Ladies and gentlemen, good day, and welcome to Sheela Foam Limited Q1 FY 2024 Earnings Conference Call hosted by JM Financial. As a reminder, all participant lines will be in listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Sumanyu Saraf from JM Financial. Thank you, and over to you, Mr. Saraf. Thank you. Good afternoon, everyone. We would like to welcome the management and thank them for this opportunity. We have with us Mr. Rahul Gautam, Chairman and Managing Director, Mr. Rakesh Chahar, Whole-Time Director, Mr. Tushar Gautam, Whole-Time Director, Mr. Nilesh Mazumdar, CEO, India Business, and Mr. Amit Kumar Gupta, who is the Group CFO. I'll hand over the call to Mr. Rahul Gautam. Thank you, and over to you, sir. Thank you, Mr. Saraf. Thank you very much for hosting this call for the Q1 FY 2024 results of Sheela Foam. I also thank JM Financial for that. Welcome to all the investors and the participants, and a very good afternoon to you. It's my pleasure to be presenting these, this quarter earnings. Let me first begin by sharing with you that, or recollecting with you that recently, on July 19, we had another investor call, and that was when the company made the announcement of acquiring Kurlon and Furlenco. And I'm just happy to communicate to you that both the acquisitions are progressing well, and we should be closing them soon, well on track. I also thank all the investors for helping us and supporting us as far as this investment is concerned and this acquisition or these acquisitions are concerned. And also to say it once again, that this would help your company to become a substantive player in mattresses and also make its foray into the furniture business. As mentioned to you on the nineteenth July call, this move will not only benefit the company, but will also benefit the entire industry and the complete value chain of the mattress and the furniture industry. For the industry, it will definitely make a move of converting the unorganized players to the organized ones. For the consumers, which is the other end of the value chain, the choices will become crystal clear and it help them go through a painless journey of selecting a mattress. Coming back to this quarter, the results of this quarter, let me share the performance both of India standalone as well as the consolidated performance. I must start on a happy note, saying that after a long time, the raw material prices has really started rationalizing and coming to their normative levels, and this is after probably about 7 or 8 quarters. Now, whatever levels that they are in, we can easily make out, and with all the other information that we have from the supplier side, that these prices, the low prices, the steady prices, are here to stay for some time. I recall that TDI was as high as about 2. Just a couple of quarters away, it was as high as INR 274, and now it's down to about INR 185. Similarly, the polyol was almost up closer to INR 200, and now it's down to INR 116. And we have always believed that these are the levels that it should be, and very hopeful that they will remain there. As we also shared with you that post-COVID and the stabilization process that that took after, in the ensuing months, the company waited for this time and actually took a bold step of rationalizing other products. And this was primarily on the mattress side, where we were competing on the e-commerce at extremely low prices. In fact, they were loss-making products that were there. You know how the e-commerce works, which is just to give discounts and keep increasing the top line. When the raw material prices had come down, we said this is the right time for us to rationalize this, and therefore, we took a call to increase the prices of SleepX. However, that was not to stay because that's not the nature of the game, and realized that it was Sleepwell brand, Sleepwell brand of mattresses that need to come in there. We had, by that time, learned how to cater to the offline and online conflict, and therefore, slowly, the SleepX mattresses started coming down, and Sleepwell had started going up. So I must say that, again, the very nature of the e-com business, it may appear from the records that the number of mattresses have fallen down dramatically, but these are all mattresses which were loss-making SleepX stuff. And the good news is that Sleepwell, which are profitable, which we now know how to deal with on the e-commerce side, have started growing in number. And in this process, of course, the profits have been impacted and have been positively impacted and have grown. Similarly, I must also share with you that the raw material prices, because they came down very steeply, there is also a sizable business of the company, which is either on the cushioning or the core side, as well as on the B2B side, where the prices are related to the raw material prices. And everyone is aware of the raw material prices. Therefore, the selling price has come down, the profit has gone up, but not yet gone up to the extent that it can go. And the real impact would be seen in the coming... So as an overall situation, what you see is that the top line may have partially or partly been eroded, but the bottom line continues to be strong. In fact, we have reported a standalone India business EBITDA levels of 13.3%, and overall on a consolidated basis of 12%. Because the same story was playing out in Australia and in Spain, too. In the same breath, I add that in spite of whatever the challenging times there have been, the selling prices may have come down, but the tons or the quantum of material that we make are completely intact, and there is no