Astral Limited (ASTRAL) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Astral Limited Q3 FY '24 Earnings Conference Call hosted by Investec Capital Services. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Ritesh Shah, Head mid-market coverage and ESG at Investec India. Thank you, and over to you, sir.

Thank you, Seema. Welcome all to Astral's Q3 FY '24 Conference Call. We have with us from the management, Mr. Sandeep Engineer, Chairman and Managing Director; Mr. Kairav Engineer, Executive Director; and Mr. Hiranand Savlani, Executive Director and Chief Financial Officer. I request the management to start with initial remarks, post which we can have a Q&A please. Over to you, sir.

Thank you, Ritesh. Thanks, everyone, for joining the earnings call of Q3 FY '24. As we had communicated, in Q3 the demand scenario is very robust, and we are able to deliver 15% volume growth in Q3 and 24% volume growth in first 9 months of FY '24 in Plumbing business. As you are very well aware, the market situation still continues to be volatile as far as pricing is concerned and particularly a downward polymer and chemical pricing situation within which we have to continuously work and deliver numbers. During Q3, also the PVC price was down by almost 7% and CPVC prices were down by 5%, which normally affects the margin and the channel also is continuously destocking the inventory in such conditions. But in spite of that, I am very happy to share that with all these challenges and volatility, we at Astral, are always trying to mitigate these challenges and deliver consistent performance within our guided numbers and guided ranges. The results are in front of you that once again, in Plumbing business, we are able to deliver EBITDA margin of 16% in Q3 and 17% on 9-month basis against our guidance of 15% to 17% EBITDA margin. The margin is often charging a few -- one of the expense is a loss of Bathware business, which Hiranand Bhai will explain in his remarks and the expense incurred towards the celebration of 25 years of the company's completion of 25 years and the event which we celebrated for the company and its staff at Jaipur. Pipe business, as communicated in last con call due to robust demand in pipe vertical, company has decided to aggressively move into expansion -- expanding its capacity. As communicated earlier, we're putting 3 new plants and all are going as per schedule. Guwahati plant, 22,000 metric tonnes plant already started production of water tank last quarter. And from the month of January, we have already rolled out our pipes so that we can -- so we are expecting some sales in the last quarter from this plant. Hyderabad plant, 70,000 metric tonnes and Kanpur plant 60,000 metric tonnes. Expansion activities are going on in these 2 locations at full swing. Hyderabad first phase of construction is almost getting over by March. And in Q1, we'll be starting putting machines and by Q2 end, June commercial production will start. Kanpur plant layout is in progress and shortly the construction work will be started. During the first 9 months, we have increased the capacity from 2.9 lakh metric tonnes to 3.29 lakh metric tonnes, 30,000 metric tonnes increase in the capacity. As a part of our commitment to the society and to our customers, we are happy to share that we have recently received green product certification for our Astral CPVC Pro and Astral Greenpro products from CII Green Products and Service Council. Adhesives and Sealants. Our state-of-art-plant at Dahej is in operation and giving good results in terms of energy savings, cost reductions, what we originally planned and what has been reflected in numbers is going to be exactly seen in the coming quarters after 1 or 2 quarters as the plant gets fully functional at the scale and the inventories of different plants, which has already been there and made at the older locations is sold in the market. Our Indian Adhesive operation has given excellent growth in Q3 with top line growth of 17% and on a 9-month basis, 15% in value terms. In volume terms, it is much higher due to fall of chemical prices. Even EBITDA for the quarter was very healthy at 16.5% in Q3 and on a 9-month basis, it was 16%. Our U.K. Adhesive top line has grown by 9% in value terms. And in volume terms, it is growing much faster. But in EBITDA terms, it has given a negative 3% EBITDA in last quarter, mainly due to inventory loss and heavy ForEx loss due to the fluctuation of GBP and U.S. dollars. If we remove that, the U.K. EBITDA was on a higher single-digit number. This also will be explained in detail by Hiranand Bhai in his remarks. On a 9-month basis, EBITDA was 5.3% and top line growth was 10% at our U.K. plant -- U.K., U.S. operation. Paint business. In Paint business, we're getting ourselves ready with lots of new products at the plant and various systems and MIS in the back office. At the same time, we are creating a team to launch Astral brand in few states from Q1. So in Q1, we are coming out with our launch of Astral brand products, and we will be addressing a few markets at the Phase 1 of it and slowly and steadily increasing the reach to different markets and almost completing our reach to the entire country in coming 1 to 2 years with the new brands, new products and new complete range of product lines. Due to this, we are confident that in the Q1 next year, we will see a substantial improvement in numbers and presence of brand Astral in market. We are in the last leg of production, which will be done in Q4 post that we are forcing a continuous journey, of course, and the Paint business has always been in a positive EBITDA numbers and always whatever the sales have been happening and happened is always in a positive EBITDA margin. Bathware, we are continuously seeing quarter-on-quarter improvement in this business. And now slowly, we are seeing the product is visible in the market. Also, our branding team has started working on this segment, and we first time showcased our product in ACETECH with exclusive booth for faucets and sanitary ware product lines. We are taking part in various exhibitions. We are of the view that it will convert in numbers in coming time. Compared to last quarter sale of INR 17 crores, this quarter the Q3 sales was INR 20 crores plus, which is very healthy and continuously improving. Since this is a new segment for us, we don't want to rush and we want to grow slowly, steadily with steady and consistent growth. Now I hand over to Mr. Hiranand Bhai, our ED and CFO for his opening remarks on numbers and then myself, Hiranand Bhai and Kairav will answer all your questions. And once again, I thank you all for joining and trusting Astral.

