AGI Greenpac Limited (AGI.NS) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the conference call to discuss Brilloca's acquisition of HSIL's Building Products Manufacturing Undertaking. [Operator Instructions] I would now like to hand the conference over to Mr. Gavin Desa from CDR India. Thank you, and over to you, sir.

Thank you, and good day, everyone. I would like to welcome you all on today's call to discuss Brilloca's acquisition of HSIL's Building Products Manufacturing Undertaking. We are joined by Mr. Sandeep Sikka, the Group CFO, and Mr. Naveen Malik, the CFO of HSIL. Before we begin, I would like to mention that some statements made in today's discussions may be forward-looking in nature. The actual outcome may vary as they are dependent on several external factors as well. The participants may hence make their own assessments too. We will start the call with opening remarks from the management following which we will have an interactive Q&A session. I will now request Mr. Naveen Malik to open the call. Over to you, Mr. Malik.

Thank you, Gavin. Good afternoon, everyone. Thank you for joining us on this call today. I hope that you and all your family members are in best of the health. As you are aware, the Board of Directors of Brilloca Limited, a wholly owned subsidiary of the company has approved the purchase of HSIL Limited Building Product Manufacturing Undertaking on a slump sale basis which constitutes sanitary ware, faucets and plastic pipes and fittings manufacturing facilities for a cash consideration of INR 630 crores, subject to closing date adjustments on an arm's length basis. The transaction is subject to necessary shareholders, lenders and other statutory approvals as required by both HSIL and Brilloca. The building product manufacturing undertaking being bought by Brilloca will include the plant and machinery and other assets related to around 2 million pieces, sanitary ware manufacturing plant at Bahadurgarh in Haryana. The plant and machinery and other assets related to current available capacity of 35,000 tonnes per annum pipes and fittings manufacturing plant at Isnapur in Telangana. This plant is currently under expansion and post expansion, the capacity would stand at 48,000 tonnes per annum. 59.5 acres of land along with building and plant and machinery situated thereon for the 2.2 million pieces, sanitary ware manufacturing plant at Bibinagar in Telangana. And leasehold land, along with the building, plant and machinery situated thereon and other assets related to the 3.7 million pieces faucet manufacturing plant at Tehrani in Rajasthan. All related inventories, other assets, business liabilities, employees, permits also form part of the deal. As part of the deal, Brilloca will be taking the entire land and building at Bahadurgarh and the Isnapur pipe plants on around a 10-year long-term lease, which is further extendable. The decision has been taken, keeping in perspective the underlying land cost of these 2 land parcels, optimizing the cost of acquisition and operating dynamics required for the business. The annual rental for these 2 land and building parcels would be around INR 16 crore per annum. All these facilities are efficiently managed and have further scope for enhancing efficiencies as we drive future growth. The current capacity utilization at 2 sanitary ware plants is around 90%, whereas faucet plant in Tehrani is operating at 65% to 67% capacity utilization. So plastic pipes and fittings, Isnapur plant has a current capacity utilization of over 85%. Brilloca over the next few years will evaluate whether further plans to upgrade and enhance capacities that are aligned to meet the increasing demand for our products in the market. We are pleased to share that Brilloca is the fastest-growing building product company in its operating segments. This transaction will have separate -- several benefits, including Brilloca today is entirely dependent on third-party vendors and the acquisition will reduce this dependence. Since Brilloca has aggressive growth plans, it is not prudent to outsource the entire manufacturing. The changes in the macro environment over the last 2 years have made it imperative for the company to have control over the entire value chain, including manufacturing, supply chain, et cetera, so as to sustain this sector outperformance. The deal helped create a simpler structure by integrating the entire value chain in a single entity. Market analysts and street investors have, during the course of our discussions over a period of time, inquired about the manufacturing and sales and distribution of the Building Products business being split in 2 companies within the same group, further resulting in additional related party transactions. The proposed acquisition can be considered as a step forward towards realigning the business to enable a simpler operating structure that resonates better with our stakeholders. Given the financial stance of Brilloca, the manufacturing processes and technologies can be upgraded and expanded to further -- to enable accelerated rollout of new products in the marketplace. The current acquisition provides a platform which we will further leverage for growth. This operating integration will also provide manufacturing to market synergies in the operations resulting in better efficiencies being delivered over a period of time. Additionally, this will significantly reduce the compliance and administrative burden for management of both companies with respect to the related party transactions under Indian regulatory framework. In terms of financial messages, the transaction will add manufacturing margin to the company EBITDA. Based on current market conditions, we expect this will initially result in incremental EBITDA margin in Brilloca of around 3% with further enhancement to around over to 5% over next 5 -- next few years. We plan to finance the transaction by a debt of around INR 550 crores to INR 560 crores in Brilloca and balance using cash reserves and accruals. As you may be aware that Brilloca reports healthy cash flows, and we believe that in the current business scenario, a large part of the debt specific to this transaction will be repaid in the next 3, 4 years. In the sanitary ware and faucet business, we have performed well in a challenging macro environment. In the pipe business, we are the fastest-growing player in the country. The acquisition of the BPD manufacturing undertaking from HSIL will only add to this momentum and enable us to deliver faster and sustained growth. Even post this transaction, our ROCE, the return on capital employed, for the Brilloca will be in excess of 25%. In conclusion, I would like to reiterate that the purposed purchase of the building product divisions manufacturing undertaking of HSIL is a compelling step towards growth, and we believe it will provide both immediate as well as long-term benefits enabling HSIL to create incremental and sustained value. Now Gavin, we are open for questions, we are happy to take the questions.

