Borosil Limited (BOROLTD) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Q3 FY '24 Earnings Conference Call of Borosil Limited hosted by ICICI Securities. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Anirudh Joshi from ICICI Securities. Thank you, and over to you, sir.

Yes. Thanks, Tushar. On behalf of ICICI Securities, we welcome you all to Q3 FY '24 and 9-month FY '24 Results Conference Call of Borosil. We have with us senior management represented by Mr. Shreevar Kheruka, Managing Director and CEO; Mr. Rajesh Kumar Chaudhary, Whole-Time Director; Mr. Anand Sultania, Chief Financial Officer; Mr. Rituraj Sharma, President, Consumer Products; and Mr. Balesh Talapady, Vice President, Investor Relations and Business Analysis. Now I hand over the call to Mr. Shreevar for his initial comments on quarterly performance, and then we will open the floor for question-and-answer session. Thanks, and over to you, sir.

Thank you, Anirudh and ICICI Securities, for arranging this call. I wish everyone a very good afternoon. The Borosil team is delighted to be communicating with you once again. Borosil Limited's Board approved the company's financial results for Q3 FY '24 and 9 months ended December FY '24 on February 13, 2024. Our results and an updated presentation have been sent to the stock exchanges and have also been uploaded to the company's website. In our previous communications, we have detailed our intention to reorganize the company's consumer and scientific business into 2 distinct, publicly listed entity through a composite arrangement scheme. The appointed date for the said scheme was 1st April 2022. We are pleased to inform you that the scheme has been made effective from 2nd December 2023. And pursuant to the scheme, the scientific and industrial products business of the company stands demerged into a company called Borosil Scientific Limited. At this point of time, we await regulatory approvals for Borosil Scientific Limited's listing on the stock exchange. Therefore, in today's call, we shall focus and discuss on the business of Borosil Limited, which houses our consumer products businesses. Moreover, for my opening remarks, I will stick to talking about the period 9 months ended December 2023 rather than simply quarterly numbers because of changes in the festival season in terms of the dates this year versus last year. Therefore, the 9 months makes it more comparable. Our revenue from operations grew phenomenally well during the 9 months ended December 2023 at INR 713.4 crores as against INR 565 crores for the same period last year. That's a growth of 26.3%. During the 9-month period, the company achieved an EBITDA before exceptional and onetime items, including investment income, of INR 124.7 crores as against INR 57.5 crores. That is more than double of the previous period. The EBITDA margin was 17.5% for this period as against 10.2% in the corresponding prior period. Profit before tax during YTD December FY '24 was INR 81.2 crores as against INR 63.8 crores in the same period last year. Last year, the company had an exceptional item of INR 9.3 crores, which was received towards insurance claim and also a onetime gain towards sale of a noncore asset of INR 13.6 crores. The income from investments for YTD December FY '24 is INR 5.4 crores as against INR 0.5 crores during the same period last year. And the depreciation and finance costs this year are higher by about INR 27 crores, primarily due to the commissioning of the new opal glass furnace during Q4 FY '23. During year-to-date December FY '24, Borosil recorded a profit after tax of INR 60.8 crores as compared to INR 48.7 crores during the same period last year. Coming to our category-wise performance, Borosil's consumer business comprises glassware products, non-glassware products, both of which are under the brand Borosil; and Opalware range under the brand Larah. Here, we achieved, as I already mentioned, a strong sales performance of INR 713.4 crores as against INR 565 crores, which is a growth of 26.3%. Drilling this down further, sales of glassware products grew by 12.7% from INR 138 crores to INR 155 crores during this period, and non-glassware grew by 23% to reach a turnover of INR 289.5 crores during the 9 month ended December '23. We saw good growth across all our ranges and as well as all our channels. Non-glassware sales on the Borosil brand now comprise about 65% of the revenue of the Borosil brand. On Opal -- on the Larah side, our Opalware brand Larah achieved sales of INR 269 crores during FY -- YTD December FY '24, that is a growth of almost 40% over the same period in the previous year. The EBITDA margin during YTD December FY '24 was 17.5% for the overall business as against 10.2%. We have seen a softening of direct costs, including fuel and raw material prices, throughout the period. And operating leverage has kicked in, in many areas post the doubling of our Opalware production capacity. We continue to observe margin increases due to increase in sales as well as reduction in input costs. The company continues to invest in marketing for both Larah and Borosil to raise customer awareness and increase brand presence. Our current priority is to expand our marketing, sales as well as the brand across the length and breadth of the country. Our endeavor is for our consumers to switch from plastic and melamine to glass storage and Opalware serving ware and to increase the use of glassware for microwavables as well as for oven-proof applications. We constantly introduce new products to diversify our offerings such as portable high-grade steel products and home appliances. We aim to make Borosil and Larah the preferred brands in the modern Indian kitchen for daily storage, preparation, cooking, heating and serving purposes. In our previous communications, we had also mentioned that the company is setting up a 25 tonne per day production capacity for Borosilicate glass pressware at Jaipur, Rajasthan. I'm very pleased to inform you that the furnace has been commissioned on January 31, 2024, for trial production. The company expects commercial production to be achieved sometime later this quarter. We will, of course, announce this to the exchanges as and when that happens. This will further help reduce our dependence on imports, improve our product offering, cater to the domestic as well as overseas demand for pressware products made of borosilicate glass and will also improve margins as our cost of production will be lower than the cost of the imports. Exports, as I already mentioned, could also have a fillip owing to China Plus One being followed by many parts of the world today. We continue to be optimistic about the consumer business' medium-term prospects. Even though occasionally, there may be slow growths due to cautious consumer behavior, we expect industry-wide growth due to positive long-term trends. Our main priorities shall be to expand our consumer base, launching new items as well as streamlining our supply chain and marketing channels to bolster our brand's visibility. The company is seeking an enabling resolution to potentially raise capital in any form during the year ahead. We will discuss internally with the Board to see how and when to go about raising the capital. At this moment, we seek an enabling resolution which will permit us to have funds for future growth. With that, with the brief opening remarks, I would like to throw the floor open to questions. Thank you.