Thank you, everyone, for joining this earnings call for Q3. Numbers are in front of you, so I'm not discussing any of the number, but whatever the key highlights for the quarter, I would discuss with you. FY '24 started with a very good note and momentum will still continue. We all know last year, Q3 base was very high due to continuous price rise of PVC and CPVC due to the loss of that restocking demand was there. In spite of higher base, current year on a higher base also, we are able to grow 15% in volume and on a 9-month basis 24% in volume. Our margin front also, we have maintained our guidance of 16%, 17% in the Pipe business. On a 9-month basis, our margins are 17% plus. As you all know that last quarter, that is Q4 has always delivered a good volume and good margin for our company, and we are expecting to repeat the same in the current Q4 also. So if we consider that we may surpass what we have guided in our guidance. This quarter, few items were one-off, which I wanted to highlight. The INR 11 crores we spent on the Jaipur event, that is our 25th anniversary and INR 4 crores loss on the Bathware division because we've spent some money on the branding activity in this quarter because of that INR 4 crore loss is there. And thirdly, the inventory loss of PVC and CPVC, it is difficult to quantify, but it should be in the range of somewhere around INR 20 crores. So in spite of all this INR 35 crores of one-off item, we are able to deliver a very, very healthy margin. Last 3 quarters, continuously, we are seeing pressure on reduction in polymer and we are incurring the losses. But in spite of that, we are able to maintain 17% healthy margin. Q4 will be last quarter where we are seeing there will be a minor reduction in the polymer price. But Q1 onwards, that will be the bottom and Q1 onwards, we will not be having any polymer pressure and that will be the bottom. And from there, we are seeing upward journey of polymer. Our value-added products are giving a fantastic result. Because of that, in spite of pressure on the polymer price, you will see that we have maintained our margin, and we've maintained our realization also. We have never ever seen such pressure in polymer price in last so many years, which we are seeing since last 3 quarters. All our new products in Plumbing, whether it is valve, water tank, Silencio, DrainPro, now even fire sprinkler, all are contributing a good number, and that is reflected in the margins. Because of competitive environment, we will not be able to give you the number of each product, but we can confidently say that all these new products are giving us a very, very healthy growth in the Q3 and will continue in the coming time also. Bathware as per the plan, we are going steadily and consistently. As Sandeep Bhai said, being a new product, we don't want to rush, but we are growing quarterly, quarter-on-quarter, and you will see a good number in the coming time. Now INR 20 crore run rate quarterly has already established. So we are confident that next year, we will be at least triple-digit number on a full year basis. Adhesive division in India is doing excellent progress. And as communicated earlier, we are going on as per guidance of 15% plus revenue growth and margins also as we guided 14%, 15%, we will be touching to that, even will be higher than that also. The first 9 months India operation has already delivered 16%. So we have surpassed the guidance of 14%, 15% for India operation. The only little bit hiccup came in the U.K. Adhesive, which is a challenging year due to drop in the silicon price, where our company's highest weightage is there and maximum contribution is coming. So because of that drop, the inventory losses and particularly in the Q3, we have incurred a 2.3% negative EBITDA because of this inventory losses and there also ForEx losses, we are accounting into the margin, so that has also contributed. And that is the reason it is a negative EBITDA of 2.4%. But still, we've maintained 9% growth in the top line, and we are of the view that we will be coming out from these problems from the Q4 onwards. Nine months basis our EBITDA was 5.35% in the U.K. operation. But on a full year basis, we are expecting we will improve a lot in Q4 numbers. Paint has delivered a revenue of INR 47 crores in this quarter and with an EBITDA of 18.5%, we are now almost on a verge of correction, and we will see a sizable improvement in number from Q1 onwards, that is from next year first quarter. As we are planning to introduce a lot of new products and with Astral brand launch in few states -- additional few states, which will give us a good number, and we will -- quarter-on-quarter, we'll keep updating you. Last but not least, business sentiment on ground is very, very robust and we are fully geared up with the capacity in all verticals, and we will definitely deliver a good number in the coming time. You can clearly see we are gaining market share in both our flagship vertical, that is Pipes and Adhesives. And once our 2 new plants that is in Kanpur and Hyderabad become operational, we will be gaining good market share in Pipe vertical in that particular geography. Further, I can add that we had given a guidance of -- in FY '21, first time to double our revenue in the next 5 years. That was our first long-term guidance. And I'm very happy to share that we are going much ahead of what we have guided. At the same time, we are working for new products in all the verticals. So time will come, we will unlock one by one, and that is going to give us an additional booster to our growth. With this, I want to thank everyone for -- once again for joining this con call and opening the floor for Q&A. Over to moderator.