Sir, can we open the call for a Q&A session now?

Yes, please.

[Operator Instructions] The first question is from the line of Porinju Veliyath from Equity Intelligence.

I'm Porinju Veliyath from Equity Intelligence. Am I audible?

Yes, you are audible Mr. Porinju.

Okay. I really appreciate the action now by the management of acquiring this BPD manufacturing, which was very important. And I used to wonder why the manufacturing of BPD was transferred during the demerger. I have been holding the stock in the portfolio management since last 7, 8 years. And I had an impression that our glass division will be demerged for various reasons and it was looking very logical. Anyway better late than never, we have -- I think for me it is looking like correcting a small mistakes we did in the past by demerging the BPD manufacturing also along with the glass division. Anyway, well and good and the transaction seems to be very professionally and very simply done, INR 600 crores of revenue is transferred at INR 630 crores, the company has acquired. I understand that Naveen was explaining, there is no more related party issues and it's something like a full integration with better margin. And we can focus better going forward. That's what I strongly believe. So I hope the management will continue to keep things simple. That is something I think the investment community had or analyst committee had some kind of apprehension about our company. So let this be 1 step forward towards that, keeping things simple and striving to make more -- much better operating margins. I used to always be wondering, now we have got our similarly strong brand companies in India in the similar business like Astral, Havells and Cera, I would say, the 3 companies. In fact, all these 3 companies are there in as part of their same businesses are done in Somany, in SHIL. So now Astral is quoting at 12.5x sale, Havells is quoting a 6.6x sales. And Cera is at something like 4.5x the revenue, whereas HSIL its quoting at around 1.3x sales. I hope this transaction will definitely contribute to reducing the gap between these our competitor companies and Somany Home Innovation. But I still believe why there is such a big gap. So I just would like to listen to Sandeep Sikka, going forward how do you feel? Why this kind of a gap is still there in the valuations? It's very important. It's a matter of concern, and I think the perception about the company. Also, it's not very good among the investment communities, most of which I believe it's a misunderstanding for lack of clarity and a little bit of gray areas and a little bit of complexity in holding the businesses. And such a valuable wonderful brand Hindware is not there in the name of the company. That's one important thing we have missed out. And so that itself creates confusion among the investment communities that whether this is the real Hindware company. So I would like to know from the management what are the plans to clarify these things to the investment community and the analyst community so that we get a reasonable kind of valuation going forward. That's all from my side, and congratulations for the deal Sandeep and Naveen. Thank you very much.

