Morning and good afternoon to everyone on the line. Thank you for joining Sheela Foam's Quarter FY24 Earnings Group conference call. Kindly be reminded that the call will start in about two minutes' time to allow other participants to join us as well. So in the meantime, we ask for your patience to stay on the line with us. Thank you very much. All right. Thank you, everyone, for your patience. Stay online. Ladies and gentlemen, good day and welcome again to Sheela Foam Quarter FY24 Earnings Group conference call. Please note all participant lines are in the listen-only mode as of now. There will be an opportunity for you to ask questions after the presentations conclude. Please note that this call is being recorded. We request that you place your lines on mute except when asking a question. Some of the statements by the management team in today's conference call may be forward-looking in nature, and we request you to refer to the disclaimer in the earnings presentation for further details. Now I'll hand over the floor to Mr. Siddhartha Bera, CFA, Consumer Durables Research. Sid, please go ahead. Thank you. Thank you, Ronald. Good day, everyone. We like to welcome the management and thank them, for this opportunity to take us through the Q2 results, and to answer your questions. We have with us, Mr. Rahul Gautam, Executive Chairman and Whole-Time Director, Mr. Amit Kumar Gupta, Group CFO; and, Mr. Iqbal, Company Secretary. I will now hand over the call to Mr. Amit Guptaji for his opening remarks and, over to you, sir. Thank you, Siddhartha. Thank you so much. And good morning, everyone, and thank you for joining the earnings call for the second quarter of 2023 of Sheela Foam Limited. I welcome you all to this conference call. I also thank Nomura for organizing this call and helping us through this call. Please let me first take you through the results of the first quarter, financial results of the first quarter of Sheela Foam Limited. So Sheela Foam achieved a revenue of INR 613 crore for the quarter ended September 2023. If you compare it with the year-on-year revenue, this is lower by around 10%. There are three specific reasons for the same. The first one being we have already highlighted in our last quarter that we have increased the prices of our Sleepwell brand SleepX brand on the online segment and have introduced Sleepwell for reasons we have explained there. We see good traction in the Sleepwell brand on the online segment and it is growing very fast. However, it is still a little bit of time before it can reach to the same level as SleepX. So to some extent, it has affected the top line. Secondly, the raw material prices have been continuously falling for the last one year. So though they don't have any impact on the profitability of the company, but yes, from an optics perspective, it impacts there and the top line appears to be lower. And I think the final and the most important thing that we faced in this quarter is that the festive season this time is starting a month later. So usually, Diwali festival used to be there in October and the sales started from September onwards, which happened last year. But this year, Diwali is in November and the sales have started in October. And of course, we see very good traction in October, since we are already over with October. But yes, as a quarter, the second quarter was a little lower. If we see, on a consolidated basis, we achieved a turnover of around INR 1,253 crores. Sorry, we achieved a turnover of around INR 800 crores. Sorry, just give me one sec. For the first half of the financial year 2024, our consolidated revenues were around INR 1,258 crores, which again was around 10% lower in comparison to last year for obvious reasons. The international operations are better off or at the same level, but the main impact that has appeared here is because of the domestic level. We have been able to maintain EBITDA amount, EBITDA in amounts, which has resulted in better EBITDA margins, but absolute amount remains INR 144 crore, which has contributed to a PAT at the bottom line, of around INR 88 crore. One, so, apart from this, I would also like to highlight on the other two segments, in which we operate. So technical foam has been doing good. From a quantitative perspective, we are better in volumes on the technical foams, primarily driven by growth in the OEM segment, especially automotives. However, furniture cushioning and comfort foams are a little bit lower in comparison to what we did last year, primarily being affected by the festive season. We expect these volumes to pick up from October onwards and the results be visible in the next quarter results. I would also like to brief you all on the recent acquisitions that we have completed. Last time we mentioned that we have signed two acquisition agreements. We signed an agreement for acquiring 35% in the furniture company Furlenco, and we also signed for acquiring 95% stake in Kurlon. We are very delighted to communicate that we have completed both the acquisitions. Furlenco was completed in August, and Kurlon has recently been completed on 20th October, just 10 days back. One of the best things that has happened to us is that we have been able to complete Kurlon on time. We had mentioned that we should be able to do it by around mid of October. This one has given us an opportunity to take over the company and control it, avoiding any lack on the part of the erstwhile promoters since they had already sold the company. And secondly, just being before the festive season, it has given us an opportunity to drive the volumes right from here so that the company doesn't, instead of going down, which generally happens in any acquisition, it starts moving in the positive direction. We have been in touch with the management team of Kurlon for the last 13 weeks along with our consultants, figuring out the decisions which have to be taken right on the very first day and also the different areas of synergies which we can explore and execute. We figured it out in that period before we took over the company, and the result was that as soon as we took over the company on the next day itself, we could implement a lot of decisions which were required for the company now to take its growth to the next level. Also, all the synergies have been identified. They are already put into execution, and we hope that some flavor of it would be available in the October to December quarter, and a good amount of synergy benefit should be available in the January to March quarter, with