BirlaNu Limited (BIRLANU) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the HIL Limited Earnings Conference Call. [Operator Instructions] I'd now like to hand the conference to Siddharth Rangnekar of CDR India. Thank you, and over to you, sir.

Good afternoon, ladies and gentlemen, and welcome to HIL Limited's Quarter 4 and Annual Results Conference Call for investors and analysts. Today, we have with us Mr. Dhirup Roy Choudhary, Managing Director and CEO of the company; Mr. KR Veerappan, CFO; Mr. G Manikandan, Company Secretary and Financial Controller; and Mr. Ajay Kapadia, Head, M&A and Investor Relations. We would first have Mr. Dhirup Roy Choudhary making the opening comments, and he would be followed by Mr. Veerappan, who would take you through the financial perspective. Before we begin the call, I would like to highlight that some of the statements made on today's call could be forward looking in nature, and details in this regard are available in the earnings presentation, which has been shared with you. I would now like to invite Mr. Dhirup to present his views on the performance and the strategic imperatives that lie ahead. Over to you, Dhirup.

Thank you very much, Siddharth. Good afternoon to everyone. And a warm welcome to our Q4 and FY '20 results conference call. I thank you all for taking out this time to join us on this call. Q4 has been a tough quarter for the entire world, with the COVID-19 pandemic bringing industries to a halt, disrupting supply chains and even changing work cultures across the world, many companies have had to quickly adapt to an uncertain period. Economies around the globe have been severely affected by the prolonged lockdowns, leading to both supply and demand destruction, which are likely to impact the business year ahead. In these extraordinary times, the CK Birla Group and our company stands firmly behind our fellow countrymen with a host of measures to support them. As we speak, there are multiple cross-functional themes in the background already working with the vendors, customers and employees in order to support the community. Just to quote a few examples, we have distributed in-house developed hand sanitizers and supplied rations to many. CK Birla Group has contributed INR 35 crores, of which HIL has contributed INR 3 crores to the Prime Minister CARE Fund for the service of the nation and fellow countrymen. Many of our employees have willingly donated their 1 day's salary, which we have used to provide financial support to plumbers, masons and carpenters at their need. India had been facing some headwinds even before the lockdown, which has impacted the demand. Furthermore, our prolonged lacuna in activities hit the economy hard, especially the real estate sector. Migration of workers and nonavailability of entire workflows are continuing to pose ongoing challenges for logistics and manufacturing. Change in spending pattern of the consumers may further impact the business scenario. The world may not be the same after this pandemic is controlled. Price corrections in all sectors are inevitable with abnormal mismatch of demand and supply as the consumers across retail, corporate and residential pockets hold back their spend. We estimate this impact to last more than just a couple of quarters as we all get used to living with this virus. However, amidst all these unprecedented challenges, your company is doing everything it can to minimize the effects of the current situation on the business by emphasizing on maintaining margin and profitability. We as a team have taken a pledge to be innovative, agile and bold and convert this challenge to an opportunity for us. Opportunity to rethink, to reimagine and to reconstruct our business model. In this regard, we have formed 10 work streams with clear charters towards the common goal of protecting profitability and people's health. Our organization has made a day 0 plan way back in March to come alive as soon as the relaxations from governments were available. As we have notified to you, we have received government's permission and resumed manufacturing of all our plants with full compliance to MHA and local district office guidelines. Post the relaxation of lockdown, the biggest challenge for most manufacturing players was to retain their workforce as many of them were migrating to their hometown. We at HIL have provided utmost care and financial support to them during the lockdown period. The human safety net has been extended to them, and we have taken all actions to hold them back. Hence our plants have started with minimum effect. Our R&D team is relentlessly working towards improving the product quality and cost. Some further changes are being undertaken to make the nonasbestos roofing product even more robust, efficient to make and stronger in its application. We will be able to discuss all of this very soon this year. Monsoons are expected to be good this year again. So we anticipate the demand to increase for all of our roofing products. We continue to face problems related to cost fiber that we have imported from Russia and Kazakhstan, but our R&D team is working relentlessly to reduce the fiber content in our product and bring down the cost. With the rural sector holding up, the demand have been good this quarter. Since the opening of our plants, the Roofing Solutions category has sustained really well in last 1 month. Notwithstanding the fact that we have lost more than 20 days this quarter, we are very hopeful to post decent results in this segment under the current circumstances. Building and Polymer Solutions are witnessing severe headwinds of a prolonged real estate slowdown. Our businesses for these segments are primarily focused on big cities. With the COVID-19 impact, many of these cities have been declared as red zones. Birla Aerocon is a segment leader and has given us strong results time and again. Our sales team has converted this crisis to an opportunity by focusing more on greener zones and bring back businesses from new customers with better terms and realization. These businesses have reached 40% to 50% scale already and expect to get back on track once normalcy sets in. We have held -- we have handheld Parador to strengthen the sales, explore e-business, further government support and banking connect, and the results are in front of you. Yet another Parador proves to be a great addition to our portfolio. As expected, it has brought the strategic transformation for HIL in global markets while giving us an entry into the Flooring Solutions business. Even during COVID-19, despite Europe being one of the worst hit geographies, the businesses have hardly been impacted in Q4 in the parent geography of Germany and Austria where we normally sell 50% of our revenues. We modified our sales approach through DIY and e-business where we safely provided the deliveries and the customers took responsibility of installations themselves. It worked very well and helped us maintain momentum during tough times. And the Parador business is holding up very well this quarter. A lot of actions have been taken to expand the sales, and we hope to see the results in geographies like China, Spain, France, U.K., North America, Nordic countries, just to name a few in the coming quarters. At HIL, we have a lot of confidence in our products and offerings, and we are certain that we will bounce back even stronger when this pandemic situation passes. We are working hard to convert this crisis into an opportunity and have redefined all our costs by adopting zero-based plan model. We are reimagining the organization towards a lean and efficient model. Digital support is being taken in many dimensions to enhance efficiencies. We are implementing end-to-end connected digital shop floor IoT 4.0 across many of our plants. That, along with integrated robotic process automation will help us reduce costs. Strategically, we are pausing our big budget advertisement and promotional spends this year and utilizing digital media effectively to enhance customer centricity and connect. We have also deferred our initiatives to augment capacities to such time that we see normalcy in the trend. Over the past few years, we have steadfastly tightened metrics of trade. And as a result, our balance sheet stands stronger and enhanced cross-border, cross cash flow management have helped us to strengthen company's sustainability during this period. Digital connect through lead generation and lead management portal, mapping greener pastures through heat maps are promising and have given promising results, 60% to 70% of our business solutions and Building, Polymer Solutions are now focused towards greener pasture, which are showing strong promise to better NSRs. Grassroot digit planning and mapping of secondary and tertiary are showing the encouraging results in these testing times. Our emphasis on team and career building for our workforce will continue. They remain the cornerstone of our progress. In this context, I'm happy to share that HIL has been awarded with Great Place to Work for second consecutive year by GPTW Institute. Your company was ranked amongst the 30 of India's best workplaces in manufacturing 2020 by GPTW. As I conclude, I wish to underline that your company has shown great resilience in these difficult times. We are building a potent global organization, having a diversified product portfolio with a good mix of growth and opportunity under renowned brands. Compared to 3 years back, the risk profile of your business has been transformed for the better, and we will continue to further augment it. I hope that with our determination, dedication and discipline, we will emerge even stronger at the end of this testing times. Thank you very much for your patient hearing. I would now like to hand over the discussion to my CFO, Mr. KR Veerappan to take us through specific numbers. Veerappan?