loss in the market share, whatsoever. In fact, it would have gone up. With these few changes that have happened, and those are important ones, I just repeat, that the Kurlon and Furlenco acquisitions are on track, and soon we should be seeing all the benefits, that will come as soon as the transaction gets over. The raw material prices coming down and all the indications of them being steady and low for long times to come indicate that the top line may appear to be going down, but the bottom line is going to be good and strong. And the third is the move by the company to say that whatever has been loss-making propositions for me, I'm not going to continue to bear, but replace with a long, long impacting and long continuing Sleepwell brand as far as the e-commerce market is concerned. So with those words, I thank you. Thank you once again, and I'm open for questions. Shall we open the floor for questions? Yes, go ahead. Thank you very much. We'll now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their telephone. If you wish to remove yourself from the queue, you may press star and two. Participants are requested to use handsets while asking your question. Ladies and gentlemen, we will wait for a moment while the questions are sent in. Participants, you may press star and one to ask the question. The first question is from Nihal Jham from Nuvama. Please go ahead. Yes. Good afternoon to the management. So my first question was just to... Nihal, your voice is not coming clearly. I am so sorry. So my first question was, to be sure, did you mention the fact that, one of the reasons that there has been a reduction in mattress revenues and volumes is because we downsized SleepX online, and that is primarily the reason, whereas Sleepwell as a brand has grown volumes and absolute revenues. Was that the right interpretation? So I would say that, Sleepwell as a brand has definitely held up its volume and may have marginally increased. However, it is true that, SleepX, we have consciously started reducing from selling on the e-com because it is not a profitable business. You know how e-com works, where you just keep giving discounts, and, and everyone down there is making a loss. We don't want to do that, and therefore, we have shifted it to the Sleepwell side. But obviously, the Sleepwell will take a little bit of time, but it is—I can only say that day by day, it's increasing as far as the e-commerce is concerned. Okay. So does Sleepwell as a brand continue ahead or, sorry, SleepX as a brand continue ahead online, or you plan to phase that down? I think it will pay, it will automatically phase out, because when you make it profitable, the price that is there, it's the people don't understand that, and they will not. However, with Sleepwell, there is not a problem. So I feel that SleepX will go down once you put it at the price or when you have put it at the price that it should rightly be. Sure. So the reduction in the SleepX contribution has also been a driver of the gross margin improvement in the India business. That would also be one of the aspects, right? One of... Yes, absolutely. It's one of the aspects, and the other one, of course, which I said is the raw material price. But, but primarily it is, it is this part, so that cause a bit of rationalization on the cost structures and, and other things that, that you would see on this. Would it be possible to give a ballpark bifurcation for this gross margin improvement in India? Because we don't see that same factor in Spain or in Australia, which also would be using TDI and Polyol. So is it right to assume that majority of this improvement, at least for this quarter, is because of the reduction in the SleepX contribution? So both have different phenomena, but however, definitely we will give you the breakdown. Amit, can you just make a note of that and send Nihal all the details of, you know, which is the bridge, which has contributed to the increase in EBITDA levels as far as India is concerned, and also, as far as the global part is concerned. Sure. Just two more questions, if I could very quickly, but we've not shared the volumes for the mattress business in this presentation, or if it's possible for you to give that number, that would be very helpful. Generally, we've been not doing that, but specifically, you've asked this question. So Amit, please, also that we give that breakup to Nihal, you know, immediately after this meeting. Yeah. So Nihal, can you please repeat what you are asking for? I was looking for the volumes for the mattress business, which I think we were reporting till last quarter. I'm not sure if that's been mentioned, but could not see it in the presentation that you uploaded. So if you could just give a sense of that, it'll be helpful. Nihal, there is a challenge that we face currently. You know that, we already said that these acquisitions will be funded with a mix of debt and equity. And when you do an equity transaction, all the information that you put up in the presentations have to be published in the information memorandum, for which a lot of certifications, et cetera, are needed. So we have tried to basically get as much information as possible, but volume information is something which, like, needs a lot of deep dive into the internal systems of the company to certify. And that's why we have just taken it out for this particular year, quarter. Next quarter onwards, you will have all the information, whatever you have been receiving in the past. But in the meantime, I... Sorry for interrupting. In the meantime, as far as Nihal is concerned, you can share the ballpark numbers here. It's all