[Operator Instructions] We take the first question from the line of Dhananjai Bagrodia from ASK.

Congratulations sir on a fantastic results and volume growth. For the number, company was strong and...

Can you speak a little loudly? We are unable to hear you.

Yes. Could you hear me now?

Yes, yes. Better.

Congratulations on a great set of results again on your volume part. For Plumbing, just wanted to understand what would be a fair OP per tonne we should be taking to the Plumbing business going ahead because that's been a little volatile even after accounting of inventory loss and gain?

I think we have multiple times communicated that the per KG understanding will be very difficult for us also and you guys also. So we are always guiding the EBITDA percentage because so many polymers we are dealing today, it is very, very difficult to maintain the per KG EBITDA. So we always request every analyst that please take the number with a percentage EBITDA rather than on a per KG. Because if you see last year, the Q4 is already loaded with the higher CPVC and the value-added products. They shoot up like anything. And first half is always higher loaded with the PVC products and the other products. So in that case, maintaining per KG EBITDA will always be a challenging, and it will always going to be a volatile. So please look at the number with the percentage EBITDA rather than per KG EBITDA.

Okay. And what would that number be guidance going ahead? Just a rough ballpark for percentage...

So we have guided 16% to 17% Plumbing EBITDA. Right now, we are working on a higher side and we will be closing the full year on higher than 17% because Q4 is always robust in our industry. And this Adhesive and Sealant business, we have guided 14%, 15% EBITDA. We are at 13.8% right now on 9-month basis, but we are confident that we will be moving between 14% to 15% EBITDA on a full year basis.

And both Bathware and Paint, any -- I mean, they're relatively small right now. So would there be any like guidance of what could be like 2 years, 3 year ahead in terms of numbers? Or is it too early to discuss this right now?

I think it will be too early to discuss because still the base is very low and Paint also, we are coming up with a lot of new products and Astral brand also. So once we will launch this product in the market, after working a couple of quarters, we will be able to guide you that this is the trajectory where we want to grow. But I think it will be too early at this stage. But definitely, our expectations are very high from that division. Bathware, I think slowly and gradually, every quarter, run rate is growing. So already this quarter, INR 20 crores run rate is there. That's why I say at least INR 100 crores plus we will be doing next year. But again, it is a very low base. So very, very difficult to predict at this stage. But again, there also our expectations are good in terms of number. But give us a few more quarters. Once we will create a reach and make a certain base, then after, I think giving guidance will be the right way to do.

Okay. And sir, lastly, what would be your CapEx number for '25 then -- '24, '25?