full-year benefits coming out in the financial year 2023, 2024, 2025. I would also like to update that Furlenco is also moving in the right direction. So we have paid out of the equity proceeds as was much. They have paid a sizable portion of the debt, reducing their interest cost to a large extent. They also have now capital for investing in the new assets, creation of new assets by which they would be able to improve their top line and hence the profitability. They are well on track to achieve break-even by the end of December of the current calendar year. On the ongoing CapEx program, just a little bit of an update. We have almost completed the capital expenditure for the plant setup at Jabalpur for our Mattress for Every Indian. The plant, as scheduled, will go online for dispatch from December onwards, and we will have the first lot of production in this particular quarter, with full quarter coming as the January to March quarter. In the meantime, we have done a lot of pilots in different districts across the country, and the response that we got is very encouraging, and we hope that this would be a landmark foray in the history of the company. As regards the capital expenditures in Australia and Spain are concerned, they are also on track, and we expect to start commercial production by end of December on both these two plants. With this background, I would now open this particular forum to the overall audience and would be happy to answer any queries or clarifications that is required of us. Thank you. Thank you very much, Amit. So, investors on the line, thank you so much. We will now open the floor for Q&A session. If you would like to raise a question, please use the raise hand button located at the bottom right-hand corner of the WebEx page. We will unmute your line and prompt you to speak. Or you may submit your questions via Q&A chat box, addressing to all panelists. Please be reminded to keep your questions to a maximum of two. If you have more questions, please return to the queue and we will prompt you again. All right. So, we have the first questions coming from Ritesh. Ritesh, your line's unmuted. Please go ahead. Hi, sir. Hi, hi Ritesh. Hi Ritesh. Yep. Please go ahead. Thank you. Yep. Hi. So thanks for the opportunity. So my first question is on Furlenco. You did indicate about re-leveraging debt repayment over there. Can you give some headline numbers on revenue, EBITDA, interest cost? How much was the debt? How much it has got repaid and how are we looking at the interest cost moment? A related question specific to Furlenco. How are we looking at the incremental strategy along with the home-first stores that we have? So that's a broader question on Furlenco. That's one. And a second question is, I think Tarang has been launched on pilot basis. Just was trying to understand what is the product moat over here, along with the price points and the addressable TAM? That's a second question. And congratulations for two recent campaigns. I think it has gone pretty well. So yeah, those are the two questions. Thank you. So, Ritesh, I'll try to answer questions. If I miss out everything, please point me out at the end. Furlenco has a total debt in the range of around INR 350 crores, including the component of capitalized lease. The net debt on books was around INR 200-225 crores. Rest was capitalized lease. Out of which, they have paid around INR 200 crores of debt, which has brought down the interest cost by around 60%. Going forward, if you look at an operational EBITDA perspective, they are operational EBITDA positive as on date. But primarily, as you could see, that is still there is some debt remaining there. There is interest cost, which is what we intend to cover in the next two months. That's why I have indicated that by the end of this calendar month, we should be able to break-even, meaning that we would also be able to recover the interest cost which is being currently incurred. Ritesh, if you can repeat the second question, please. Sorry for that. Hello? I'm audible. Yeah, Ritesh. Yeah, sorry. I was muted, so I was not audible. So my second question was more on the product, Tarang. What is the differentiation on the product? What are the price points over here? And what is the addressable TAM that we are looking at? And how do we see the ramp-up of this product? And will it be able to recoup the volume loss probably for SleepX that we have seen either by Sleepwell or through Tarang? That's the second question. Thank you. So, I think we had a market we have already recouped, say, around 40%-50% of the loss in SleepX volume that we had done through the Sleepwell brand. It is not a question of just recouping those volumes. I think the volumes that we are looking forward from Sleepwell are much higher. We have launched recently a very aggressive advertising campaign. And apart from branding, we have also seen its impact on volumes. The new mattress that we have launched, Nexa, which is at around INR 25,000 price point, is something which is returning good results. And we hope that the volume should be much higher than what we thought in SleepX. As far as Mattress for Every Indian in is concerned, it's a volume product, and the success of that product is only determined if we are able to sell a very high volume of those mattresses. So we are not just looking for recovering these volumes, but we are looking for entry into a totally new era where, on one hand, we have the brand strength of both Kurlon and Sleepwell. Now, instead of competing with each other, we'll be acting complementary to it because of their precise positioning. And on the other hand, we are hitting the untapped market, Indian market, in the rural and semi-urban areas through the Tarang mattress. So it will be a different scenario altogether, Ritesh. As far as the TAM is concerned, target market, for Sleepwell and Kurlon, it will continue to be urban and semi-urban. Whereas for the Mattress for Every Indian, that is Tarang, it will be more on the rural side of it and the lower end of the semi-urban market. I hope I have answered. All right. Thank you very much, Amit. Okay. Next question will be coming from participant Arjun. Arjun, your line's unmuted. Please go ahead. Hi, Arjun. Can you hear us? Yeah. Hi. Sorry. I was muted. Yeah. Sure. Thank you. That's all right. Thank you. So, my first question was just in terms of the merger-related synergies, now that both the transactions have been completed. I was hoping that some data could be provided how you actually see this pan