[Operator Instructions] The first question is from the line of Arpit Shah from Stallion Asset.

Congratulations on the demerger and superb performance in this quarter. I had a couple of questions. I will just list down all my questions and then we can go ahead. I just wanted to understand, what is the capital employed number for the quarter and how this number is divided between working capital and fixed assets? What would be the steady state of depreciation and finance cost when the CapEx has been commissioned? And is there any CapEx which is still pending in the business that needs to be commissioned in the coming quarters? And if you can help us with any guidance for '25, what kind of margins or what kind of revenue we could expect given that market has been soft, but your performance has been actually been very, very strong? And my last question, was there any one-off number in sales this quarter, I mean, in Q3 FY '24? Because I do remember when La Opala had commissioned up their plant, they had seen a very big pump-up in sales in the subsequent quarter. Do we have something similar which is happening with us as well? Or is it something that's different that we have done or we have executed superbly well this quarter?

Okay. So that's a lot of questions. Let me -- I will take a couple and then I'm going to ask my finance team to answer the few others. As far as sales are concerned, I can tell you that we do have institutional sales, which happen during Diwali quarter every year. And these are, let's say, routine sales, meaning it's not every year to the same party, it's different parties for different years. And that does play a role in improving sales during the Diwali period. So as such, there have been one-offs, but it's like this every year. So it's hard to say whether the one-offs will not be repeated or will be repeated. It just depends on the traction for Diwali. But at this moment, I would say we are quite comfortable that we expect to improve upon our performance in the years ahead. The -- as far as the bump-up of anyone else's sales are concerned, it's hard for me to comment, that you'd have to ask them. But we have 5 strong channels, which we have -- and we have teams manning each of those channels. And each team has their own targets, which grow year-on-year. And therefore, they are incentivized and motivated to keep doing better than the year before because the last year becomes the base for them to further move ahead. Coming to the question of FY '25, I would stay away from giving you any guidance on FY '25 specifically, except as to say that we have given guidance in the past on a medium-term CAGR, which has been in the range of 15% to 20%. And this, of course, encompasses a period of low growth as well as high growth. And if you look at our past performance, if that's at all any indicator of future, which probably is not, but we have been kind of on the higher end of that spectrum. But whether it happens in any one particular year, it's hard to kind of to comment on. So I would not like to comment on FY '25 numbers per se, but to say that we look over a 3- to 5-year period, and we hope that we can do 15% to 20% CAGR in that period. And this is nothing new. It's been -- I've been sharing this for a long time now. I would request our finance team to talk about capital employed if they have the numbers ready or maybe they can connect -- we can upload this on the -- online at some later stage. But Rajesh, if you would like to take this question.

Yes. So regarding this capital employed and all these things, I think we will upload these numbers separately. On the depreciation side, the present depreciation number is around INR 52 crores. And since the -- our another furnace, borosilicate furnace, which is at Jaipur, this is going to capitalize in this current quarter, Q4. So after having this furnace capitalized, the depreciation amount may range to INR 80 crores per annum.

Got it. And the debt sits in our business, right, the INR 200 crore-plus debt?

Yes, that sits in Borosil Limited. That's right.

But if you see, our finance costs were on the lower end, and it was around INR 2 crores a quarter. So what -- how is that number on the lower end [ in our account ]?

So basically, most of the loans we have drawn in the last month of Q3. So that is why the finance cost is lower.

No, given that our debt, INR 215 crores was for the combined business, which was there since a long time, so is -- do we have investments also in this business or that is meant for the science business?

Anand?

The investment in this business also.