'24, '25, we will be somewhere around INR 250 crores to INR 300 crores. Mainly in the Pipe because other divisions, we've almost done the CapEx.

The next question is from the line of Rahul Agarwal from InCred Equities.

Sir, 3 questions. Firstly, on Pipes and Adhesives. You obviously mentioned in terms of what margins you're looking for, which are more sustainable in long term. Just on the growth rate on volumes and revenue for either segments or Pipes and Adhesives, some outlook will help for fourth quarter and FY '25, '26 based on your capacity increases, both in Plumbing as well as Adhesives, just help with some growth rates, that would be helpful. That's the first question.

So I think this year, we have already given the guidance of 20% plus volume and 9-month basis already, we are on 24%. So higher probability that we can cross 20% also. But our guidance is definitely we have given 20% volume, which we revised last quarter. And as far as long-term guidance is concerned, I think looking to the current situation on the ground, 15%-plus volume should not be a challenge.

And for Adhesives?

Adhesive also we have guided 15% to 20% kind of run rate.

Okay. Get it. On the U.K. business for Adhesive, could you just help me with the 3Q margin. You said 2.5% negative. Is that correct?

Yes, yes. For this quarter, INR 81 crore was the top line. Again, that is INR 2.4 crore was the loss, so roughly about 3% negative.

Okay. Got it. And last question on the Dahej plant. Is it fully done with -- I mean, what is the status there?

So Dahej, yes, we have completed that plant, but the synergy will come in the coming quarter because once the volume will start picking up. You can see in the number also this quarter itself, our margins are 16%. So synergy has already started working in our favor. But what we've originally planned, I think it will take another one year or so, once we'll reach at a certain level of scale. So I think we are very happy. And in coming quarters, you will see further improvement.

And what is the final CapEx for the plant? Because my sense was about INR 1,000 crores of top line we expect from whatever machines we have put as of now. Could you help me with the final CapEx number? And does that include the land cost as well?

I think we have already incurred INR 200 crore plus -- INR 200 something on this plant.

There's no land included here, right?

Yes, including land.

Okay. What will be the land cost?

Land cost I think -- in December because we have bought -- the land was taken around 10 years back so, but will be negligeable. For some other chemical business. So land cost is not so high here. If my memory is right, it will be somewhere around originally cost of INR 5 crores, INR 6 crores. And when we transfer to this company, that time it was around INR 7 crores, INR 8 crores.

Got it, sir. No, why I was asking was just to calculate that what could be a revenue -- the asset turn for the business, basically? But anyway, I get it, I get the answer. Thank you so much. All the best.

But in that plant, we've kept the provision for the Paint also. Remember, it is not only for the Adhesive that we've kept a certain space for that also. So in future, if required, we can manufacture Paint also from the Dahej.

And also, we have a massive plant of our solvent cement and some other chemistries. We have enough land bank still with us at Dahej plant.

The next question is from the line of Sneha Talreja from Nuvama.

Sir, thank you so much for the opportunity and congrats on strong volumes. Just 2 questions from my end. I think in your opening remarks, you mentioned that prices -- raw material prices are expected to bottom out in Q1. Does that mean currently your destocking is on and is expected to continue for Q4?

No, it will bottom out probably in this quarter. In Q1, it will stabilize or start moving up. And one more thing, ma'am. It won't be a huge bottom out this quarter, it is already at a very comfortable level. So it will be in the range of...

Plus with this Israel war, there has been a Red Sea blockade by Yemen. So that is also causing some logistical issues with regards to raw materials. So maybe some polymer and chemical prices could also see an upward tick depending on geopolitical factors. So we don't know what is the impact and when it can happen, but it seems likely that a small impact may come. We anticipate to start going upward in near term also.

Right. So the idea was in anticipation of the same, has channels started picking up inventory compared to last quarter?

Channel is picking up inventory, there has been no real channel destocking. It is very evident in our volume numbers also. As you know, Astral has a healthy retail and project mix, we are not only a project company. So if the channel was destocking then these volume numbers would not have been possible.

Understood. That was helpful. Sir, secondly, also on your Paint, I just wanted to seek some guidance. Where are we right now? And what's the path ahead? When are we launching it at the pan-India level? Some guidance here would be helpful.