Thank you, Dhirup. Good afternoon, ladies and gentlemen, and thank you all for joining us on the call today. I would like to take you all through the financial and operating highlights of the business during FY '20. The Roofing Solutions business degrew by 16% year-on-year on account of a difficult year with a slowing economy. The Building Solutions segment degrew by 1%, whereas Polymer Solutions segment grew at 9% amidst challenges faced in the real estate sector due to the lockdown. Our strategy of cherry picking orders have proven effective and helped us in boosting our profitability. As Dhirup mentioned, we emphasize greatly on cost reduction and enhancing margins and that has delivered such consistent performance during the whole year. We continue to have one of the highest profitability in the industry. In the first full year of acquisition of Parador, we have put adequate attention towards smooth cultural and financial integration between us and our subsidiary. Our next focus was on enhancing profitability and sales. Operational excellence using Six Sigma and lean manufacturing practices have rendered towards cost reduction in Europe, which in turn has helped improve profitability at Parador significantly. An impactful improvement in operating margin of more than a couple of percentage points can be appreciated in the year-end results, which is published. Consolidated EBITDA came in at INR 271 crores as compared to INR 282 crores last year. The consolidated PAT stands at INR 106 crores, showing a 5% increase over last year despite last few days complete washout in March in India. We have prudently reduced spends on marketing and advertising in FY '20 to a total of INR 34 crores as compared to INR 44 crores in FY '19. The focus on working capital continued during the year, and the long-term borrowing at HIL India was reduced by INR 75 crores during FY '20 and at the consolidated level by INR 43 crores. The debt-to-equity of the company has been maintained below 1.0. We remain committed to maximizing the returns of our investors through improving profitability and sustainability of HIL. Our consolidated EPS came in at INR 142 and was up 4% year-on-year compared to INR 136 last year. In view of lockdown due to the outbreak of COVID pandemic, the operations of the company were shut down for second half of March 2020. Duration of this lockdown is uncertain at this point of time. However, the company has resumed its operations in compliance with the directives issued by the government authorities. While this has impacted the sales performance of the company, we are closely monitoring the situation and have taken all the necessary actions to scale up operations in due compliance with the applicable regulations. We do not foresee significant impact on the carrying amounts of inventories, intangible assets, trade receivables, investments and other financial assets, and we continue to monitor changes in future economic conditions. Cash is king during lockdown, and we were successful to secure loan from bank in April to ensure sufficient liquidity position. Election -- good later part of April and in May, and we have sufficient cash balance with us currently. As mentioned by Dhirup earlier, various cross-functional teams have been formed, and the teams have made a charter for themselves to prepare for a worst-case scenario. Objectives of the teams are to maintain liquidity, profitability, customer and vendor connect, employee connect and monitor people's health and safety. You may be rest assured that your company is committed to convert this crisis into an opportunity. With this, I would like to conclude my opening remarks. I request the moderator to open the floor for questions.

[Operator Instructions] We have our first question from the line of Amit Vora from PCS.

Congratulations on a good set of numbers and especially on the Parador front, I think, been very good. Can you just throw some more light in terms of what has changed and what exactly worked for -- in your favor for this strong performance?

Thank you, Mr. Vora. Thank you for asking the question. Ever since we took Parador, we were committed that unless and until the cultural integration works well, everything can fail. And I think that was the first very impactful achievement that the team achieved. There is the full coordination amongst both teams, and there is a trust and transparency that has been built. Financial integration was the next bit. And I think that has been done extremely smooth by our finance team and their finance team. We have now got both the same auditors, KPMG, doing the audit at both the sides. So that also helped us in the process. The third was focusing then on the business. We clearly knew while we were taking Parador that there was an upside possible on the profitability. And definitely, we had to work with them towards scaling their sales in different parts of the market. So we dedicated ourselves towards improving the profitability at the first instance, while we built the sales organization. Let me talk about the profitability, first of all. We have introduced Six Sigma and lean manufacturing. We have worked together with them in trying to get the prices out from the suppliers by doing a cross-border supply chain. And that has improved all of it together. The inventories have come down and the profitability has improved in the organization. But a part of it also comes from the sales. We have built the sales organization in Parador. We have brought in the new sales director, as we had promised to you. The gentleman is online now, and he's working very aggressively with the team. We have gone across and set up joint ventures in Nordic countries already. China joint venture was anyway there. It has come under a bit of setback now because of COVID, as you all know. But however, the business model is absolutely robust. Whatever was invested has already been returned back. So basically, we are losing nothing there in China. The brand has been created, 42 new retail shops have been created. Part of the business we were trying to secure already before the COVID, and we are very hopeful once things stabilize in China, this will again go scaling up. We are also looking at different countries to increase our sales from them. And in Germany, specifically, we have gone for e-business. E-business was not a forte of Parador. And certainly, it's not the forte of many other flooring companies there. While Germany has been hit real bad because of COVID, what we have been able to achieve is the e-business settled down since last year, and this was more a push from our side, but it has really worked very well with Parador. DIY chain, there was another set that we did. We changed the regional Head of Germany and brought in a new guy who could enhance all of this for us. And while German market has been degrowing to about 3% to 4%, Parador is growing more than 10% in Germany. So whilst the German business scaled only to about 50% revenue earlier, today, that's giving the most impactful business during the close down. And as you know, German people normally do the rehabilitation and rebuilding of their houses during these lockdown and that has helped in advancing this business. So overall, a model which is relying on people, on sales, on profitability enhancement and looking at continuing the production even during tough times.

Okay. That's very helpful. And credit to your team for putting up that performance. A follow-up on this is that as we have gone into the first quarter in FY '21, how have you been seeing the changes? Is there the pent-up demand in the Indian operation and even at the European operation getting started to fill in? And how are you seeing these trends right now?