out. So, just in the interest of the investment community, just to get an understanding of the merger-related synergies, I was hoping to see some data. If you could just talk about it. Sure. So, Arjun, there are multiple synergies that we have identified. Some are at the back end and some are at the front end. Though it's a very difficult task to actually or precisely quantify these synergies, but I will just try to give you some idea of what we are looking at. So on the back end, I will start. The very first thing is, we are a foam manufacturing company, and Kurlon has traditionally been a coir manufacturing company. Though as on today, also, more than 50% of their material is foam material. But if you look at it, our ability to produce foam, both in terms of chemistry as well as in terms of output is much better in comparison to Kurlon. So the very first thing that we are embarking on is to derive the same level of economic benefits both in terms of yields as well as in terms of quality from the foam which Kurlon is currently manufacturing. So that is one part. The second part is both the companies have been in different economic cycles. Kurlon was in a different cycle, and we have identified that there were different price points at which both were purchasing raw materials. We leave aside what we could negotiate or what we could do because this is a different type of market. But even if we basically derive the lowest common denominator between the two, it's still we find that there is a lot of saving potential, which can come out of that, which, of course, is a very low-hanging fruit, and we intend or we have already started our journey towards it. The third synergy that we see is in the form of logistics. Till now, yes, we had a pan-India network, and Kurlon also had a pan-India network. We were able to supply to our customers from a reasonable level of distance. But now this footprint has further deepened, which means that you can supply to the customer from a particularly shorter distance. One, it helps you in terms of logistic cost. And secondly, it turns you in, helps you in terms of time to customer, which is, again, a very important factor in this particular segment. So these are broadly, broadly three. There are many others also, but I have just given you the major three ones which are at the back end. And I think at the front end also, first of all, what will happen is we will stop cannibalization between the two brands. So it is, previously, there was a lot of competition that we were fighting in the south and the east, whereas Kurlon was also trying to, fight it out in the north and the west. Now the positioning will be much faster. Not to say that both the brands would not be Pan-India. Both the brands would continue to be Pan-India and be selling across the country. But we will definitely work on the positioning of both the brands, across the country such that each brand stands for a particular, value delivery. And then, it becomes complementary between them that both of them support each other in their respective areas to provide the customer the value which each particular brand is giving. Now, this is something which is, I think, we have done a lot of brainstorming, and to some extent, we have laid down certain things. But this would be another, few months wherein we execute it on the floor in the market or in the field, and we see how best this can be achieved without affecting the existing infrastructure or the existing strength or the existing people that are associated with both the brands. Sure. Thanks for this overview. But is there any specific milestones we can call out? So, as investors, how do we know that the merger or the synergies are coming out in the right direction? So if you could just probably quantify it by the next quarter and give us some data, that would be helpful, sir. Just in terms of milestone over a two, three or four period, what we anticipate from the same. But, thank you for the same. So my second question is related to the expenses part of it. Is there any expenses you'd like to call out that would happen in the third quarter since we did consummate it in October? Okay. So I'll start. Take your first thing, one. See, I would not be able to give you an absolute INR amount to that. But we are pretty confident that from the three back-end synergies that we have mentioned, the consolidated or the combined EBITDA margin should have an impact somewhere between 100-200 basis points on a combined entity. What ultimately it will come out, I think, give us a little bit more time because putting something on an Excel sheet and actually executing it on the floor are two different things. As far as the outer timeline is concerned, I think this has started being executed, and you should see good amount coming out in the fourth quarter of the current financial year. Some impact would also, of course, be visible in the current quarter as well. But since we will be combining both the companies, and there will be a lot of issues which have to be handled, you know, in an integration, those have to be taken care of. I would request that you observe the fourth quarter, and definitely, then you would be able to see benefits in the financial figures in the next quarter. On the expense side of it, I think, now Sheela Foam is a different company from what it had been, say, around a few years back. We have now two national brands. We are absolute leaders across the country. And hence, it becomes even more important that the company now is spending certain resources on things like advertising to take both the brands to the next level, strengthening of the management team who can then take over all these activities and can realize the benefits which should come out from both the size and the integration of both the brands. So I believe that going forward, these will be the two areas which will be interesting from a cost perspective. But given that, I think more important is we are in an industry which works on a 40% gross margin. We are pretty confident that whatever expenses we will be doing here would be coming out of the expansion in volumes with some of it being converted to the bottom line in the form of EBITDA achieved by the company. Sure. Thank you for the same. So just, the second question. In terms of Tarang, if you could articulate, possibly what's the output that we could generate from the Jabalpur plant, you mentioned you need high volumes. So what's the minimum top line do we expect from the business, to be break-even or, or, to