Thanks, Mr. Porinju. Thanks for the nice words. And thanks for all the support, which we got from you since you have been invested into our company for a pretty long time. And you have always been supportive and at the same time, very critical like you are today. So I'll answer your question one by one. I will say this, I've been saying that this transaction market should consider as a step forward. What we did as a demerger a few years back was very correct from that particular perspective. Based on our post demerger, based on the feedback, which we got from most of you who have been attending these calls giving us feedbacks. Internally, we deliberated on it. And there would be some series of steps which we are going to take on this. This is the first step in towards acquiring this manufacturing entity. The benefits of this are multifold, as Naveen has already spoken, our reliance on the third parties, elimination of related party transactions, the financial strength of Brilloca will help this in a much faster decision making and a significant reduction in administrative and other burdens. Even from the analyst community side, while analyzing Brilloca or SHIL, they had to simultaneously analyze HSIL, which also had a BPD division, because the whole fluctuation in the incoming raw material and other things would happen at that particular thing. So internally, we strongly feel that this will add substantial value to the bottom line of the company and will also help over a period of time, accelerate the growth on the top line as such. Now answering your question in terms of the understanding of the market, our strategy, which is the Brilloca strategy or SHIL strategy, over the last 3, 4 years has been differentiated from the strategy of the other players in the market. Our strategy has been more focused on further enriching the Hindware brand in the minds of the people, includes taking benefit of higher brand recall of Hindware in the mind of our consumers, launch more products into more categories, which are profitable and create long-term sustained value. Today, if you see, it's not something which is something new we are saying. We spoke about the same things around 4, 5 years back, and they're all part of our transcripts. And you can check the erstwhile HSIL transcripts, which are there. Of like 4, 5 years back, we took a call in 2 key segments of growth. One was our consumer product and other was the building products in which we went behind the wall and started selling pipes. I hope you will all appreciate that given the fact that pipe, we are doing quarterly now INR 160 crores. And consumers also -- consumer product also has grown and is profitable and both this businesses are profitable. They are now the new pillars of our growth going forward other than sanitary ware and faucets wherein over the last 4 to 6 quarters, if you try to map us, we have outperformed the market. And we spoke about it that we will be growing more than the market. Definitely, some questions are always there in the mind of the analyst community that this SHIL is now a fairly diversified business constituting of consumer appliances like kitchen chimneys, air coolers, we had water heaters. We had sanitary ware faucets in Brilloca and CPVC and UPVC pipes in fittings. But it's very important for all the analyst community to understand 1 point. We have been fairly successful in terms of each of the elements which we hopped on, we invested on in last 3, 4 years, let it be consumers. We are today the #2 player on kitchen chimneys and hoods and hobs. And we may be touching a good level of turnover there, which symbolizes that the success -- our success into the mind, on the consumer. We are pretty strong there on the pipes and fittings. We are pretty strong on the sanitary ware, we are pretty strong on the faucets. And in all the markets which I'm talking, we are in a leadership position. Amongst the top 3 leaders in the market, you can recognize us. Pipes, the base is right now small, but the leadership is in the growth, which we are doing, our growth versus the growth of the rest of the industry. So we do make a significant impact in the mind of the consumers. One clear example of this is that we used to be a pure bathroom brand, wherein people will use in the commodes or the washbasin. And people are very happy to cook food on the Hindware hoods and hobs, use chimneys even take dispensed water from Hindware brand even have a air cooler of a Hindware. So which shows how versatile the Hindware brand is. And we are hopping on it. We are -- we have hellbent on achieving the highest growth, which can be possible into these markets. We are pretty aggressive internally. We have verticalized this whole businesses into the separate CEOs and most of our CEOs come and interact with the analysts every quarter on the results. So there are significant initiatives, which we have done as such. Definitely, 1 point, Mr. Porinju, as regard the names, the rationality of the names, we are internally working and once it is approved by the Board, we will definitely come back to you. So what I can tell here is that this is a wonderful story as such. We are now a very unique company, having 3 distinct go-to-market channels, not many people have. And I'm not saying that these 3 distinct market channels are very small channels. In each, we do almost 10,000-plus retail touch points. With the similar -- each channel contributing more than annual sale of INR 400 crores plus whether it be pipes, consumers or sanitary ware faucets is already higher. So which is not significant. Now we have a base on which you can grow, build the businesses, build sales, build EBITDA and also the bottom line. So thank you for all the support, Mr. Porinju. I hope I would have been able to answer your question.

The next question is from the line of Sunny Gosar from MK Ventures.

I have a couple of questions. The first 1 being, basically, if we look at HSIL Building Products division performance in Q2 FY '22, we had a revenue of about INR 230 crores INR 240 crores and an EBITDA of INR 9 crores, which I understand would broadly translate into EBITDA of about INR 15 crores to INR 17-odd crores. So the question I had is what is the scope for revenue increase on the current plant that we have acquired? And basically, incrementally, what's the kind of peak EBITDA that can be done on a, say, a quarterly or an annual basis from the current set of facilities that we have acquired?