See, we -- when we bought this company, we needed some systematic corrections, strategic corrections, safety measures, so bringing in proper systems. So all these things have been done. Now they had a market channel of their brand in South, which also we are strengthening in existence. And there, the sales numbers have started coming in a healthy manner. There were collection cycles, which were disrupted, which we have corrected. We have made a few products, not few many products, which are made now and tested to be launched. So we have done a lot of work here and our strategy launch of products in the brand name of Astral umbrella is almost getting ready. And in Q1, we'll be going ahead with this launch also in a big way. But we will be moving from market to market. We will get at least 2 years to reach pan-India level. We don't want to mess up, rush and say, we are pan-India. We'll put 1 zone, 3, 4 states. See that everything is properly working where reach is there. We have dealers there. We are delivering proper products at time and then move to another zone, then another zone. And so we want to go step-wise with correct measures, and you can see the way Astral leading the Adhesive business. And our way of working, our way of tackling a business heads reflects our capability from Adhesive business and the way we are doing it. The good thing is that in Adhesive as we have very good manpower at senior level and junior level. In Paints also, we got a good manpower. And these manpowers are already working with us in the sync and preparing strategies to move in the market. And we'll be always communicating things.

And I can add that you will be seeing that our employee costs are going up. That is mainly because of this new vertical, we are adding the good people with us. We are increasing our management bandwith, not only the new vertical, even existing vertical also, we are adding the senior people. So because of that, our manpower cost is also going up. But looking to the long-term picture, which we are foreseeing in the next 3 to 5 years, I think this cost right now looks higher. But once will be absorbed with the growth, I think it will come down to the normal level, but that is going to take the company to the next level. So we are incurring intentionally the higher cost, considering the future growth in mind.

Next question is from the line of Praveen Sahay from Prabhudas Lilladher.

And many congratulations on good set of numbers. So sir, first question is related to the volume growth guidance. As you have done better than that 20% of growth and now guiding for a similar number, even though there is a also a discussion related to the channel picking up inventory demand is very strong, and your peers are also giving a guidance of 30%, 35% of growth for the fourth quarter, but you are giving on the lower side. Why is it so?

We have not given for the reverse side. We had earlier gave the guidance for the volume at 15% at the start of the year, which was then revised to 20%. And at 9-month basis, we are at 24%, 25%. And even this quarter has started on a positive note and is making us for the 9-year average, so we can also deliver higher than 20% at the end of Q4. But we don't want to get over optimistic because we don't know we are sitting in a commodity industry, we don't know how the pricing of the polymers will behave. The general sentiment sometimes change overnight, which is very hard to predict. And then what happens is that even Holi falls towards the end of month of March. So we don't know -- plus there is an election period also being talked about in the month of April and May. So we don't know what all sectors will contribute to the building material industry as a whole and how this will affect our volumes. So we are giving a little bit of a conservative guidance, but we will, as always, try to beat our guidance in this quarter also.

And Praveen, I can tell you, it is not that we are fixed to 20%. We are ready for the higher growth also. And even in the month of January also, we've maintained 20%-plus run rate. So nothing to worry on the volume, but don't go by only guidance of the management for a particular quarter. Look at the bigger picture for next 3 to 5 years.

Yes, sir. Got it. The second question is related to the Gem Paints. How much is the revenue for this quarter related to Gem Paints?

This quarter is INR 47 crores with a margin of 18.5% EBITDA.

Yes. So even if I look at the top line numbers for Paint is quite stagnant, but the margin profile sequentially has improved. So is there anything we have done so far? Or we yet to do?

No. Margin has naturally improved because this chemical price has substantially come down because all are crude derivative. So because of that, the margin has improved. But next year onwards, we are going to go aggressively in the market. So may not be maintained this 19%, 20% margin, which we have done in 9-month. 9-month margin 19.38%. So we'll not be like that margin because there is a lot of branding costs and everything will be there. And lot of marketing efforts will be there because now -- our focus will be going for the growth in the volumes. But yes, this year, because of benefit of the raw material side, we are in a good shape.

And second, the stagnancy which you are seeing is there because as Astral came in and ran the unit, we did a lot of correction on the credit cycles and all. So now whatever the sale is happening is with the maintaining of the proper cycles of payments. It's not that somebody has a payment and he wants an order and then go and supply and then see everything is falling in the discipline how Astral works for the other segments also.