So Amitji, as we see, so first of all, as I said in my opening remarks, we had done a fantastic planning of day 0, and day 0 was a special plan that HIL made, wherein each factories that we have, we have 20 locations, each of them prepared as though they are going to start tomorrow. And therefore, what is the inventory levels of finished good, of raw material, of work in progress, how we will manage the workers around the factory, how we are going to manage the transporters and laborers, all of that was planned. Therefore, as soon as the government gave us permission to start the operations, and you know that our product was not given an approval straightaway. In fits and starts we started, but with total compliance with the government. And we have been able to start up the roofing segment, which is the most important segment during this time because this is the season from March 20 itself. So all the inventories that were at different places and godowns and everything was taken stock of. And as and where there were green zones approvals that we were getting, we started dispatching these materials. And it has augured very well for ourselves. I would say, April, the last 10 days has been miraculously good for us. And even this month till now, it's holding on extremely well from roofing segment. And that, I believe, is the strength of HIL. We have bounced back very soon. Of course, the Building Materials segment and the Pipe segments were mostly dependent on big cities and real estate. That has got a severe setback and yet to start, honestly. So the team while sitting at home during the lockdown has revamped the complete country map and looked at greener pastures and looked at customers' profile there, got the heat map done through digital route and what we have been able to achieve is about 60% to 70% of the revenue of building materials and pipe are now coming from new customers in greener zone. These markets have started decently. We have done about -- we are, at the moment, at about 40%, 50% of last year in these businesses, building materials and polymers. But we are -- polymers, we are doing better than last year, but I'm very hopeful that all of that will start to pick up very soon.

Just one more thing. On the roofing segment, how are we, during this 10 days of April and in the month of May, if it is okay for you to answer that.

So as I mentioned, Amitji, last 10 days of April has been very good for us. We have started from day 1 in pockets where we could, and it started well for us. The realization is far better than last year. And definitely, the demands are shaping up. I think there is cash in the market, so collections are also good. And our penetration and our brand has really hold us to reach to deep pockets where there is a possibility to sell. And therefore, I would say, I'm very satisfied with the roofing segment progress so far in this quarter.

That's great to hear. I'll just squeeze in one question, if it is okay, and then join back in the queue. Is that okay, moderator? Or should I jump in the queue?

That's all right, Amitji, please go ahead.

Yes. Yes. Just wondering, as we're speaking, all of our plants are operational and there's none of the plants which are kind of right -- still in the shutdown mode. Is that right assumption, both in India and Europe?

All our plants are operational. We have got the approvals from all factories, and we are operational, both in India and Europe. German plants have been continuously working even during the lockdown in India. Austria has been slightly slow because most of the product of wood -- pure wood that is made in Austria goes to rest of the world, and the rest of the world had completely paralyzed. But it has taken up now. It has started again. We have never closed the factory, but we were working on small gaps.

That's wonderful. And once more, congratulations, all the best to the team of HIL for putting up this show.

We have next question from the line of Baidik Sarkar from Unifi Capital.

And given the context, great set of numbers for Q4. A couple of questions. The [ beaten ] Q4 for Parador, especially was very encouraging, and great to see the show from Germany. But obviously, Spain and the rest of the West European markets, we know have been under a lot of strain. Could you give us a sense of how they're doing comparatively on a Y-o-Y basis? And realistically, net of cost control initiatives in Europe, what do you think is the best case earnings impact that one should expect for Q1 of this quarter?

Mr. Sarkar, thank you for asking this question and joining the call. I understand your question is primarily on Parador. Let me say Parador is holding up very well. There are severe headwinds on the international business for Parador because the rest of the world has collapsed, and it's slowly picking up in different places. Even in Europe, you'd say, the main market was Spain, France, Italy, U.K., which was collapsed for major part, but what they did is they have done exemplary well in Germany. And because the other manufacturers were not able to supply, we have got benefited. Therefore, as I said, the plant has never stopped while inventories are coming down, and that should give you a good symbol that the revenue is really picking up. I'm definitely looking at the next -- that next 3 months to be weak in Europe because it's normally weak, not for COVID because of the summer. Summers are normally a weak period in Parador, but it's going to shape up from September, but I do not see that the impact will be severe because we are still holding on to the orders as we talk about it. Giving you a judgment on how the year will close, I think it's very difficult for me to make an assessment, how COVID is going to plan out. But we are staying positive. We have taken a lot of cost reduction drives in Parador as well. There is no increment to people, there is no recruitment, there is no CapEx except for maintenance CapEx that we are doing. And we are holding on to our cost much here. Even the employees whom we can release for short time, there is a short time work, which is allowed in Germany, where the government pays them 60% salary, and we don't have to pay them. So those are all being utilized wherever in pockets we can to save cost.

Sure. That was very helpful. In your opening comments, I think Mr. Veerappan referred to about INR 34 crores in terms of ASP sales last year. Is it fair to assume that, that number will be completely nullified this year? And if you could in a way hard code the other cost initiative programs that you've taken this year, it will help us understand your OpEx in perspective?

Thank you. Yes. Absolutely right. You're absolutely dot on, on the marketing spend. We are going to do as minimum as possible. INR 34 crores was last year. This year should be substantially lower than that. We will only do the BTL activity and where the point of sales is needed. So far as other costs, as Veerappan and I both said, we are going at a 0-based costing model. That means we have looked at every decimal of the company costs, both variable and fixed, and we have looked at every possible opportunity to reduce the cost. We are also looking at rethinking the organizational model, which means that how to combine various departments and consolidate the organization. All of that is being talked of. You can be rest assured there are 10 teams working on this. And you would see good results coming from HIL under the present situation.

Okay, lovely. And Mr. Choudhary in your statement of the [ PBT ] last week, there was a comment on deleveraging. If I could request your thoughts on that as well. I understand the cash from HYSIL is yet to come in. So as and when that comes in net of capital gain about INR 65 crores, INR 68 crores, what's the outlook in deleveraging for next March, please?

So I think the total long-term debt that sits on our balance sheet is about INR 494 crores as on March 31. And out of this, about INR 215 crores sits in Indian book, and that's our prime focus because the other part is in Europe with absolutely close to 0 interest. We are planning to repay majority of this portion in India this financial year.

We have next question from the line of [ Kritika Gupta ] from Equitas Investments.

Sir, congratulations on a good set of numbers. Sir, for the roofing segment, can you tell me currently at what capacity are we operating?

Good afternoon, [ Kritika ]. And thank you so much, ma'am, for your good wishes. Roofing is full up, 101%.

Okay. And what is the price differential between us and our competitors?

So we normally are up on prices. We are the best brand in the country and because of our excellent network, customer connect, we always get a price premium in the market. So we continue to get that price premium. It is anywhere between INR 7 to INR 8, right up to INR 20 per meter.

Okay. And what would be -- you mentioned even that the fiber prices are a challenge right now. Is fiber availability also a challenge? And what are we doing regarding fiber prices? And how have they moved since last quarter?