Thanks, Sunny. So I think if you just simply multiply to -- we had in quarter 2, a sale of around INR 234 crores, INR 235 crores. We feel that based on the current capacities which we have, we can simply do INR 1,100 crores to INR 1,200 crores of sales based on the current market conditions based on the current pricing of input materials. As Naveen also spoke in the initial remarks that the pipe plant, which right now has a capacity of 35,000 tonnes per annum is right now under expansion. And as we acquire these facilities, we feel that by 31st March 2022, a major part of this expansion would be completed, and then we will have an incremental capacity. Any incremental cost after 30th of September 2021, let us say, around INR 50 crores, we may have to pay more because our valuations were primarily based on the capital working progress status as on 30th September 2021. We feel that it can incrementally go from here to easily to a level of INR 1,400 crores to INR 1,450 crores with the incremental pipe capacity coming into the play.

Right. And that would what translate into about 7%, 8% EBITDA margin at that level of revenue?

Yes. A slight improvement in EBITDA margins will happen because some of the factory costs, which are fixed cost get a portion on to be higher. So we feel that as the capacity utilization increases around, we can have 7% to 8% margins on this.

Got it. And the second part of my question is basically, out of this INR 630 crores or whatever, INR 680 crores that you may end up paying by March '22, what would be the portion of assets acquired? And what would be the portion of working capital acquired? Because I want to understand what's the depreciation impact going forward? And basically, what would be the -- also the borrowing cost on the debt that we will end up taking up? So will this be like EPS accretive immediately? Or will this basically get EPS accretive by FY '24?

So I'll answer 2 questions. So as a part of the whole deal, as Naveen also said, that we are buying certain parcels of land. And these parcels of land in the books of HSIL were at old rate, but we had to now pay the current market prices for this. The value of these lands -- land parcels, which we have acquired that range is in the level of around INR 70 crores, INR 80 crores. Balance will be there, which in the books of HSIL was at around, let's say, INR 15 crores. So incrementally, there has been a value addition on terms of the valuation of the land. So overall depreciation broadly will remain as in line with HSIL other than the buildings which we are acquiring. And we feel that maybe there will be 1 year of pressure on the bottom line. But immediately after that, with all the profits which we'll earn, as we said, most of this will get deleveraged over next 3, 4 years. It will be value-creative the bottom line also.

Right. And basically, what would be the borrowing cost that we are looking at?

Right now, in HSIL, most of our long-term loans are at -- in a range of around 6.5%, working capital in the range of 5% to 5.5%. And similar level of interest rates, we feel that Brilloca will also fund, the long-term loans at around 6.5% and working capital cheaper. So 1 more question. On the INR 630 crores, so there is a net working capital of odd INR 180 crores which is coming along as such. And over a period of time, we'll optimize this working capital also because right now, we have 2 different organization maintaining 2 different working capitals. So we'll optimize that also, and with that will also bring efficiency over a period of time.

The next question is from the line of Vineet Gala from Monarch Networth.

Sit, at the outset, congratulations on a good transaction. Sir, so post transaction, as we have articulated the margins in the building products should directionally go up, right?

Yes.

So on this, how do you see your long-term guidance that is on FY '25 numbers on the margin front, which was previously at 14% to 16%. So how do you go about that particular guidance?

So with this acquisition, the incremental sales will not be much, although with some efficiencies, faster turnaround, some growth impact will be there. But if we just, for the time being, ignore the growth impact out of this we feel that immediate impact in the coming quarters post acquisition, incrementally 2.5%, 3% increase in the EBITDA margins, which should further grow higher to a level of around 4.5% to 5% with all the production efficiencies, which start coming at faster utilization of the resources of the factories. So we feel that unlocking of the EBITDA value in next 4, 5 years fully should be in a range of 4.5%, 5% around.

Sir, so that would be over and above our previous guidance of 14% to 16-odd percent?

In the previous guidance, we had given that overall incremental margins -- those margins were more towards efficiency. Those margins were more towards better utilization of operating leverage. So we had given guidance that we should be able to incrementally earn 3% to 4% over next 3, 4 years. So that will be over and above -- that guidance continues as such. Vis-à-vis -- what I'm talking here is more specific to the acquisition we have made here.

Got it. Sir, and also, if you can articulate the CapEx needs for SHIL over the next 3 years, given that the capacities that you have acquired, especially for the faucets and pipe division, they're already at a higher utilization. So can you quantify the CapEx amount that you are expected to do over the next 2 to 3 years?