I think it is recalling all this Adhesive story when we -- in 2014, we acquired Adhesive also, a couple of years were like that only because we have to correct a lot of systems and that is exactly happening right now. But we are looking for the long-term benefit so for that we are sacrificing right now short-term growth. But we are confident that once these systems will be on the place then growth will come auto rather than depending on a human, we are more depending on the systems. So we are creating right now system. That's why short-term pain is there, but we are confident that long term, it is going to pay us.

And as I told in the opening remarks, we have completed everything. A few things will be in line in this quarter, and we have already planned the products and things, designs, communication to market strategies of launch, branding strategies and which will all be unveiled with the new product line, the new brands and things in the first quarter of Q1 next fiscal year.

Okay. And then lastly, sir, on the Sealant, the U.K. business. How is the situation now? Like how is -- because we had incurred losses because of silicon prices or GBP-USD fluctuations. How is the -- because...

There is no problem of any business growth. This is the whole -- after our acquisition in the whole of the history, this is the first quarter, this has happened, and this is mainly due to the steep fall of silicon prices, nothing that inventory losses. And if we take out the currency loss, it is not a loss, but we are accounting it in the margin. So there's nothing to worry about any situation. There's nothing alarming for one quarter, whatever it is, we have put in forth as -- with you, but it is not alarming situation at all. And things at 9%, the company is growing there.

Q4, we are expecting a positive EBITDA, close to about 7%, 8%. That's kind of -- they have worked out the budget, that they will work in such a way that they will deliver 7%, 8% minimum EBITDA in the last quarter. So absolutely nothing to worry as Sandeep Bhai rightly said. This year also, we are growing, and the growth is also not a -- you see a country like U.K., where the economy is not growing still, this company is growing in the double digits. So what else we can expect from that country. So we are very happy with the performance. This is a one-off where the $8.5 silicone has come down to $2.3. So naturally, that kind of situation has to be created, and inventory losses will be there in the fiscal. But I think now everything is said and done. So we will be coming back next year, we are going to be a double-digit growth in top line as well as we are expecting double-digit EBITDA margin also.

And with even such a huge steep fall of the raw material, the top line has grown by 9%. So you can imagine the volume growth is even much better.

Yes. Volume growth was very, very on a higher side of double digit, 18%, 19% kind of.

The next question is the line of Achal Lohade from JM Financial.

Just a quick question with respect to CPVC price. You mentioned something in the opening remarks, the price was down Q-o-Q some 5%. So just wanted to clarify, was that about CPVC or PVC you were talking about?

So CPVC, it was down by 5% in last quarter, and PVC was down by 7% in last quarter.

Understood. And what was the price action in 2Q for both CPVC and PVC on a Q-o-Q basis, sir?

So CPVC, every company to company price will be different. So very, very difficult to predict what will be the price of individual company because there is no benchmark. As far as the PVC is concerned, yes, PVC prices are published by Reliance. So there, we can say it was somewhere around INR 85.5 in the beginning of the quarter and at the end of the quarter, it was INR 79 point something. So INR 6 net basis drop was there. So in percentage term, it is worked out to be 7%. But CPVC, I think every supplier has a different price. There is no based upon price where we can say. We have worked out our average price. And based on that, we have calculated 5%.

Fair point, sir. Because another peer actually mentioned about a 10% price correction in 2Q, and no -- and prices were stable in 3Q. So I was just curious the extent of price drop, is it similar 10% over 2 quarters? Or is it lower than -- for us?

No, no, no. For us, Q3, there was a down in CPVC also.

We take the next question from the line of Ritesh Shah from Investec Capital.

Couple of questions. Sir, first is on the Bathware side. Can you indicate how far we are on the number of SKUs, number of stores? And any time line by when we'll stop bleeding at EBITDA level over the years? And if you want to highlight anything on the management changes, given we had senior level departure recently?