move towards profitability? So, Arjun, the way we are looking at it, see, in our case the foam plants are not, like, standard capacity plants. If you see why we put up our plants is mainly in the past, why we did it was mainly to expand our footprint because, the cost of setting up of the plant was potentially at times lower in comparison to the volumes that you got from a particular micromarket, and it was a long distance to serve that micromarket. So you went near the micromarket and set up a plant there. So even if you look at the Jabalpur plant, the plant has no limitations in terms of capacity. So if I run the plant 24 hours, probably I can feed half of India. But that is not what is important. In this industry, what is important is how strong is your distribution network, how the product is being liked by the consumers, and it is able to penetrate across the segments that you want to penetrate. I can say for any amount of volume that is being asked by the market, Jabalpur plant is capable of delivering that volume. No, no, real restrictions in terms of capacity or ability to produce foam. My question was on. Yeah, yeah. Arjun, Arjun, let me just comment on that. So, we should be starting in December this year. And we expect then in two years' time, we should be looking at a top line of INR 300 crore. And that will be well, well past the, break-even point. So I, I can calculate or evaluate the exact break-even point, but we'll get back on that. But in two years' time, we should be at a INR 300 crore level. Sure. That's really great to hear and wishing you all the best. Thanks, Arjun. Thanks. Thank you, Arjun, and management. Hi, Sid. I believe there are some questions from the Q&A chat box. Would you mind you read out the first one? Thank you. Sir, there are a few questions. One is from Janeel. He's asking about the total revenues we can expect for Kurlon and Furlenco in FY25 and what kind of EBITDA margins also to expect. Yeah. So currently, if you see financial year 2023, Kurlon had a revenue of INR 850 crore. Since this year was the year of acquisition, we are not forecasting at any revenue for this year, but we are pretty confident that that should be the volume which should at least be achievable. However, if we look at financial year 2025, we would be targeting a minimum of INR 1,000 crore from Kurlon and a minimum profitability of at least, say, around 10% EBITDA, which amounts to around INR 100 crore. Though we are hopeful that if these synergies are implemented, we should be somewhere between 11.5%-12%. On Furlenco, currently, Furlenco is at INR 156 crore in the last year. This has a break-even and a total break-even at PBT, with PBT break-even at around INR 1,210 crore- INR1,215 crore. And please remember, this is not sales revenue. This is total rental business. 95% of the business is rental business. So though it may appear to be a small figure from a top line perspective, but this employs an asset of more than INR 300 crore to generate this revenue. So, once we achieve the break-even in December this year, next year, definitely, we are looking at some positive, profitability at the PBT level, beyond break-even. However, our intent with Furlenco is not to push it just for profitability immediately. Yes, we have a three-year plan with them where they have to achieve double-digit PBT margins. But, before that, what we would be, more focused on is that they are able to create assets, which, can then be deployed, for generating of revenue. What happened to them in the last one year was because of, paucity of capital. They could not generate the assets, in line with the demand that they had from the market. Once they achieve PBT positive by the end of this calendar year, they would be looking for developing those assets to be deployed further in the market and expanding their market reach. With a brand like Furlenco in their pocket and capabilities like the digital capabilities that they have, designing capabilities that they have, or the manufacturing capabilities that they have, it is very important that we leverage those capabilities and expand geographically before the other players capture the market at different places, which then makes it more costly for us to enter those markets. The. I think just, the question that is there is that FY25, what is the expectation of the revenue? So Kurlon will be about INR 1,000 crores. Furlenco, my understanding, INR 300 crores. And Sheela Foam would be about INR 3,200 crore-INR 3,300 crores? Sheela Foam. No, Sheela Foam would be, yeah, almost at the same level. Yes, you are right. Totaling to a INR 4,600 crore level in FY25. But Furlenco top line would not be consolidated with us. No. Yeah. They are independent. Whatever will come, will come. Sure. Sure. Okay, sir. So second question is from Aditya. So as a minority shareholder in Kurlon and who hasn't taken part in the recent buyback from Kurlon, what can we expect from Sheela Foam now? So as per the s-s. Let me take that question. So look, as per the arrangements, all shareholders who were unable to join in this selling process, it is the responsibility of the erstwhile promoters to acquire them and then pass them on to us. However, in a rare case, if it will happen and doesn't go through that process, we would be happy to consider an open offer. Okay, sir. Got it. Ronald, we can take other participants now. Okay. Thank you, Sid, and management. I believe Ritesh has some follow-up questions. Ritesh, you're on some muted. Please go ahead. Thank you. Okay. Hi, Ritesh. Can you hear us? Hi, Ritesh. Hi, Ronald. All right. While we're. I'm audible, Ronald? Sorry. Is that you? Yes. Yes. We can hear you, Ritesh. Yes. Please go ahead. Yep. So, I had two questions. One was on specific to Tarang. What is the sort of distribution model that we are looking at? Predominantly, Kurlon and Sheela Foam, we understand it's more tier one and tier one two and probably tier three. The addressable market over here is very different. So can you give some specifics on the distribution model and how we're looking at incentivizing the channel? Specifically, given we had indicated earlier that this is something which is likely not to sacrifice on both margins as well as return ratios. That's the first question. And the second question is specific to Furlenco. We do see that Furlenco folks are also opening up retail stores. There were two; there was one large one in Bangalore, one more. And how does it fix or mix and match with the Furniture First retail stores which are there? So are