right. Okay. Thank you. Just one final question was that it's been just, I think, a few weeks since the transaction was announced, but if you want to highlight anything more on the potential revenue synergies. You highlighted the cost synergies in the last acquisition call, but any revenue synergies that you would want to highlight, too, and I will be done. Thank you so much. All right. So, I just want to say this, that there is a lot of overlap as far as the number of products are concerned on either with both the brands. That only creates more and more confusion in the market. The basis or the base, the background for that is, that each brand needs to or has to cater to the full range. The moment I make each of the brands absolutely crystal clear as to what their positioning is, the consumer gets a clear message and can seamlessly negotiate through the entire range and buy what he or she wants. That's one. The second part is, that because of the regional or zonal strength of each brand which exists, the other brand can leverage that as we go forward. So if we say South is extremely strong for Kurlon, North is extremely strong for Sheela Foam, both can leverage those and thereby increasing the total revenue. Increasing each one's revenue and then increasing the total revenue. Understood, sir. Thank you so much. Thank you. Participants, you may press star and one to ask a question. Next question is from the line of Ritesh Shah from Investec. Please go ahead. Yeah, hi, sir. Thanks for the opportunity. So I have, like, a few buckets of questions. First one is on capital structure and cash flow funding, Gautam. So we have taken enabling resolution of INR 1,200 crores, INR 600 crores on equity and debt. My question is, what is the threshold that you'll be comfortable with, on a net debt to EBITDA basis? Is, is there a particular number that we have in our mind? How are we looking at that? So, Amit, would you take that question? Although I know that we've fixed the debt that we want to raise, and the EBITDA levels are known. So I think if we take a combined EBITDA, I think they would, they would be of the order of some INR 250-something, INR 250, INR 300, but maybe you can be more accurate. So about 1.5 or 2 years of debt is what we have taken. But, Amit, please. Yeah, yeah, I'll take it, sir. So Ritesh, on a combined basis, we hope that financial year 2024 should end somewhere around 2-2.5x. And in subsequent years, with the Furlenco profitability coming back, this should come down to less than 1x. So we have been quite conservative on our debt profile, primarily because we didn't want to raise debt at the cost of deterioration of our ratings. Sure. And this is net debt, right, sir? Net debt to EBITDA. Yes, net debt to EBITDA. Okay, perfect. Sir, Rahul, just to continue with the question, how are you approaching the business? My specific question comes because for Furlenco we have taken 35% stake, and I'm sure basically the intent would be to increase the stake eventually. And it's not something which is a profitable asset right now, and the outdoor is significantly higher. So when you allocate capital, are you looking at Furlenco and refurbishment together as one silo, Kurlon and Sheela Foam, the mattress part of the India business as one silo, Technical Foam India as one silo, and overseas business as one silo? So the question is more from a cash flow fungibility standpoint, and specifically given we have Furlenco, which is not making money at this point in time. So what's the thought process, sir? So let me, let me first begin by talking about Furlenco. And as I said, that we are not that new, new age business, where you just run after the top line and burn cash. So we have ensured that Furlenco turns EBITDA positive by October, and if we were not confirmed on that, we won't do it. And before, by December, it would turn PBT positive. So having said that, after us investing, and this is primary investment into the company, our projections are that there will be no need for any cash as far as Furlenco is concerned. And therefore, there would not be a need for any more allocation to it. It, it may still have a, a little bit of a debt, which may be, a bit higher than normal bank rates, but the moment it gets into that situation, it will be in a position to, to get, you know, to get money from any of the banks at, at very standard rates. But it would not... For continuing, it would not need any more cash infusion, into the business, into Furlenco. And as far as looking at the businesses are concerned, look, I, I go back to my, probably it was the last time, statement, that, both businesses though appear different as far as the front end part is concerned, and I said, though, appear different. At the back end, are pretty well integrated because the major ingredient which goes into them is polyurethane foam, which the company does very well in or has the experience to do too well in. And that's the genesis of both the businesses. Come to the front-end part, again, the opportunity to to put the furniture onto retail showrooms so that the touch and feel factor comes in, and it also helps to grow the Furlenco business beyond this, the rental part that it is doing today. So there would be connection. They will they will be different, separate corporate entities, but there will be a connection between them. Sure. So, if I may just continue on Furlenco, sir, is there any timeline by which we are looking to increase the stake, to, say, 100%? And what are the voting rights do we have right now? So on the board, we have majority of, 3 versus 3 is ours and 1 is the promoter group, and 1 more is