So the prices of fiber last whole financial year has been a severe challenge for us, and I think the comment was made from last year's results. The availability of fiber is absolutely not a problem, it was only on the prices because it was the Russians and the Kazakhs who had the sole agreement of supplying because Brazil had come to a halt. But even though the Brazil Supreme Court has not given them approval for mining, there was a bit of fiber left with them as a finished good, so we are -- we have negotiated, and I guess we will be able to get most of it, if not all, from Brazil, that should bring down a bit of our fiber cost. I can give you the numbers in the next meet once we have confirmed our deal. But that, together with derisking that the R&D is doing in way of lesser and lesser fiber impact in our product, I think, overall, we should be able to do better than last year on the prices.

Okay. And sir, regarding Parador, sir, have you received any government aid from Germany?

So the government of Germany is very, very progressive towards supporting the industry. So, a, I said they are talking about the -- they are paying for the workers who are being sent home for short term, and the company doesn't have to pay. And this we can do right up to 6 months. So we don't need it because the plant is well up running. But wherever that's needed, we have done it. For instance, when sales were sitting at home, we have even used it for our sales colleagues during the serious lockdown that Germany also had. Even today, many of the sales do not have a face-to-face work. So we are utilizing all bit of that, number one. Number two, the government has decided that they are going to support industries, which have made profit last 3 years and support them. So Parador is one amongst them. And therefore, Parador will continue to get any support that is needed, whether it be postponing of their county fees, whether it be postponing of the tax pays or the government -- the bank is also looking at possibility of giving them a loan if that's needed from a cash flow standpoint. So I think from all angles, Parador is taken care of by the local government to a great extent.

So what are the kind of benefits that we have availed -- that Parador has availed? Have we availed the lower tax rate?

No, no, it's not the lower tax rate. It's basically deferment of tax. Yes, we have availed that, number one. Yes, we have, and we have also…

Okay. So did we even avail it in Q4?

Sorry?

Did we even avail it in Q4?

We did. We did. We did. And then the other thing is the short time work, which is basically we are sending home people, whom we don't need. So even for a day, we can send them home and bring them back next day. That's the process that the government has done so that we don't have to let go the people, and they have their jobs and we have the continuity. And that is being availed in Austria to a great extent and also in Germany.

We have next question from the line of Devansh Nigotia from SIMPL.

Sir, in our Polymer Solutions, can you elaborate on the mix between pipe and wall putty for this year and for the quarter as well?

Devansh, we are almost at 60/40, 55/40 wall putty or maybe 55/45, and I think that percentage will continue this year as well.

Okay. And since because our commentary is continuously that it continues to face headwinds because of the real estate sector. So would it be right to conclude that we have low exposure to agri pipe?

We do not make agri pipes, Devansh, so that's something that we have not got into. The profitability margins there are extremely low, and there are quite a few players. So we haven't really looked into that. But as I mentioned, over last year same period, at the moment, as I said, we are doing better in pipes. So we are hopeful that this business will really shape up this year.

Okay. Okay. And then from like post, we have started reviving and selling pipes to -- in green zone. So how is the response on the ground? I mean, if you can just throw some light on that.

So about 60%, 70% business is coming from new customers. So that can give you a call that we have been able to plan very well. The heat metrics that we have done, we are tapping on the demand metrics at the greener zones, the new projects and everything. Even e-business platform is being looked at by HIL in the [indiscernible] technical sales department has been created, which is looking at that to work with the project even before they are posted. All of that is supporting us. I think we will try to make the best of it. I can tell you that the prices are better and the terms of payment are certainly better.

Okay. And regarding -- I mean, asbestos prices has been really impacting our GP margin. It would probably be like 3 year in terms of GP margin. So if you can just share some trend or what we're really expecting in terms of the input? Or are we looking to take price increases? So just -- if you can just throw some light on that?

I'm not sure I got your question fully, please the last…

So I mean, asbestos prices, I mean, it is what is impacting our GP margin on standalone, if that's the right direction?

Okay. Yes. So yes -- yes, asbestos raw material peaked the root -- roof last year, and there was a huge -- about 20% increase was there in the price previous to last year versus last year. We are hopeful that the price won't improve any further. And definitely, we are trying to derisk ourselves to some quantities from Brazil as well as by reworking on our designs to use the fiber lesser and lesser.

Okay. And in terms of end product side, are we looking -- I mean, because -- I mean, now that even the situation is so difficult on the ground that even price increases looks really difficult. So I mean, how are we really looking to expand GP margin or probably -- is it that -- would it be right to say that improving our sourcing mix is the only way to improve it? Or what would be…

So I think we were very clear even last year that there is very little we can do on the material cost because cement is dictated by home. And then we have the fiber, which is getting into a bit of a sticky position. So we knew that we had to do much more at the front end at the sales. So we have mapped 520 districts in the last 6 months, and we have gone into grassroot levels. We have looked at the -- each retailer. So rather than pushing the material from distributors as we used to do earlier because our brand was very well recalled, we are now looking at pull from the retailer, and that has helped immensely as we see after the COVID situation once we have started the business, the business is on a roll because of that. And we are also getting plus 10% or more as a raise in NSR. So that's also helped us in every way.

We have next question from the line of [ Abhijeet Vohra ] from Sundaram Mutual Funds.

Sir, my first question is, if you can help understand how the consolidated debt will move in FY '21. And some color on how the operating cash flow as well as asset sales will help reducing this debt level, both stand-alone and consol, if you can just clarify?

Both are very difficult question, [ Abhijeet ], you would know because giving any projection at this stage is a very difficult task for any management or any company, but we'll still try to do the justice. On the debt, Veerappan, can I ask you to comment, please?

Yes, Dhirup. See, I think Dhirup had already mentioned on the debt in one of the questions earlier. Right now, the consolidated debt of long term, we have, March 31, is at INR 494 crores, of which INR 215 crores sits in Indian books and INR 279 crores in Parador books. And the Indian portion, at least the major portion, I don't want to quantify that. It will be definitely substantial, in excess of INR 100 crores, will be repaid during this year. And by end of this year, the Indian portion would have come -- end of the next financial year, by March '21, the Indian debt portion would have come down significantly. And Parador, as per the normal installment what we are paying, that would have come down, which will be around INR 35 crores, INR 40 crores. So this INR 494 crores, I don't want to give a number, but I would expect this will be in the range of INR 250 crores.