we looking at Furlenco to go more into offline by their own stores? How should we understand the incremental capital allocation? Those are the two broader questions. Thank you. Okay. Amit, I'll take that question. So as far as Tarang is concerned, we are looking at a completely different distribution channel. The current channels are, as you rightly said, from metros to tier one to tier two and tier three and maximum, in a few cases, up to tier four towns. But here, we are going right the other way around, which means that we reach to the tehsils or the block towns. And the model that we are envisaging is actually going to be overriding on what's called as a small-town distribution system, practiced by FMCG products and the likes. So these are distributors who are in district headquarters, and they have their little vans which do the rounds of the tehsils and the taluks and the block towns. And this is what we have piloted on and find that as useful. The difference is the distributor will not be an exclusive distributor like we have, here. And that makes it far more economical. The truck that they would be having to go around would also be carrying some other material. And we hope we are looking at just blowing this up on the entire 600 or 700 districts that we have. The second question that you had on the two retail stores which Furlenco has opened. So number one was already in operation when we took over. The other one was on the drawing board. The fundamental or the philosophy behind the two stores is that furniture is an item which has to be felt, which has to be experienced, and oh whether over a rental possibility or a sale possibility. In either case, it makes more sense for people to see it in reality. Now, this is actually, and the two stores are lending more credibility to this. The sales have gone up in that area. The rents have, or the rental part has gone up in that area where there is a store which is in place. This is all lending credibility to our plans that of the exclusive stores that we have, we should be able to leverage them for Furlenco products, for rental less, and for sale more. So today, as Amit said, we have a 95/5 break, which is 95% rental and 5% on sales. We expect this to go more to 45/55 level or a 50/50 level, very soon, the moment that we are able to do it. So we expect that out of the 5,000-odd stores that are with Sleepwell and some more to come with Kurlon, we should be able to put furniture on at least about 20% of them and grow that, the furniture from there. Great. Thank you very much, management and Ritesh. Ritesh, should you have any follow-up questions that you would like to ask later on, please use the raise hand button again. Okay. We will now take the next question from Anik. Anik, you're on. You're muted. Please go ahead. Am I audible? Yeah. Yes. Thanks for taking question. Sir, my first question is, like, you are explaining regarding the, regarding stopping the cannibalizing effect, due to both of the brands together. Now, from a layman's point of view, like, when a consumer goes to the market and if he has option for, like both of the options, like Kurlon and SFL, Sheela Foam together, so, which obviously, they have to like, the consumer has to pick either of these two. So in that from that aspect, like, how this cannibalizing effect can be stopped? Because one brand if I'm taking up one brand means I'm again suppressing the another brand. So let's, let's look at it like this. That today, the consumer has 50% and I'm just taking a number, but close to that, of 50%, say, in what the product he or she is buying, and the balance 50% is of the retailer. The retailer and the consumer decide together that what, what product that they want. The products that in the past have been developed, whether by Sheela, which was primarily a foam, mattress company, or by Kurlon, which has been a rubberized coir-based company, each company added all the possible products into their line. And that's where the confusion grew. Our research on the, the consumer research shows that when told properly, people know for sure whether they want a coir mattress or they want a foam mattress. And therefore, going forward, our, our strategy is that we sharpen the positioning of both the brands. So Sleepwell will stand for a modern mattress, a technology-based product, a variety, you know, with comfort levels, etc., which are variable, that kind of a positioning, while a Kurlon product will be based on natural product, organic product, recyclable product, and people, you know, who have a sort of affinity towards nature. So that's how the positioning would be. We have seen that in the past, that we may have added many products, but there is a consumer who wants a or who wants Sleepwell or who wants Kurlon. And we are only trying to sharpen that and make that better. Will there be a 0% cannibalization? Probably not. But we expect this to be very, very minimalistic, you know, very minim yeah. All the business, let's say organized business, should come at the expense of the other organized mattresses or the unorganized parts. Similarly, for the foam side, it should come from the unorganized sector to Sleepwell. So as we sharpen, we will also spend a lot of money or considerable amount of money to increase the brand salience of each one of them. Fair enough, sir. Sir, my next question is, probably, this question may be repetitive in nature as I joined almost 15 minutes late due to some technical glitches. So, sir, I'm like, for last five quarters, we have been seeing some kind of degrowth at the top line year-over-year basis. So, like, is it the effect of the low volume or, like, is price erosion so what it is? Amit, you want to take that answer? Take that question? Or I'll do that. So, Anik, no, first of all, let me assure you that this is not a repetitive question. And you are the first one asking that. So, thank you for that. The reasons have been very different. And we've, you know, in the recent roadshows, this was a question which was repetitively asked. And the reasons have been very different from a quarter-on-quarter basis. However, all I can say is that as we have pulled out, you know, from the post-COVID COVID times, we have been strengthening our positions and getting prepared for the future. I maybe I'm not 100% legally correct in saying it, but let me just say as a reflection of a quarter that has ended, and we are talking to you about it, but there has also been a month that has gone by. You know, when Amit was saying that the festive