a PE fund, which is there, which will be reducing. And to the time that it reaches 10%, then that would position on the board will be extinguished. And therefore, there there would be total control of it, even with the 35% share that we have. Beyond this, we have an option with us, which is another 9% at the same valuation, which we have we can exercise within one year. That takes us to 44%. And amongst... I mean, that is as far as the primaries are concerned. Then coming to the secondary part, there are multiple of them who are ready to—I mean, there are totally some 67 or 71 small investors, and there are many of them. So they are—I mean, we are in talks, but at the moment, we don't want to invest beyond this. We want to take it to the profitable position and then look at. But definitely moving to a majority position even on the shareholding part. Sure. This is very helpful, sir. Sir, I have a couple of more questions. Can I continue, or I can join back with you, sir? I am not the decider, but I think let the moderator decide that. I'm okay. Sir, we will come back and discuss your questions for the follow-up question. Sure. Thank you, sir. Thank you. Participants, you may press star and one to ask the questions. Next question is from the line of Nalin Shah from NVS Brokerage. Please go ahead. Good afternoon, sir. This is Nalin Shah, director of NVS Brokerage. First of all, let me just congratulate on the, you know, acquisition of Kurlon, which is a prime, I would say that, the branded product company, and I'm sure that under the leadership of Kurlon the distinguished Mr. Gautam, it should, you know, do extremely well in the times to come. Sir, I have some few questions like this: That one, what is the going to be the structure of this company? Are you going to take over the company fully, but are you going to maintain it as a subsidiary company? And then, you know, I mean, take a call on the merger of the two companies or how it is going to happen. So that is one. Secondly, what is the funding pattern for the entire, you know, whatever, some INR 2,150 crore or something, which, you know, we have seen from the newspaper reports? Thirdly, I want to ask is that what is the kind of a top-line, you know, addition you envisage from day one, because it's a running company, and how do you feel that, you know, it is going to add a lot of value? I'm sure that your position as a mattress manufacturer in the country is going to be very, very prime, and that should give you a huge lead over most of the others, and it should become a very profitable transaction in the times to come. So if you can just highlight some of the things, I'll be great. Thank you, Nalinbhai. Thank you, and thanks a lot for all the kind words and wishes and prayers. Thank you. I'm sure that all of them will be good. Thank you very much. Yeah. So, number one, was the question you asked about the corporate structure. Yeah. At the moment, when we are beginning, it will be a subsidiary of Sheela Foam, and post stabilization, maybe in a couple of years' time, we would consider merging the two together. Right. But at the moment it will be a separate corporate structure, 100% or 95% right now, and the balance 5% are also in the process of being acquired. So it should be, it will be a substantial subsidiary of Sheela Foam. Correct. On the funding pattern, so we need about INR 2,050 for Kurlon, for the 95%- Mm. and we need another INR 300. So that makes it INR 2,350, and we have on our books we have cash available of about INR 850, leave 50, 60 behind. INR 800 from there, INR 600 debt to be raised, and the balance QIP, which will be of the order of about INR 1,000. Okay. It should be. Excellent. Excellent. The third question that you asked was, how will the top... How much top line will be added? So, I mean, just a ballpark figure, I would say about INR 1,000 crore would be added. Okay. Sir, can you just give us some idea about the, what is the full potential of this acquisition? Because as I understand, some 11, 12 plants all over the country, and more or less you are having an entire footprint on the, you know, the Indian markets. So at a full capacity utilization, what kind of numbers you are talking about? And secondly, this, you said that 5% you are in possession of acquisition. So other than promoters, whosoever the shareholders, you will be giving some open offer, or how are you going to do that? Okay, so let me answer the second question first. Yes. That is, the 5% part, that's also amongst the extended family, and they have said, you know, it is the availability, non-availability, et cetera. Mm. But it is up to them. It's a part of our understanding that they will acquire it and hand it over to us at the same price as soon as it happens, and they've taken a couple of months for that, you know? Okay, okay. Very nice. Yeah. I think the second question that you asked was on the number of companies and production facilities that are there. Right. I just want to add, to say, reconnecting, totally, with both companies put together, there would be 20 such establishments across the country. Correct. The good point is that none of them are co-located into any particular city, therefore, there will be no overlaps. And then what is best suited from each of them to the market, we would draw up that structure, and so, I mean, all that is being actually worked out. So that's how it will be. So excellent. I think this is really excellent. I feel that Sleepwell has got, I think, very, very good deal on the platter, and I'm sure that you are going to make the... I mean, really, you know, make the this thing this acquisition a