On the profitability of the company, if that's your next question, [ Abhijeetji ], I can tell you that roofing has started well. I don't know how long this will last, but that started well, definitely. Productions are going on full swing as we speak. And there has been severe problems that the factories have faced in bringing in labor. At this stage also there are many plants where only 50% of the laborers are allowed to work, but we are doing everything that's possible under the norms to do it as per the government rules. Roofing is standing up very well. Building Solutions and pipe, as I mentioned, Building Solutions is about 50% of last year at this stage. And the pipes is doing better than last year at this stage. And we are hoping that real estate somewhere or the other will creep up. So that some portion of our old customer comes back to us. At the moment, the business is coming through new customers, but we are looking at exciting our business model towards providing COVID centers wherever the government is building or labor hutments wherever they are building, so that we are able to quickly assemble it for them. Roadways, a lot of projects are happening. And there, again, labor hutments are getting created. We are looking at that. We are diversing our efforts fully and constructively towards health care as well as the COVID centers so that we are able to get the mileage from greener zones. So I believe that is something which will happen, but the next couple of quarters would be taken in Building Solutions, if you ask me, to come back to where we were, while we will strive to do it even earlier. Parador is still sustaining, slightly lower than last year, but it's still sustaining well. So probably…

Sir, just one question on -- just one question, sir, on Roofing Solutions. You mentioned that from Brazil, you're trying to get some raw material. What portion of your raw material can be met through this particular inventory in Brazil? And second is you also mentioned the pricing is not expected to go up. That is for you? Or in the industry? Pricing of…

When I said the pricing won't go up, what I meant was for the fiber prices from Russia and Kazakh. I hope that it doesn't go up further this year because they have already peaked last year. That's my understanding and hope as well. Brazil, we are still negotiating. We'll get back to you next time that we talk around the same time. We will give you the exact numbers. But on the profitability of SBU-1, which is our Roofing Segment, definitely, we are trying our best to get a little better price realization from the market, as I mentioned, to live up to the bottom line pressures.

Sir, Q1 is the most important quarter, right, for HIL, because Roofing Solutions is seasonal -- I think it's a seasonal product. So if the profitability were not to pick up in Q1, even if it improves for the rest of the year, it will not sort of support the profit margins for the entire year to the same extent, which is why it's critical. For our understanding, we wanted to understand how much will it contribute in Q1 itself. It doesn't look like so soon it will contribute, right, that is bottom line?

So [ Abhijeetji ], as I mentioned, I talked of all the 3 businesses separately. But if you're talking about roofing, let me tell you, we have a clean 20 days washout that has happened, neither you nor I could help that. But soon after that, the business has made all impactful actions to get the business back. And as we speak to you, we are doing rather well in roofing. So hopefully, for the balance part of the quarter, the business will stand really good, and I'm hoping that the rains get a bit deferred, so that the season extends to half of July. If that does, we will be really, really advantageous.

Sure, sir. One last question, sir, I'll get back to queue after this. On PVC margin, segment margins, there has been a little bit of volatility. Can you also -- I understand that you mentioned revenues are doing quite well, and it's still holding up. Can you help understand if EBIT margins have also started improving? And what was the issue in Q4? Has it got sorted in the pipes business?

So for this business, EBIT will not be the right perspective because there's a heavy investment, and therefore, the depreciation is very high. We are focusing more on positive EBITDA and enhancing that. And there, I can tell you, Polymer Solutions is making positive EBITDA and we are hoping that to continue amidst all the seriousness of volatility of products -- of raw material as well as the market.

We have next question from the line of Manish Poddar from Nippon AIF.

Sir, I just had 2 questions. Firstly, how much was the debt number -- the net debt number as in FY '20 end?

Veerappan, please?

I didn't get the question. If you can just repeat the question?

I'm just trying to understand the net debt number as in FY '20 end?

It's -- INR 740 crores is the total debt in long term and short term borrower -- together, and we have INR 100 crores cash. So consolidated level net INR 643 crores.

INR 643 crores. And can you explain the bridge, which you just mentioned that you will bring down the total debt by INR 250 crores. So how does that match…

No, no, no, I talked about only long-term debt. I said it's not INR 253 crores. I talked about only long-term debt. There is also a short term, what, capital borrowing which will be based on the business, quarter-to-quarter that will vary. What -- we are focused on reducing the long-term debt.

Manish, if I can take your question. What Veerappan is trying to say is we have a long-term debt of INR 494 crores as on March 31, '20 and out of that, INR 215 crores is all that sits in India. The rest is in Europe books, in euro. And we are not really very worried about repayment because that's at an average of 1.8% or something. So that will go on its own from Parador's profit. The Indian debt is what, INR 215 crores long-term debt, which we are at the moment, focusing to repay, and majority of that, we believe, should be repaid this financial year.

So effectively, you're trying to say that roughly INR 200-odd crores debt reduction on the long-term part will happen in FY '21?

INR 200 crores will be a bit stressed…

INR 150 crores, INR 100 crores -- excess of INR 100 crores to INR 150 crores should happen, yes.

We have next question from the line of Dhananjay Mishra from Sunidhi Securities.

So first of all congratulation for decent quarter despite this all challenges. And sir, just a follow-up question on roofing side only. When you say now the -- after 20 days of loss, we are doing well, so -- then you are saying we are doing well compared to last year or your -- I mean, because of this is peak season, so we are matching the last year volume or what?

So doing well is always -- Mishraji, it's always with respect to last year, that's how all investors and even the management looks at. So definitely we are doing well on that perspective. Plus, the prices are holding on, and that's where I said doing well means revenues will be good and profits will be good.

So can we achieve last year volume number in terms of roofing segment in this quarter?

It will be a difficult task because 20 days are lost, right? And to make up 20 -- you see, we have not only lost the sales, but we have lost the production in 20 days. And you know roofing segment needs a 15 days of drying of product. And therefore, after June 15, whatever you make really doesn't count in the quarter's revenue. So effectively, you would have lost 20 days in March and 15 days in June, which is normal. That means almost a month washout. We can't make up the whole month in a quarter.

Dhananjay, they are doing well is like-to-like. It means, we need to compare like-to-like. What we are saying is like-to-like, we'll be doing better.

Maybe -- May and June you're doing well, right? Month-to-month basis you're doing well?

Absolutely. You're right, spot on now, Mishraji.

Yes. And sir, one more question. Can we expect some pickup in demand in this roofing segment due to this migration happening of workers. And they may -- I mean, require building home in their rural…

Yes. Answer is, yes, Mishraji, absolutely. The demand should pick and is doing well, I must say. At the moment, the question is how much can we supply.

And also MGNREGA thing will -- may also help?

Yes. Absolutely. And the rabi crop has been good. The cash is in their hands. There are a lot of things that government is doing around that. I think farmers are one community, which should be doing well, and we should take that benefits in our business.

Okay. And sir, in Building Segment where you're saying 60% to 70% customer is new, you're talking about contractors per se, right?

In the newer zones, yes. We are talking about the new zone, the green zones, because primarily, we had been focusing on big real estate and commercial activity. Now we are going to the tier 2, tier 3 cities. So that's the new customer I'm talking about.

You are requiring new contractors, building sector contractors, right?

And builders in their own rights in the tier 2, tier 3 cities, that's right.