season has moved and we have strengthened our leadership team and we have started advertising and promoting for our brand, these are a few things that have already brought about the change. I may not be able to speak on numbers, but you will see a different picture as we kind of go along. Of course, the consummation of the acquisition has also been a part of or at least responsible for in the past for a little bit of resources and focus to go away. But as far as the future, that's the addition, or the inorganic addition that that will play an important role in. So in a nutshell, if I I mean, yes, you're right on the five quarters. But the future is not going to be like that. Okay. So, sir, was there any, like, erosion in the prices as well? Yes, it's so. On what we call as the industrial foams or the furniture foams, etc., they are relatively more commoditized, and there the prices do go down. Therefore, this is one reason which I didn't want to talk about, that there is a sizable drop in the raw material prices, and therefore, the selling prices of the foam products as also and which has impacted the top line and then being reflected as a degrowth. So Anik, if you see yes, whenever raw material prices go up, you will find selling prices of segments other than mattress going up. And similarly, it is the case in the reverse. So though you might see the impact on the top line in terms of absolute INR, but if you look at profitability, the profitability has not been impacted. Rather, reducing raw material prices to some extent has improved the margins that we are making. So if you look at contribution margins that we have been doing or we have done in this quarter or the half year, they are 1 to 2 percentage points higher than what we had done in the corresponding periods last year, which implies that our operational profitability is better. But yes, because the volumes are lower for the reasons we have cited, it has impacted our EBITDA. Even in the cost side, we are not extravagant. You see that it is only two costs which you might find. Or rather, in this quarter, it is only one, which is the manpower cost which has gone up a bit. And there are obvious reasons which we have explained just now why the manpower cost has gone up. But we anticipate that with increasing volumes and with a product core portfolio which has 20%-40% gross margin, we should be able to derive better results with these investments. Okay. Thank you very much, management. And Anik's question. If Anik, you have any follow-up questions, please use the raise hand button again. Now we'll move on to the next person. Nihal, Nihal, your line's muted. Please go ahead. Am I audible? Mm-hmm. Yep. Please go ahead. Yes. Good morning to the management. My apologies again. Even I joined a little late. So I had a question, apologies if it was repeated, that the mattress business, while the earlier participant also highlighted the overall business, has been seeing a degrowth over the last six quarters. And in Q1, we did allude to the fact that SleepX as a business had been taken away. So would it be possible to give a sense of what was the core, what was the degrowth because of Sleepwell as a brand, excluding the impact of SleepX in Q2? So, I mean, let me just repeat, the question so that I've understood it. You're saying in Q2, what was the impact of withdrawal of SleepX as far as the mattress business is concerned? Is that correct understanding? Yes. Yes, Rahul. That is what I was alluding to there. So, on an annualized basis, SleepX had gone up to a level of about INR 120 crores. And when we withdrew it, of course, we did not withdraw it physically. What we did was to actually increase the prices, which appeared and which made it profitable, but which also appeared as not the right. And therefore, the sales kind of went down. And I think it dropped to about 10, 10, 12 crores annualized. Sleepwell has been taking that position and has been growing. Currently, I would put the Sleepwell numbers in the online business at about INR 45 crores-INR 50 crores annualized. But it is improving on a month-on-month basis and actually improving pretty well. So if I took the full year, the impact of SleepX being withdrawn and Sleepwell coming in, I would say that you would have lost about 25% in the current year that I'm talking about on an annual. But if you go to the next year, it would have crossed. It will cross those numbers. And not only cross those numbers, it will also get profitable. Or it is already profitable and will continue to have profitability. So, so just to be sure, there was in total an impact for a full year basis of around INR 100-INR 110 crores from SleepX being taken away or, say, the prices being high. Some of it was made up by SleepX increase. So net-net on an annualized level, INR 80 crores was the impact, which ballpark would be around INR 20-INR 25 crores a quarter. Would that be a right understanding of the choices? That's right. That's right. That is clear. A related question to that, Rahulji, was that we, we knew that SleepX as a business was obviously, lower gross margin. If I look at the TDI prices, they have seen a decent correction versus last year of around, say, 30%. And even there is a, a benefit of a product mix, I would say, with, specifically the mattress business, seeing a better mix of Sleepwell. So isn't the increase in gross margin should have been higher versus just the 190 basis points that we've seen in the Q2 quarter? So, Nihal, I would say that, look, the reflection on the gross margin will automatically come. And, the impact of TDI is far lower than the other chemicals and the other things, you know. I mean, Polyol is about 60%-65%. You use Polyol. And TDI is only used about 30%-35%. So if you just put all that up and it's a, I mean, it's arithmetic that goes on there. So whatever is an outcome is an outcome. But because we don't decrease any Sleepwell prices, therefore, I don't see it. Yeah. So, see, from a margin perspective, I, I think, there is improvement. You are right that the improvement is primarily because SleepX has been converted into Sleepwell mattress. Sleepwell margins, which are higher. Broadly, if you see, the margins that are coming out of it is a combination of all the products that are here. So I can tell you that the gross margins on Sleepwell, it has gone up and has increased by the similar percentage that I mentioned to you. Yes, at the same time, technical foam, if you see, have gone up and the mattress has come down, whereas the remaining two