very, very value creative kind of acquisition. Thank you very much. Thank you very much. Congratulations once again. Thank you, bye. Thank you. Thank you very much. Thank you. Next question is from the line of Anik, from Findata. Please go ahead. Am I audible? Yes, please. Yeah. Good afternoon, sir. Thanks for taking my question. My first question is, post this acquisition, what will be the product mix? Okay. This is my first question, sir. So, we will first take the Kurlon acquisition, and therefore, just say that whatever is the current product mix of Kurlon and the product mix of Sleepwell, they are virtually similar in nature. I mean, in the sense, these are consumer products, therefore, the brands are separate, the model names are separate, they are priced differently, and they are supplied to the country differently. The real advantage would be that once, I mean, in a very diverse country like India, one consumer brand is not enough to take care of everything, and therefore, both these together will. But the product mix, I mean, if you really go down to hardcore, breaking it down, look at the bills of materials, et cetera, well, very similar, but what they communicate and what they convey and what they make the consumer perceive are the brands under which they are sold. Okay. Sir, what I mean to say in terms of product mix is like how much will be the contribution from foam-based mattresses, and how much from the rubber coil-based mattresses in your top line, like, any ballpark figure? Let me see. If you look at the current position, Sleepwell has about 60% foam, and Kurlon has 40% foam. And of course, there are some small things which are of, for springs and latex and EPE. But by and large, it's 60 or 70/30 foam, rubberized coil for Sleepwell, and about a 40/60 for Kurlon. Okay. Hello? Yeah. Okay. Sir, my next question is, what is the CapEx for FY 2024 and FY 2025? I will have to hand you over to Amit. What are the projections for FY24? You would know, but FY25, I don't think we've made any business plans as yet, but Amit, you can- So, post the acquisition of Kurlon, as you would have now seen, we will have a very more deeper penetration and covering a lot of more wide areas, across the subcontinent. And so, the primary reason why we expand capacity is basically to increase our footprint. Setting up a facility for capacity is not the concern. We always have surplus capacity at our plant. So once both these combine together and our need for further expanding to cover more wide areas reduces to a percent, we believe that we would not be required to do any incremental CapEx until and unless there is an incremental opportunity being presented for something alternative. The only CapEx that will happen going forward, at least for a foreseeable future, would be maintenance CapEx, which for Sheela Foam could be in the range between INR 10-20 crores and INR 10 or crores maybe for Kurlon. But there would not be any, any plant setting CapEx, except for exceptional opportunities that come our way. Okay, okay. And my final question is, what would be the... Just a moment, sorry. Yeah. Hello? Yeah, yeah. Please go ahead. Sir, what is your current capacity utilization in Sheela Foam? As far as capacity is concerned, each of the plants has a very large capacity. The reason for setting up another plant is because it is at a distance, it is closer to the markets. So we could supply it from an existing plant, but the transportation costs would go up, and therefore, we need to set up another plant. And with the spread that we have, I mean, I can easily say that whatever both the brands or both the companies are producing, we could easily produce four times this material, and be well positioned to cater to that. Got it, sir. Got it. And sir, like, what is the debt in the books of Kurlon? So, what we are acquiring, the company is based on a debt-free, cash-free basis, and so there will be no debt. Okay, that's great. And sir, in Q1 FY 2024, like you have, like we have witnessed, significant drop in the other expenses part. So, it seems to be 15, means, last year, same quarter, it was 15 percent, 21 percent of the top line. This quarter, it is 15 percent of the top line. So sir, what made this difference? I'll answer that, sir. Uh, yeah. Look at other expenses. Last quarter, we had to take a hit on the foreign exchange fluctuations, which was, to the tune of INR 10 crore plus. So that has gone away this time. In addition, since we were giving up SleepX brand, like, since we anticipated that there will be reduction in volumes because of this, we had to take control on all the indirect expenses that were there. All these together have led to a major reduction in operating. Major of them, most important of them being the foreign exchange fluctuation, which was a one-off item last time. Okay. Got it. Thank you so much. Thanks for answers of all my, all of my questions. I will talk- Thank you. Pleasure. Thank you. Next question is from Ritesh Shah from Investec. Please go ahead. Hi, sir. Thank you so much. I have a bucket of questions. So first one is, sir, you did indicate the rationale on Kurlon. We completely buy into the argument of products and regional brand strength. But sir, if I just had to push you a little bit to understand, how will the volume growth numbers move beyond sum of parts? So A is fine, B is fine, but obviously we want something more than A plus B. So sir, how should we understand this? And a related question over here is, are we planning anything specifically, more efforts on A&P, S&P to actually towards category creation for mattress as a segment? ... Okay. So first on the