We have next question from the line of Siddharth Rajpurohit from JHP Securities.

And congratulations on your efforts fructifying in Parador.

Thank you, Siddharthji, really appreciate your comments.

Sir, on Parador, sir, I just wanted to understand what is the utilization level now?

So Siddharthji, the utilization today, if you ask me, is a very difficult question because naturally, COVID has had its impact on Parador. Let me explain you this way. The sales of Parador before COVID, 50% was from Germany and Austria, 50 -- and the rest 50% was divided into 25% from the rest of Europe and 25% from the rest of the world. As you know, due to COVID, rest of the world has come to a full stop almost. U.S. is not buying any more. India, you know what is the situation. Australia has come down. China has come down immensely. Middle East has come down immensely. So that will take its time to come up. Now we talk of Europe, the 25%, which went into balance of Europe, then you had the Spain, you had Italy, you had France, you had U.K., all impacted by COVID. That's now started, but the 50% volume that we used to get from Germany has definitely gone up. And therefore, we are holding on to closely about 90% of last year's volume already in revenue. And Parador, I think that at the moment, it's really, really outperforming than our own expectation. That's all I would say.

Okay. Sir, I think this is for this quarter, I think, you have given the guidance. I just want to understand, for Q4, what was the volume growth and utilization? Q4 to Q4?

Yes. So volume -- so in Parador, Veerappan, do you have that number with you?

Yes. We have grown by 7.6% and the utilization is -- level is little bit above 70%.

Okay. Okay. And do we have any currency translation benefits also in the…

So currency translation benefits has come -- no, not -- Veerappan, do we have anything on…

In the month of March? Yes. Last year also, we have brought this 5 million of what we had hedged and actual valuation was -- there is a currency translation, yes. Closing conversion based on the…

Okay. So what will be that impact in EBITDA, sir?

Money?

It will be around INR 6 crores in the last quarter.

In Q4?

Q4, yes.

Okay. Okay. And sir, the -- we have actually reached a very good margin level in Parador, sir? So a lot say Q1, Q2 also I would like to discount given the situations which are uncertain, although Germany has done a very good thing on COVID. But sir, how do you see -- what is the sustainability of this margin, sir, which we have achieved in specifically Q4?

So I will answer this question, if you permit, on 2 dimensions. One, if COVID had not happened, we have taken all actions to explore the rest of the world as well in a significant way. We had looked at joint ventures in many countries other than only China. So -- and we had got the sales team in place. I think that was our right way of moving Parador, and we were very much on track. COVID has definitely put a break through the rest of the world, as you know, and impactful significant break in many of the parts of the world. So we will have to wait and watch how that happens. So in the meantime, we are extremely lucky, and I use that word knowingly that we have put in the e-business in place last year and also attached ourselves big way into DIY and gained on our competency to do individual shipping from our factory to the consumers, and that has helped good. So I would say, coming to Q3, if COVID situation has improved by then, we will see Parador thereafter not looking back.

Okay. Okay. So the long-term guidance of, say, 7% to 8% top line growth could be maintained, say, after first half, from second half onwards, if things normalize it could be maintained.

I can't tell you first half, second half because I really don't know how to look at COVID. But definitely, as things normalize, that's a very, very good estimate that you're doing.

Okay. Okay. And -- but margins definitely -- on margins, it would definitely be better on normal scenario better than what was there in, say, FY '19?

Absolutely yes, absolutely yes.

Okay. Margin-wise, we have stabilized. So is there a cost of sale in your calculation?

To still improve it?

Improve it, yes, sir.

Absolutely, yes. As the utilization of the factory will improve, the margins will improve significantly. As you know, major element of cost in European countries is manpower. And if you are able to spread that over a bigger base, your margins will improve. So that's exactly what we want to do. That's where the whole intention of building the sales in a much more pragmatic way to reach out to bigger geographies. Yes, you're right, sir.

Okay. And we have done CapEx also, sir, in Parador during the quarter -- sorry, during the year?

Of course, we have done. I think about…

INR 57 crores?

Veerappan, about 3 million to 4 million?

3.8 million.

Yes. 3.8, yes, that's right, yes. Euros, euros, it's in million euros, EUR 3.8 million.

EUR 3.8 million, so INR 40 crores, close.

Yes.

Because the difference between standalone and consolidated CapEx is INR 57 crores. So I thought that will be the CapEx in Parador.

That is -- [ I think ] business assets we have shown as a discontinued asset.

Okay. No, but the purchase of asset, on consol is somewhere around INR 118 crores. Stand-alone is INR 61 crores so I thought the difference INR 57 crores will be the CapEx in Parador.

We'll get back to you, Siddharth.

Sir, I'll take this offline.

It was exactly EUR 3.8 million that was spent on CapEx in Parador. I confirm that to you.

Okay. Okay. And how is China shaping now, sir? Anything -- any update, sir?

No, no. I mean, I don't think it's shaping up well at all. It will take its time, sir. Give it its time. But we are well poised. As I said, 42 new point of sales have been created. Retailers have been fed digital road maps for -- right from choosing the solution, right -- if you were to -- anyone of you get into Parador's website or HIL India website, you would see, there is a wonderful digital handle that we have created there. You can use that handle in your mobile and get into any part of your house, your own house and select -- and look at the floor through that and then select any material of Parador. You can see how your flooring is going to look, and those digital media have been utilized extensively in all parts of the world. And I can tell you that China was using it very effectively. Just give us some time to settle down, China business is definitely going to prove a huge metal for ourselves. As I said, we are not losing any money in China.

Okay. And any CapEx still required in Parador, sir, not expansion…

Sir, I think this year also we will need a similar CapEx in Parador because some of it is maintenance and some of it would be normal expansions that we are planning in different areas where we are getting a lockdown, but we would be very, very careful on CapEx and every time have a double think before we click on to it, both in India and in Parador.

Okay. Because sir, we have done a free cash flow of INR 12 crores for the year. And if we still have to do some CapEx, then the reduction of debt may take time or a bit hit.

I think you take it offline because we have done a complete cash flow on Parador. We'll be able to help you. So get across to Ajay, and I think we'll be able to help you understand this better.

We have next question from the line of Jaspreet Arora from Equentis PMS.

A commendable job last quarter despite challenging times. My first question was -- and my apologies upfront, I missed the initial part of our discussion. Sir, what's the ballpark utilization rate across our factories in India currently versus, let's say, the peak of the March quarter, a ballpark.

So you're talking about the quarter that has gone by or the present quarter?

No sir, currently, currently, correct.