segments, like furniture foam and comfort foam, have almost been at the same level or a little, little lower. If you look at the mix, I think this is the result what is ultimately coming out. But you are right. Once these two segments also recoup, the increase in contribution margins should be higher than what it is appearing currently. Sure. Point taken. Just one final question, if I may. How would Tarang's pricing compare to the erstwhile Starlite brand that we have? And how would the diff distribution be different versus what we did for Starlite? Okay. So, Nihal, on the construction part of it, it's very different from Tarang. Tarang is a good, solid foam, solid mattress, while Starlite was more of an EPE-plus kind of foam construction. So they are different from each other. And therefore, a comparison may be a little different, but the price points may be similar. Tarang, the advantages come in from ability to number one, use a technology to produce, which brings down the cost of foam by at least 15%-20%. But that is a centralized plant. And therefore, we have to transport to all the parts of India. But this foam also allows saving on the transport cost by compressing and transporting it. And that's very different from a SleepX, or sorry, a Starlite product. The third is, of course, on the distribution side. I just shared with you that, or with the on the call, that the distribution is not through the regular, zonal distributor, area distributor, and then the dealer, etc. Therefore, the amount of money that is spent on the distribution is far less. These are the advantages that Tarang would bring to the table as compared to Starlite. Sure. Point taken. Thank you so much, Rahul, and management. Thank you. Thank you. Thank you, Nihal and management. Next question's coming from Namit. Namit, you're muted. Please go ahead. Hi, Namit. Can you hear us? Yes. Yes. Please go ahead. Thank you. Yes. Thank you. Thank you, Ronald, for the opportunity. My question to Rahul is that, while Kurlon has been a successful business, you know, obviously, with your success at Sheela Foam over the past many decades, there could be very valuable learnings and experiences that you would bring to bear on Kurlon. So we'd be grateful for your initial thoughts on how you intend to leverage that to take Kurlon to the next level, given all your experiences and learnings. Thank you. Thanks, Namit, for a great question, you know. That's been on our minds all this while. The first step that we would do is to just allow Kurlon to go back to its normalized levels of top line and its normalized levels of EBITDA, which it was used to and which it was delivering for years together, before COVID. I think there is some feedback that's coming in. But just see if it can be taken care of. Okay. So that's the first step, and which is simple policies, procedures, decision-making, etc., and leveraging some administration and some, let's say, leadership issues from one company to the other. So that's the first step. The second is, of course, the synergies that that would come in, which Amit pointed out a little earlier, right from procurement of raw material to formulations for making foam to getting the yields or improving the yields out of it, and then the ability to supply it from the nearest manufacturing facility to the market and thereby saving transport costs. The third level, which, of course, some of them will go along simultaneously, is the front-end part of it. In the front-end part, we are quite aware that there are geographies where Kurlon is extremely strong: south of India, east of India. Unfortunately, Sleepwell has not been as strong or has been rather weak in those areas. In the north and the west, Sleepwell is an extremely strong brand. Now, the strong brand means it brings the relationships. It brings the distribution along with it. We now would leverage the south ones for Sleepwell and the north ones for Kurlon, and thereby increasing the distribution and the availability of the products. The brands are known, very well known, throughout the country. It's the distribution, the availability of the product, that we are working on. So I think on these three steps, in the coming times, we should bring this integration to be beneficial to both the companies and end up with a one-plus-one far more than two-way. Got it. That's extremely helpful. Thank you very much for your detailed thoughts. All the very best to the entire team. Thank you, sir. Thank you, Namit. Thanks. Thanks. Thank you. Thank you, Namit and management. Okay. Next question is from Abhinav. Abhinav, if you're on the line, you're muted. Please go ahead. Hello. Hello. Yep. I can hear you. Please go ahead. Yes. So my question is, related to your overseas operations. So, one is, if you look at Australia, the gross margins are high. And relative to Spain, the EBITDA margins are much lower. So what is the specific reason for that? And what is the reason for fall in margins in both geographies as well, on a YoY basis? Abhinav, if you look at Spain and Australia, first of all, they are not comparable, because even if you see the absolute EBITDA margins, they are very different in Australia between Australia and Spain. If I remember correctly, Spain has around 30%, whereas Australia has around 50% gross margins. They are different operations because even from the perspective that Spain has only one facility, it supplies to the European market, whereas Australia has 6 facilities across Australia and New Zealand. And it supplies mainly to the Australian and New Zealand subcontinent, which is a different market altogether. Now, coming back on the margins, I think what we intend is what our expectation from these overseas operations is that they should be mid- to high-teens EBITDA margins. We, during the recent past, first because of COVID and then because of, extreme competition, due to the falling commodity prices, there were some pressure on profitability. But, Spain has been able to achieve an EBITDA margin of 11.5% for this quarter. Australia, yes, I agree that it is lower, but it has still improved from 6.0%-7.7%. But that's not what our, our expectation is. These should also move gradually, to, more than 10%. And maybe, in a few, period, should move on to, the mid-teen, margins, which we believe is the optimum level for the type of business they do in these particular geographies. So I'll just add to that, Abhinav. As Amit said, they are the, I mean, they're completely different as to the, the way that business is run in those areas. In