One is Bathware, the display is continuously growing. But only growing display is not important. We are now strategically going with 2 markets. One is retail base market. We have added one more product line here, which is on the lower end in the pricing, which was also to be addressed, and we have the top range also with us. So we have completed complete range with the competitors offer. And we have a complete range of products and a few new designs and products will keep coming as years pass, as the months pass. So things are very positive. Now team wise, we have a senior person coming. I cannot disclose the name or the -- for the marketing and sales, a very experienced person is joining shortly and has a rich experience of the product line for most -- almost 25 years plus. And he will add a lot of value on the growth, product segment, strategies and going to the market. Now coming to the second thing, we've already started branding. You can see Astral partner at various airports and various places and also in the exhibition, ACETECH was a flagship exhibition of Mumbai and where we had only Bathware display booth. So similar booths are coming up at various exhibitions. So the Bathware is steadily growing. Acceptance is very good. We don't push and sell the product, whatever the sales secondary we give. And a lot of projects are -- that we've approved and part supplies have started. We have around close to INR 60 crores to INR 90 crores worth of projects lined up for buying Astral Bathware products. And we are gradually as the demands come, we have started supplying these products. There is nothing that is going wrong in this segment, and we are continually seeing the growth on the upper end of the segment and expectance of the product.

Yes. This segment is very different than the other segments we operate in. Paint, Adhesives and Pipes, you know the sales operate in a very different manner. This operates in a very different manner. We are upfront of the valve brand here. And there is a lot of things that go into creating and developing a market for these products. So it is unlike our other products, getting that number moving very fast overnight is not possible unless we sell in a very haphazard manner, which we don't want to do. We want to grow slowly and steadily at a decent pace for the coming 5, 6 years to establish a base on which then we can do exponential growth. The first 5 to 6 years of creating the base is very important in this product.

So just a follow-up question over here. Are we already incentivizing our existing plumber network to cross-sell Bathware, has the process started? Or is it...

Yes, we are doing that. But as you know, plumber plays a very small role in this particular product segment. No house owner will blindly trust a plumber when he says to use a particular brand of Bathware. Every house owner wants to feel and touch and see the product in person before they decide. So even though we are incentivizing, plumbers play a very small role in this particular segment.

Ritesh, particularly in the replacement market, you are right, the plumber play role. But on the new project side or new construction, plumber role is very limited. But replacement market, yes, definitely and that is why we are giving focus on the retail market. I can share you yesterday's experience with me personally. I took my architect -- because my house is getting built up. So I took my architect to the Astral display center. He was amazed to see our faucets. He said, I was not aware that Astral is manufacturing such an excellent product because he so far was using the Grohe and other brands. So I said, no, I don't want to use the Grohe because I want to use Astral in my home. So he was shocked, literally shocked. So from there, I come to know that basically, we have to create a lot of awareness in the market among the architect and this community. Otherwise, this brand will take more time. So now we are going to act on that also to create awareness among all the stakeholders. But otherwise, he was very shocked to see the product, he was amazed. He was telling me 10 time at least that I was not thinking that Astral has made such a great product. I am in the local market, but I'm not aware about that Astral product. So that force we have to create in the market.

Sure, sir. This is helpful. Sir, my second question is basically on the Agri basket. I think a couple of quarters back, you had indicated that we will go look at agri as a product category, and you also had indicated that we will add extruders specifically to cater to this particular category. Any specific updates over here?

I think that volume is increasing year-on-year basis. And once this 2 new plants will come up, then it will further improve a lot in the next year because these 2 locations that is in Kanpur and this Telangana, both are the good agri markets. So we are expecting a reasonably high growth in the next year onwards. But this year is also a very, very healthy growth in the agri side also. Otherwise, 24% kind of volume growth is not possible in 9-month basis.

So Ritesh, we want to also say that we are selling agri in a different application. We are selling agri in the building application. We are not selling -- we don't want to sell agri in the agri application because there you have to do [indiscernible] business, and we are not -- we don't want to do [indiscernible] business, and we want to cut corner in our quality and all that. So we are focused on the building materials, building project side and retail side agri business.

That's useful. And just last question for Sandeep. Sandeep, you did indicate that synergy benefits from Dahej are yet to come. Possible to give some time lines and contemplation, like what do -- how should one incur the synergy benefit? Is that probably from a procurement logistic standpoint, how it can potentially help?

From next year, Q1, complete benefit will be seen from Dahej. This year, there will be overlap of stocks already made at the old plants, which are already in stock and some of these products are made, slowly all the chemistries of epoxy and the wood and other -- some products are going to be shifted to Dahej completely in this quarter. So from Q1 next fiscal, you will see complete benefit of Dahej coming.