volume increase and beyond the sum of parts. So I think I remember somebody else had also asked this question and said that besides the clarity that would come to the consumer and therefore the drive or the intention to buy more, it is the presence of each brand in a particular geography and the availability of the other one to be able to... Because it's already present there. I mean, for a Sleepwell to go down south stronger, to go east stronger, for Kurlon to come to the north stronger, and come to the west stronger. And that is how the sum of, I mean, the growth in each one of them would be much more than some standard annual growth which had been there. And therefore, the sum of that will be, will be greater than what it should be. The second question that you had on spending on the marketing expenses. So, oh, sure. I mean, in general, I can just say at the moment that the cost synergies or the cost reduction synergies that will come about will provide us enough money or enough kitty to advertise in both the brands as we go, to advertise more for both the brands as we go forward. Sir, I'll just dive a little bit. Yeah. Sir, you indicated on the clarity which comes to the customer, right? But sir, as a layman, honestly, when I get into the shop, I don't know what a rubberized coil or a PU foam is. So two brands are very, very strong. I'll still end up buying one of the two brands, but how do I get to A plus B plus something? So, I'm just not able to comprehend that. If you can give a simple example, that would be great. And sir, A&P spends, historically, our number has been around 3-3.5%, which has been pretty high when you look at it on a standalone basis in line with the other companies. So if one had to look at the effectiveness of this A&P spends, how do we gauge it? Or are we looking to do something different, specifically with Mr. Nilesh joining us and his background at Pidilite? Thank you. So while I will request Nilesh to prepare for responding to the, marketing expenses and the two going to fives, et cetera, we'll let him do that. But I will go back to try and explain to you that how would that clarity come in. Number one, globally, mattresses are also known by the materials that they are built on. So there are spring mattresses, there are foam mattresses, there are latex mattresses, and then there are horsehair mattresses, et cetera. Right? That's how the world is also divided. Cut to India. India, we also have rubberized coil mattresses, foam mattresses, spring mattresses. Latex mattresses are virtually gone now. So these are the three categories that exist. The way that each brand has grown, Kurlon has grown as a rubberized coil mattresses, and that is what people understand. I'll come back to your, to your, question about you saying that you being a customer, you don't understand the difference between the two. And similarly, Sleepwell, which has grown as a foam mattress, or as a foam, product, is a foam mattress, and that's how it's understood. Ritesh, I do not know about you, but when a consumer takes a decision, there are two aspects to it. One is the brand that he or she looks for, which I would put the percentage as 50%, and 50% I would put that is based on the trade, on the retailer. The retailer has at least a 50% influence on deciding what. As far as the trade is concerned and the retailers are concerned, completely understand and know that what is a rubberized coil mattress and who, for whom this is better and for whom the foam mattress is better. Plus, as we go ahead, we're going to drive these differences sharper, which means that all the advantages of rubberized coil would be advertised. And therefore, it will be you would then Mr. Ritesh Shah will be a better informed consumer to say, "Look, I want a natural product, or I want immunity or, yeah, a hygienic product, or I want something firmer, or I want a green one, or I want it." Once those things are clearer, you will make that choice much quicker and much better. So we expect that how the market will evolve as we go forward. Yes. And now, Nilesh, would you please take that question? Yeah, I'll do that, Ram. So, thanks, Ritesh. I will just, try and also respond to your question about how, brand A and brand B combined together will become, larger than the parts. You see, that even after the brands come together, there is a significant amount of the opportunity which still remains in the marketplace, which is in essentially three different areas.... One is that there is still a large unorganized sector, and therefore, when I gain shares from the unorganized sector, I need to invest on creating, far higher brand saliency and brand saliency for both the brands. There is obviously also share gain from some of the national organized players. The third leg, which we have spoken about in the past, which is about category creation, which is to upgrade the non-foam, the cotton users, the cotton mattress users, et cetera, and upgrade them into an entry-level foam mattress. Now, in order to do these activities, what is required is to invest on consumer communication. And, as I look at things as we move ahead, that the economies of scale that we will be able to derive at the back end, and also some of the economies that we will get from the go-to-market channel strategy, channel that we have, that will help me in building and investing in brand and brand saliency. So anywhere between 4%-5% would therefore be the marketing spend without compromising on the EBITDA levels. This was very useful. Thank you. Thank you so much. Rahul, just a couple of questions. So Jabalpur expansion, which was due in June, are