Australia, the pass-on to the consumer is very different in the sense that, there are some big customers where the pass-on happens in 3-4 months' time. And, there are some customers where even it goes up to 5 months. So if there is a fluctuation in raw material prices, it takes a little time for passing on the, the prices. And, with this, what, what we are seeing is only a reflection of that. As we go a little forward, this will, this will get back to the, 10 or 10+ levels that Australia is, is known for, or that is our expectations from there. As far as Spain is concerned, it's a little more. I won't say volatile, but a little more moving, easy-moving. And every month, they kind of change prices. So there, the experience that is, is primarily on the top line. And that's because whatever Europe is going through at the moment, everyone fully understands that, though we are not impacted that much, because our market share is extremely small. And we still have capabilities and capacities to increase, which we are going to do and which we are doing. So on a tonnage basis, on a volume basis, it's not going to reduce. However, on a top line, it may because the raw material prices have gone down. But the two of them are completely different than the way they operate, you know. Thank you. Thank you, sir. All right. Thank you very much. With the interest of time, I think we can take only a few more questions. So I, I believe, Anik, you have some follow-up questions that you would like to raise to management. Your lines have moved to now. Thank you. Repeat question. Sir, as you let, like last, all of our discussions were related to volume. So my point is, like, do you find any impact of the wedding season in the volume? Like, is there any thrust in the wedding season? Yes. It's, you know, when we look at reasons to purchase mattresses, the biggest season or reason is the wedding season. Undoubtedly, the volumes go up at that time. And we can see that. It's because these are also voluminous items; they are not possible to store and stack for too long, either by us nor by the distribution channel. And therefore, you see the reflection of that straight away as far as the factories are concerned, and the sales that are happening. The impact is immediate. Absolutely right. Okay. Sir, how is this festive season or, let's say, buying season ahead? What is your understanding? So the festive season, it got delayed a little bit. So in the last quarter, the quarter that we are talking about, we did not see the impacts of that season, you know. Otherwise, people tend to pre-buy a little bit. But the October that has gone by, which is a subsequent quarter, we already feel the good impacts or the very good impacts of the season. And therefore, expect that, that the next quarter, I mean, the reflection of that will be in the next quarter. Okay. However, on the wedding season, let me just say that, at this time, we have a short wedding season. But this is in the festival period. And therefore, the impact may not be so much. The other wedding season comes somewhere in February, end or middle or end February. And that's a longer one. But thankfully, that is a part of the leaner season. So I think these things should kind of balance out, you know. And both, the season and the wedding combinations should be almost equal enough for, for both these quarters. Sir, like, can you throw some light in terms of the current inventory situation in the system? Like, is there any inventory buildup at this point of time in this quarter, in Q2? Generally, we don't. Amit can give you some numbers on it. But generally, because these are voluminous items, as far as foam and foam products are concerned, number two, on mattresses, unfortunately, the standard mattresses are, on a national average, about 60%-65%. Balance 35% are custom-made mattresses or personalized mattresses on sizes. And therefore, you can't keep the inventory. So generally, the inventory levels are low as far as these products are concerned. Right, though. And moreover, yeah, I agree. Inventory levels are lower than what it had been in the previous quarters, no, primarily because we have been focusing very sharply on inventory and plucking out each and every component of it and trying to say that whatever minimum as required for the business is only the inventory maintained. Of course, if, if you look at October, the wedding season, sorry, the festive season, we have increased inventory to some levels because that is what is needed at that time when the demand are high. So specifically in October, you would find high inventory. But by December, the festive season would also culminate. And so you should, you should see similar levels of inventory as in the last quarter. All right. Thank you very much, Anik, for your question. Sorry, I had to cut you short. And I believe, given the interest of time, Sid will help us wrap up the call with a final question from the Q&A box. Sid, please go ahead. Thank you. Thanks, Ronald. Sir, I'll take the last question from the chat box. So what is the current transport cost per mattress? And what do you expect it to be once Kurlon is integrated? So, see, I can't give you inward movement cost on a per mattress basis because there are different type of products for which transportation is used. But yes, I can tell you that there would be at least 10%-15% overall reduction on a per-unit basis once we combine the Kurlon and the Sleepwell footprint. Okay, sir. So, so that wraps up the Q&A conference call. So thank you so much, the entire team from Sheela Foam. That was the last question we had. And sir, I'll hand it over to you in case you have any closing remarks. Thank you so much. Thanks, Siddhartha. So thank you all for participating in this earning, in this earnings conference call and asking such enlightening questions. I think Rahul has mentioned it earlier also. I also am of the same opinion that every time we attend these calls, we get to learn something which helps us to implement in our business and improve further. So thank you so much for that. I hope we have been able to answer your questions separately. If you have any further questions, we would like or you would like to know about the company, you can please reach out to our IR managers at Valorem Advisors. We would be happy to support, clarify, or reply to any of the queries that you might have. Thank you so much. Thank you, Siddhartha. Thank you. Thank you. Thanks, everyone. Thank you very much. Yeah. Thank you. Have a good day. Take care.