So if you see a normal maintenance CapEx of such a level of plant, should be in the range of around INR 25 crores to INR 35 crores, wherein we keep de-bottlenecking, adding new machineries. But we feel that in next 12 to 18 months, as the growth in the pipe is substantial, and we are the fastest growing in the pipe today in India. We may have to put some small pipe plants across the country. Today, we are more focused in the state of Telangana. We do almost 1,100-plus SKUs, which is very, very high in the market, and that's one of the reasons we have been very successful. But pipes being a volumetric business has a limitation of travel. So we may consider over a period of time, putting up regional solo pipe plants, so which can add value to the -- our penetration into the local markets by selling higher pipes along with the fittings. So that's 1 thought. So we feel that once this whole plan comes, our average with the incremental capacity de-bottlenecking and everything should be in a range of from INR 70 crores to INR 90 crores per annum as such.

So INR 70 crores to INR 90 crores is ex the maintenance CapEx of INR 25 crores, so.

If you only consider maintenance, it should be INR 25 crores to INR 35 crores. But if you were to do an incremental capacity whenever we do, we feel that it should be in the range of INR 70 crores to INR 90 crores.

Okay. Sir, and also this includes the water heater. Any investments in the water heater JV that we are expected to do over next 2 to 3 years?

So water heater is a separate, this call, we would like to more focus on the building products to be very frank. We can take your question in the post results. As regards to water heaters, the investments in that water heater factory is already disclosed in the last call. I would request if you can refer to those transcripts, you'll have all your answers there, because that's a part of a JV, not a part of Brilloca.

The next question is from [ Pralok from Aditya Birla Sun Life Insurance ].

I'm not sure whether you guys mentioned about what kind of funding you guys will do with both the equity and debt? And what's the repayment plan that you guys intend to do for?

So I think we spoke in the beginning, I don't know. So we have today a cash reserve of -- Brilloca today is debt free. So we are not using any debt. And in fact, we have a surplus cash, which is odd INR 60 crores today. We feel that this transaction will complete by around March '22, we'll have incrementally INR 40 crores, INR 50 crores surplus cash also and with the incremental margins, which we do. These are rough figures. But we feel that we'll have to contract a debt, incremental debt of around INR 550 crores to INR 560 crores. And we also feel that a major part of this debt may be 3/4 of this debt will get paid off in next 3 to 4 years itself, which we -- the debt we contract for this acquisition with the profits which we earn. And so at that particular time, all these benefits and other things will be highly value accretive even on the bottom line.

Okay. And just 3 to 4 years, so I think in 1 of the response you also mentioned that there is some INR 180 crores of working capital and so is that like mainly -- is there an inventory layer mainly because I believe you guys are [indiscernible] from them.

I just forget to mention here. So when I say we are debt free, it means that we are not using even a long-term loan and not even working capital loan. But based on the inventories today, we can borrow from our -- with all the profits which we earned in the last 1.5 years or 2 years. We have parked the entire internal accruals on in our borrowing by way of paying off the short-term debt and the long-term debt. But we can definitely use this. So actual long-term loans would be ranging between INR 350 crores to INR 375 crores. Balance, as I told you, we are getting around INR 180 crore, INR 190 crores of working capital also as a part of the deal. So there will be an incremental borrowing based on that. And then balance, if any shortfall is there, we have a surplus working capital limits, which we can utilize to pay off the entire transaction.

And what's the inventory that the acquired entity has as we speak today?

So the total inventory value as on 30th September is odd INR 260 crores, which includes inventories relating to the CPVC, which we import into HSIL, the plastics in there and then inventories of brass inventories of other elements, which are there.

Okay. And so is it like fair to understand or assess that by, let's say, in 3 years out, FY '23, '24, '25, you will probably pay INR 100 crores each in the debt that will raise because of this actuation. That's first point. And second is, what kind of capacities or space that we have in the acquired plants in case you want to expand further by minimum brownfield or maybe incrementally carefully lower?

So like, I'll go line by line, faucets very recently, HSIL did capacity expansion around 1.5 years back. When they increased their 2.5 million pieces capacity to 3.7 million pieces. So that capacity. Right now, we are using at around 65%, 70%, 65% around. On pipes, we are capacity 35,000 tonnes, but we are at almost 85% -- 80%, 85% capacity utilization. So there is a margin and -- but we have been incremental capacity also. Faucets, we are touching almost 85% capacity, 85% to 87% capacity utilization -- on the sanitary ware sorry, not on the faucet. There where we have to see -- we have to make additional investments within the factories. Or we may look out maybe 2 years, 1 year down the line that we put up a plant in a very different distinct locations so that we start capturing that local market also for that particular factory.