there any timelines? And we had earlier spoken about Mattress for Every Indian. That was also expected something by June. Any specific updates over here? And if you would like to spell something out on the progress on the Indian Railways side, those are the last two. And I suppose third one. Sorry. Yes, on the Jabalpur one, the installations are going on, commissioning is going on, and at the same time, by June, we have already begun our piloting in the markets. We've already got our first reports. They are extremely encouraging, and we expect everything to get kind of streamlined by about September end or October, that it should have. However, nothing is... As I said, nothing on the marketing side is getting stopped. And, as far as the commissioning part is, yes, it continues to or was a little more delayed than one, but it is in, it's in full, full swing and full progress. And, the second question that you had was on the railways. So railways, we continue to supply to them. But it's also true that there is increased competition as far as the railways are concerned. And there are—I mean, it's a constant process of upgrading and technically improving the products over the others, and the others continuing to sort of catch up, and be able to supply to, to the railways. But we are the flagship suppliers. We are the foremost suppliers. We continue for all their prestige projects. They continue to buy from us, and that's in progress. Sir, exports? Sorry. Exports. Any specific numbers on exports? Okay. So, retail exports are going through a bit of a metamorphosis. You know, besides all the other issues of supply chains and logistics and this, and a bit of a recession in the U.S., because U.S. was the main market that we were exporting to. They are also intending to, they have already announced of anti-dumping duties, extremely high anti-dumping duties. So we, all this haze will clear in about a month's time. And, they have gone ahead and put mattress or anti-dumping duties on mattresses virtually from everywhere, entire Europe. So our Spain facility on supplying is also out of, out of question, or it will be a cost. It'll be a huge cost in coming out of India, China, Southeast Asia, et cetera. It appears that the U.S. is moving towards wanting to produce themselves and supply to the world. We do have very small orders, small quantities, small compared to what we had projected. But as I said, the haze will sort of clear up in about a month's time. Sure. Sir, as I said, last two, my promise, those will be the last two. Sir, would you like to qualify a number on B2C? I think last year you had indicated we did around INR 100 crore plus, but you also did indicate that we will slowly get SleepX out, with focus on profitability. So over the longer run, how should we look at this particular segment, which has been contributing something? That is one. And the last question is, I think there was a fire incident. There is an exceptional item which is booked around INR 11 crore. What was the source and the mitigation variables that we are looking at? And was there any loss in business or revenues on back of that particular event? Thank you. Yeah. So, so one is this, you, this is the B2C business of INR 100 crore that you're talking about, right? Yes, sir. And that's the one that I referred to, which we were selling under the brand SleepX. And that, you know, with discontinued and increased and more intense, kind of competition, was becoming a loss-making proposition. So we have decided that we will increase the prices there. And I, and we also understand that that's not a very sustainable proposition, and therefore, what is sustainable is through the brands, you know, through the flagship brand of Sleepwell. So the process has already begun. There may be a reduction in the numbers, but it has definitely added to the bottom line, and the Sleepwell numbers are catching up, and they are increasing day by day as we learn how to cater to online and offline. On the fire incident, so this was an old unit which was leased to one of our vendors, and there was a bit of stock that we had, very, very insignificant amount, which had the fire incident. There was no loss of life. Primarily, I would say if there is a learning for us, it is that we have to extend our fire safety, et cetera, to our vendors and suppliers, too. But because we I mean, we owned that place, that's why it's coming into our place. But otherwise, our systems were not there and we were not running it. It was one of the vendors. It has not impacted the supply one little bit, nothing at all. Absolutely. Thank you so much, sir. I really appreciate your time and patience. Thank you so much once again. Thank you. Next question is from the line of Mehul Desai from JM Financial. Please go ahead. Yeah. Hi, sir. So my first question is specific to Sheela Foam. I mean, let's keep Kurlon acquisition outside. Given that the first quarter you have seen almost, you know, 7%-8% kind of revenue decline, how do you see Sheela Foam business for FY 2024? You still, are you internally targeting, you know, double-digit sales growth for the full year, FY 2024? And is the SleepX rationalization largely done, or will we see further impact in coming quarters also? So first, let me go to the SleepX side. SleepX is largely done. Whatever we'll sell at an elevated price, we'll sell. Otherwise, Sleepwell is catching on, and the numbers... So in any case, for this, for this action, as we go forward, we would only have positive impacts coming out of it. There would not be any more negative impacts on that. That's as far as the SleepX part is concerned. As far as the