So currently, roofing section is, I wish it was more than 100% because it's far more than 100% required at the moment from the market. So it's absolutely 100%. We are trying to do even better in some of the factories by using certain sensitivities. When it comes to Building Solutions, I think the business is not yet fully picked up, as I mentioned because we are looking at greener pastures. So it's about 40% to 50% at the moment of last year. And that means the capacity utilization is about 40%, 50% because Building Solution is absolutely pick on capacity even last year. Polymers, the capacity utilization is only about 23% at the moment, there's a long way to go in there. And -- sorry, so Parador is about 70-odd percent.

Okay. And in India, in terms of the touch points or retail points or distribution network, are you -- are the numbers, are they better off versus all this? Because at the end of the day, they would need to be equally open for us to sell it out. So is the situation better versus the production utilization rate?

Are you saying whether the sales demand is better than production?

Not demand, I'm saying the distribution network, the logistics, the retail points being open, the red, green, orange zone being supportive, are all of that helping you or they not as much -- in terms of -- are they equally supportive or…

So definitely, it is not a free open country anymore at the moment. There are lots of restrictions around which you have to move. We are identifying the greener zones and trying to sell there. So from roofing point of view because it goes to rural sector, we are able to keep up very much with the pace that we need. On Building Solutions, it's still not there. But the touch points are well aligned. We have gone into newer touch points. We have gone into newer revenue streams. We have got into greener belts by heat mapping. And I think that part, expansion of our rural network is something that we are always working on and continuously working on.

Sure. Okay. And on Parador, we've done a -- I mean, the numbers were very good in last quarter. And -- I mean, you made the comment in the presentation as well on that, that despite Europe being one of the worst hit geographies, we have done well. So I was just curious to understand March was not a very good month for whole of Europe. So how did we -- I'm just trying to understand if we've done good in March, there are good chances that, that may flow through to April, May as well despite the situation there. So I'm not able to connect the 2. If you could help?

Very smart question. No, thank you, Mr. Arora. Definitely, March was extraordinary because, a, March is normally a good season in Parador. Q4 is a good reason in Parador. So March was good. And we did the e-business more. We did the DIY connect more. We were able to sell in Germany far better than any other competitor. And therefore, we were able to take a huge market share in Germany. All of that contributed because the borders were more or less sealed and therefore selling outside Germany was very difficult. We were also extra capital on payments. And therefore, we were doing businesses that are absolutely safe. The same in India. We're not doing any business where there is a possibility of money getting stuck. So same in Parador. In April, it has sustained quite well. But definitely, the order intakes from the balance part of the world as well as from balance part of Europe was far lesser. And therefore, you can't expect the 100% revenue to come from Germany alone. Therefore, it's not 100% definitely, but it's quite up. About 90% is what we achieved in April. I think May is in similar lines at the moment. And we are hopeful that Parador will not go down to 50% or 40% at all. So we will definitely be able to mark it up from there. But summers is a weak time in Europe. So I want to also caution you that this is not this year, this is every year, that June, July and August would be a difficult part of the year and it's normal in Parador, nothing to do with COVID. I think Parador has managed COVID very well.

Okay. Okay. And we've discussed this in the previous questions. I'm just trying -- referring to Slide 25. So you've kind of highlighted all the challenges that are there in real estate and migrant problems and lockdown restrictions and stuff like that. So the summary of this is that current quarter, running quarter will definitely be challenging on all aspects, I'm referring to India, I'm just -- and therefore, we should not be having too much of expectations while we're comparing Q1 versus Q1 when we talk same time after, let's say sometime in July. Is that broadly the summary that you, kind of, are trying to highlight here?

I would not say -- I would not paint it that dark as you did. We definitely have lost the first 20 days. There's no stealing away the fact that we can't get back 20 days. And 20 days of peak season of roofing, 20 days of a business which gives you maximum profitability. So we have lost that. But definitely, thereafter, we are standing good on roofing. Building Materials have come back to about 50% scale. Plumbing is doing better than last year. And Parador is about 90% of last year. If that gives you any symbol of where we are.

We have next question from the line of Shailee Parekh from Prabhudas Lilladher.

Mr. Choudhary, heartiest congratulations on a great set of numbers. I have 2 questions for you. The first being that for the rest of the year, can we expect any additional divesture of any noncore asset, sir?

Good evening, madam, and thank you very much for coming to the call and your positive comments. That's something that we are always looking at, anything which is noncore, nonutilized, we will not stay back from divesting it and reaping our -- and paying back our long-term debts. At the moment, I think the time is really bad to sell an asset because of COVID, we'll have to wait a little bit. But yes, you would get to know it as soon as something materializes.

Yes. I'll have to agree there. That's true. And sir, I had a follow-up question. One of the earlier participants had spoken with you about a cut in your A&P spend for the year for obvious reasons. I just wanted to know, and you also did mention that you'll are working on other cost-cutting initiatives. But I just wanted to know, it would be possible for you to quantify the variable and fixed costs that you see reducing in addition to your A&P spend, sir?

As I mentioned, again, it's a 0-based costing, both from variable and fixed cost element. Many of our employees and, in fact, to be clear, all our middle level, senior employees all have taken a salary cut. And they have all contributed towards the company's sustainability. We have looked at cost cuts at every angle that is possible and it's even going on. I think overall, you will get a much better picture once we're able to skip through May, which would be the first full month of plants running. I think we'll get a better picture of that. But yes, all actions have been taken; 10 focus groups are working on that. Every element is being looked at, no CapEx is absolutely needed, no increments to colleagues, no promotions this year. Salaries have been deducted from most, as I mentioned, on their own behalf. They have only opted for it. And several other cost-saving drives that are -- there are no recruitment at the moment unless it's absolutely there. So all of that have been put in place to prepare ourselves for a worst case scenario.

Okay. And sir -- I mean, if I may, just one last question. At what capacity utilization level do we breakeven, sir? Would you be comfortable sharing that number, please?

I think we will break even. You just wait for the results. I think we'll be better than that.

All right. We'll do, sir.

If roofing does what it is doing, I don't think we should have a problem there.

We have last question from the line of Mahantesh Marilinga from Finquest Securities.

Sir, just had a couple of questions here. Sir, actually, I was just trying to get an idea on the realization part, because in the last couple of quarters, the realization in the roofing segment was quite competitive since the competitors were cutting their prices and you were slightly holding on. So what is the current scenario in that roofing segment?

So you're absolutely right. Last year, I was very pronounced and clear that we are not following our competitors. There was a determined effort from their side to lower the prices. We didn't want to get into that panic, a, because we have a brand to protect, and we don't want to go below that; b, I didn't think it is worth doing a business where we are not making money. I think competitors' results would give you a good clarity around this that we have sustained on the profitability. This year, we have made enough impact in the market to increase our selling price. And I think the realization has gone plus double figures.

Does double figures, you mean in terms of rupees per meter?

No, percentage.

Okay. And even the competitors have increased or they are maintaining the same price?