Sure. So -- okay. And incrementally, would you like to kind of -- like you mentioned in 1 of the responses INR 70 crores to INR 90 crores of CapEx for de-bottlenecking, what is the kind of revenue generation that incremental de-bottlenecking can generate for you guys?

So most of this CapEx is -- if you see, they can yield much higher turnover, especially on the pipes, if you see the turnover can be much higher because the switch on this is much higher. So incrementally, you can easily assume we can do 1.5 to 2x the value of the investment we do in terms of the sales.

Okay. And lastly, if I may, is it like fair to conclude that incrementally, now in order to grow, we will probably need to invest to either manufacturing or I mean the whole -- from outsourcing manufacturing, what kind of mix do we expect in the next 2 years now?

So if you see, we were doing this outsourcing mix of 70-30 on sanitary ware pretty long time. And we would like to continue. Only thing is that over a period of time, we would like to reduce our reliance on Chinese market for import, if any, we were doing and try to do this internally. And internally means within India. So we may go for local development of vendors over a period of time. But outsourcing for sanitary ware faucets will continue. Pipe will be more or less 100%, 98%, 99% in-house because most of the molds, which are there are in-house for fittings and nobody else has those molds. And pipes also would like to do of our own. So I think outsourcing will be more focused on sanitary ware faucets between 30% to 40%.

The next question is from the line of Deepak Poddar from Sapphire Capital.

Sir, most of my queries have been answered. Just a couple of things I wanted. Is there any kind of goodwill that will come on the balance sheet because of this acquisition? And if that's so, how much would that be?

So Hindware brand, if you see is already part of Brilloca. So what we have acquired as much as a slump sale of land and buildings and plant and machinery. There can be a very minimal amount because as per the accounting standard, since it a slump sale, we'll have to account for each plant and machinery based on the fair valuation of each plant and machinery as on date. So there may be a very minimal -- we have not bought any goodwill as such. All the track record of the manufacturing is already coming along with the deal. But we may record maybe INR 1 crores to INR 5 crores of goodwill based on the final effect, the line by line valuation once we do this as on the closing date.

Okay. Sir, so that's very minimal. And what's the absolute level of depreciation? You did mention that it would be similar to in line with what it's being seen in HSIL. So what will be the depreciation in our books for this acquisition?

If you see the level of depreciation, which was there in HSIL manufacturing was odd INR 24 crores per annum. Since we are not taking some buildings along with it, so we feel or INR 16 crores, INR 17 crores of depreciation would flow in here as such.

INR 16 crores to INR 17 crores of depreciation. Okay, yes, yes, that's about it. All the very best.

These are approximate numbers, but it will finally be dependent on the final valuations which we do on the allocation of the slump sale value.

The next question is from the line of Varun Dadani (sic) [ Varun Pattani ] from Quant Mutual Fund.

Actually, missed the starting part of the conversation because of closing market hours. So I don't know my question has been already answered, but I'll just ask. So can you tell me how much was the debt of the BPD division within HSIL?

So actually, the allocation of debt internally, we do on an HO basis in HSIL as such. So the money which we pay from here will be utilized by them to pay off their existing term loans as such because there we have a concept of HO allocation of debt as such.

Okay, understood. So entire INR 1,100 crores, INR 1,200 crores pertains to HSIL and out of this amount, part of it would be repaid?

Yes, 6 -- they have a total debt, including short-term, long-term 1,100 crores. So INR 630 crores will be taken off [indiscernible].

Okay. Okay. And so what was the basis of the valuation. Basically, I understand that it was a slump sale, but then there would be some bases. So some color on that, how was the valuation done?

So Brilloca hired Ernst & Young to do the valuation. And we had 2 valuers and HSIL had appointed Deloitte. So both had Big 4 on the either side. And both of the organization, they have focused on valuations linked to the DCF more. In fact, the weightage is on the DCF rather than the asset valuation and valuations are not far off. And the value of INR 630 crores is within the range of both the valuations, which has been based on the negotiation between the 2 organizations.

The next question is from the line of Abhishek Vora from Ambit Asset Management.

My first question is on...

Excuse me, sir I'm so sorry to interrupt, but your audio is not clearly audible sir.

Your voice is not clear, please.

Yes. Am I audible now?