drop in the top line is concerned, I have already explained that. A little bit is on account of SleepX, which I said is already kind of done. The other one is on account of the raw material prices coming down, and there is a bit of business of ours here in India and Australia and Spain, which is completely related to the raw material prices. So if it kind of sharply fell, we had to, had to bring the price down for the, for the customer. However, as I said, the impact on the bottom line will make some impact, but will only improve as time goes by. If we are, the prices stabilize around this, there shouldn't be any more impact. And I'm, I may not be able to share with you, you know, the numbers, exactly what we, plan or what we believe, because I think there is a, a bit of a, a period when we shouldn't be giving any guidance on that. Amit, is that right? Yes, sir. We cannot make any futuristic statement. But by and large, I think whatever need, correction needed to be done, have been done, and there should only be positive impacts of both these things, both these actions of SleepX as well as raw material prices coming down, if it's as we go forward. On the gross margin side, is the full benefit of this falling input cost in this current quarter gross margins, or you would see further benefit? I can only give a general comment on it. I mean, that's Amit, I mean, technically, I don't know how to answer that, but, is it, is it something to do with inventory? No. Sir, I think, the question here is that, upon the reduction of cost, is it, whatever, enhancement need, or impact need to have on the gross margin, has that happened or is there something else? I think, I mean, I would say that there would be something else as we kind of move forward, because eventually the raw material that will be used for producing whatever you've already changed your selling price, but the raw material price depends on the inventory, and that will come down. Is that not correct? You are right, sir. Yeah. Okay, sure. Thank, thank you so much, sir. Thank you. Next question is from the line of Aniket from BMSPL Capital. Please go ahead. Yeah. Thanks for the opportunity. I had a question regarding the acquisition. Can you just give a number as to what will the goodwill be that will be added into this acquisition? And, you know, how will it affect the return profile for the company? How will it impact? Can you just repeat that? How will it impact? How will it affect the return profile for the company? So, Aniket, I think it'll be better if we kind of respond to that a little down the line. The reason being that to the best of my understanding, the goodwill is a kind of a residual number after calculating the brand values and the distribution numbers or valuing the distribution, et cetera, and goodwill is a bit of a residuary number. So, we are in the process of calculating that. Whether it be big or large or small, we still need to know that, and probably the next time we should be in a better position to answer that. Okay. All right, no issues. Thank you. Thank you. Next question is from the line of Anirudha Jain from HU Consultancy. Please go ahead. Yeah, I first of all, both acquisition seems to be an excellent bet and hope will create a value- Excuse me, can you, can you, little louder, please? Yeah. So now it's clear? Yeah, better, better. Yeah. So first of all, both acquisition seems to be excellent bet, and hope this will create value for all stakeholders. So I have a couple of questions relating to the acquisition, sir. So first, question is on the manufacturing side. So what I believe is the manufacturing facilities relating to the Kurlon are with the holding company. Is that understanding correct? So it's a mix of everything, but eventually that's one of the conditions precedent to the transaction happening. They all have to be transferred to the operating company. You are right, in some of the cases it is, in some of the cases it is not. So wherever it is in the name of the holding company, the holding company will transfer it or it's in the process of transferring it to the operating company. Okay. Okay, fine. The second question is: What will be the combined capacity for the Sheela Foams after this Kurlon acquisition in India? And if you can just throw some light on the FY 2023 numbers for Kurlon. So we have to receive the... Well, I can make a guess. I don't know. Amit, will you have any- We haven't got these numbers in an audited form, so we cannot comment on those numbers then. Okay, and the capacity plan, sir? Capacity, there is no issue on. As we said, that is the business that we are both in, capacities are quite large at all the units. It is just the location of the unit, which is important, and that's the reason that we would have many more units. So capacities is not a problem. There is enough capacity at all, virtually all the plants. Thank you. Thank you. Thank you so much. Thank you very much. A reminder to all the participants, you may press star and one to ask the question. As there are no further questions, I will now hand the conference over to management for closing comments. Thank you, Mr. Tarak. Thank you for conducting this conference, and it's, it's really been a pleasure interacting with each, each one of you, and for asking the most interesting questions as always. It's been a learning exercise for the entire team, and we hope that this process continues forever. So thank you very much, and wish you a very good evening. All the best. Thank you very much. Thank you. Thank you. On behalf of JM Financial Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines. Thank you.