, best wishes for you. Thank you so much. Thank you. Ladies and gentlemen, that was the last question. I now hand the conference over to the management for the closing comments. Okay. Well, thanks everyone for the interest in the company, and I just want to end by saying that, we, I already mentioned revenue growth has been good. Margins definitely, as we can see, there are some challenges, but from an organization perspective, our concern is always three, five, ten years out. In that particular thing, we do things to grow the organization from that perspective, even at the cost of, you know, short-term decision-making, which can improve margins or which can help you in the short run to show, let's say, better numbers, but it may hurt growth. Our focus has been on growth, you know, on communicating to customers what we're all about, on spending money on developing teams. Definitely, when you have quarters such as the couple ones that have just gone by where demand has not been so robust, you know, you do see some short-term impact on the margin. I'm not too worried about it. I think we have to build a company which is very strong and, you know, market customer-centric for the future. India's opportunity is vast. That's how we, you know, look at the business, not specifically, you know, too worried about quarter on quarter, from a, you know, margin perspective. It's just a kind of thought I would like to leave everyone with. You know, really thank you for your support and engagement and look forward to speaking with you next time. Bye-bye. Thank you from the management team. Ladies and gentlemen, on behalf of ICICI Securities, that concludes this conference call. We thank you for joining us. Now, disconnect your lines. Thank you.