I think they would be also increasing. We are the market leaders on price. So once we increase, they will also increase. Sorry, 1 minute. Veerappan was it INR 10 or 10%? I don't have the numbers in front of me. Veerappan?

Price increase is around 10%.

Yes. Thank you. Thank you very much. Go ahead, please?

Sir, and you mentioned about the roofing business being more than 100% utilization, right, currently?

Roofing, yes.

So net-net, even after taking into account the 20 days shutdown, would it be safe to assume that the sales rate would be on par maybe when compared to last year or slightly better than last year?

I said that 20 days lost completely in manufacturing and sales, so you can understand we couldn't even create the inventory in the first 20 days. And we will lose out the last 15 days of the month because the production is not good for this quarter. There is a drying period that we have.

Sorry, sir, what period?

Sorry? There is a drying period. The product gets dried before it can be sold.

Curing.

Curing. Curing time.

Okay. So the last 15 days will be lost.

So I think 30, 35 days are lost from a revenue perspective on product. Actually, we can't make up 1 month in the balance 2 months. I hope that puts the…

Sir, and coming to the other businesses, like Building Solutions, what's your near-term take like for example since the real estate is down of late, and you're only catering to the green zones and trying to improve demand there. Maybe this will run to 1 or 2 quarters more, what's your insight there?

I think it's as good as your guess. I would opine at least 1 or 2 quarters will be a difficult period for real estate to come back. But we will try and maximize through digital network, through lead generation, through heat maps, everything that we are trying to do to get business from the greener pastures.

Sir, in the roofing segment, you mentioned that you are trying to negotiate some terms in -- with respect to Brazil. This…

Sorry?

In the roofing segment, regarding the fiber procurement from Brazil, you're negotiating with them. So this will run for a couple of quarters or it's for the whole year?

No, no, no, the quantity won't be that much. Please give me some more time, let me conclude that deal, I will come back to you and pronounce the amount.

And also on the rupee depreciation, would you have some impact on the overall raw material cost?

So we normally hedge extremely well. We don't like to take any positions, and that's exactly what we have done. At the moment, I think for the next 2 quarters, the fiber is very much in, and therefore, the hedging has already been done. I think the last 2 quarters would be something which is still open because we haven't yet completed the ordering cycle. So we will see how rupee fares up then, and then we will have to take a call.

Okay. Sir, lastly, like, what's the current cost of debt, sir?

The current cost of debt. So in Europe, I mentioned already to you. In India, Veerappan, about 8.5%?

No, it's around 8.2% -- 8.25%.

Sir, we have a couple of more questions in the queue. We have the next question from the line of [ Sarika Kukshya ], an investor.

Hello? Am I audible?

Yes, ma'am.

Yes. Just wanted to understand when we talked of a 50% jump on the bottom line for FY '21, which segment is going to contribute towards the same? Because when we actually talked of the Building Material or the Parador, we hardly expect the growth to kind of taking for FY '21?

Sorry, did we say 30% jump on FY '21? Sorry, your question, please, once again?

No, where did you get these numbers. I think we need to be a little bit -- if you can just clarify?

We definitely talked of the INR 150 crores when it comes to reduction on the debt side. So definitely it's going to be out of the cash flows, which we expect for FY '21. So we are expecting 100% -- 50% jump on the INR 100 crores, which we have clocked in for this year.

No, no, I think the debt reduction is mainly on account of the sale proceeds, which we are going to get from the sale of this thermal insulation business, that sale proceeds. That is the major one and transfer -- and we're also trying to transfer some money from Europe based on their internal cash accruals. So it's a combination of all this. It's -- there's no jump in profits to that extent. That understanding, I'm not sure they will give that.

I think, madam, it will be fair to say it's very, very difficult for any organization to give you year-end projection at this stage. And I would not dare to do that. So it's very difficult for me to tell you how much the profit will increase or decrease at this stage.

Right. So when we talk of the roofing segment, just wanted to touch upon the margin business. Would we be able to find -- sustain last year's margin for this year as well?

For the period that we work, yes. For the period, we have lost 20 days, definitely no.

Wonderful. And secondly, could you talk about the institution side of this as well? Does it find applications on the warehousing side as well?

So could you again repeat? Sorry, the line wasn't very clear.

On the roofing segment, we were active on the institution side as well. We actually had the -- made some suppliers on the railway side, and we were actually trying to kind of build upon it. So what's the progress on that side?

So it's faring well because these are initial orders, which get installed and it takes about a year for them to repeat it. It was actually doing very well till the COVID settled in. At the moment, institutions are a little weak, but we are hoping that we will get this picked up in the next 30 days' time. So I'd be able to give you a much better picture next time that I talk to you on this.

Right. And would the same be finding application on the warehousing side as well?

Absolutely yes. Absolutely yes.

So the fee on the tier 2 city is wherein the [ cost cuts that we are planning ], so how big could that turn out to be for the current year?

It should be positive. It should be positive. That's all I can say. It should be positive.

And it would reflect starting the first quarter of this current year itself? It would reflect in numbers?

Yes, difficult to say whether we can catch on to that immediately, but definitely, in the next couple of months we should be able to.

We have the last question from the line of Naomi Marfatia from Investec India.

Congratulations on good set of numbers. Actually, I wanted to know a couple of things. One is, how is the putty business doing, specifically competitive intensity in space with Spain companies venturing in?

Putt is doing very well, ma'am, and I must say that we are extremely happy about that business; a, it's a negative working capital business for us; and b, productions have set up very well. We have now set up 2 lines of putty manufacturing in Jhajjar and 1 in Golan, and I think our brand has created itself a good mark in the market. We are mainly centered at North earlier. Now we are spreading to East and South as well. West is slightly dull because of COVID. But hopefully, in the next 1 month's time putty will really pick up. No, I have no concerns on putty at all.

Okay. And also I wanted to know what is the product mix on agri versus non agri?

Sorry, the product mix of?

We don't have -- I think Dhirup mentioned in the earlier thing we don't have agri plants, madam.

Okay. And also one last thing. Can you please share the Polymer division volume growth or degrowth for the quarter?

For quarter 4? Or the present quarter?

The present quarter.

The present quarter, at the moment, Polymer business is sustaining well over same time last year. It's doing better than same time last year.

Thank you. Ladies and gentlemen, that was the last question. I would now like to hand the conference over to the management for closing comments. Sir, over to you.

Thank you very much. It has been a pleasure interacting with all of you over the call. We thank you for taking your time out and engaging with us today. We value your continued interest and support on HIL. If you have any further questions or would like to throw anything as a suggestion to our company, kindly reach out to our investor relationship desk, I'll be most happy to speak to each one of you, if you have anything in particular. Thank you very much, and goodbye.

Thank you very much, sir. Ladies and gentlemen, on behalf of HIL Limited, that concludes this conference call. Thank you for joining with us, and you may now disconnect your lines.