Yes, there are investments in this business also. So there is about INR 180 crores of debt basically, which is in the form of your loans and your working capital loans. And then there is a cash of about INR 90 crores or investments in the books. So the net cash position is about INR 90 crores negative.

And the next question is from the line of Pranay Roop Chatterjee from Burman Capital.

So my first question actually builds upon a question that has already been asked. So if I look at the overall market and especially in the results of consumer companies, consumer durables, kitchen appliances, other glassware players, all of them, and I'm not talking -- I'm adding up Q2 and Q3 and looking at it from a Y-o-Y perspective. So the timing of Diwali does not really matter. Everyone has either been flat or actually shown a decline. So -- and Borosil has shown mid-20s to 30% growth, right? So what would be, number one, what would be the volume growth portion here? I'm just trying to strip out the commodity price deflation that might have happened. And what has driven the strong growth, right? Because it cannot be that the sales team is working, right, because sales team is working every quarter. But until the last quarter, we were seeing single-digit Y-o-Y growth rates in -- especially in consumer glassware, and that has turned into 35% this quarter. So if you could just throw some more color on some of the aspects here.

Look, as far as we are concerned, I can tell you that we have huge diversity in product categories as well as in channels, and that has led us to perform quite well compared maybe to others. And I don't have an answer other than that really because when we look at glassware, since you raised that point, we knew we have this furnace coming, so we have to innovate on products. We had to innovate on various, let's call it, new shapes, new sizes, and many of those new SKUs did quite well for us. And as far as the, like I said, competition is concerned, hard to comment there. But we do believe that the product innovation and the various range of products plus the number of channels we have, each of which have dedicated teams, I think that would be maybe one of the reasons we have been able to grow. Not to say that the market has been very good, it has been very tough and it has been very challenging. And this is something we are discussing really on a daily basis. So we have grown well in a tough situation, and I hope and pray that this can continue for us. But I'm afraid I don't have much different answer for you than that.

All clear on that. Secondly, you commissioned the borosilicate pressware facility. And just in case you have some more clarity incrementally over previous quarters, could you give us a sense on how much increase in fixed costs we can expect? And by fixed cost, I mean simply the incremental employee costs and incremental other expenses we can expect in the next couple of quarters because of this furnace, right? Because that would slightly dent your EBITDA temporarily. So just wanted to get a heads-up on that.

I'm afraid I can't share that information with you at this stage, frankly, for 2 reasons: one is I can't; and second is that we don't even know it yet fully because it's just a few days since the furnace has started. So any number I give you may be erroneous. So -- but you're right, directionally, yes, it will impact going forward for a shorter period of time until the production stabilizes. This is after -- I mean, this is the first furnace of this type in India. So there is no other specialist available, let's say, in India to -- who can help us. We are learning by doing. Of course, we have a great team on the technology side doing this. But still, whenever we do something new, it's bound to have its own sort of challenges. So there will be some impact on this, and I think it will be short term, frankly, because the benefit of the furnace, the lower cost of production and then the higher revenue coming from higher tonnage sales will more than offset it. We always do business in the long -- for the long term. We don't really think of the short term while doing business. So we'll absorb that impact if it's there for 1 or 2 quarters.

Great. That makes sense. And on the Opalware division, you saw quite a good growth number, about 60%. I just want to understand, in this quarter, should we assume that your capacities were fully utilized? And along with that, did you also see some benefit on the realization side? Just trying to understand the price and the volumes versus your revenue.

Yes, yes, so you had asked the question before. So at this year, we've not taken any price increases really. So all the growth has really come from 2 areas: one is volume and second could be product mix, right? I mean -- so that is hard to quantify product mix. But I would say, across the categories, we have not really taken any price increase, so all growth is basically volume growth. But Opalware has not been operating at 100%. We have been somewhere about 85%, I would say, capacity utilization. So we still have a hope to further improve this should we be able to sell the entire production.

This 85% is blended or only for the new furnace?

Blended.

Okay. Understood. And what would be the peak revenue potential in that case from your existing capacity, 100%?

Opalware, if -- I think we had also shared this in the past, it's somewhere -- with the 2 furnaces in operation, I think somewhere INR 400-plus crores for the year should be the possibility, INR 400 crores to INR 420 crores.

And lastly, if you could also cover -- because the Borosil Scientific is getting demerged, right? Any thoughts on the management on how we will allocate the bandwidth?

I'll talk about Borosil Scientific when that comes up, maybe I'll talk about it separately. But of course, we already have -- it's already happened. So yes, we have a separate team altogether. I mean just a short point is we have 2 separate teams, which are running these 2 separate businesses. And there's a CEO there, and there's a Board of Directors and there's a non-promoter Chairman who runs the Board of Directors. So it's quite professionalized, that business.

And the next question is from the line of Jasdeep Walia from Clockvine.

Shreevar, what are your plans for capacity expansion on the Opalware side? Given the strong growth in sales this year, it seems like by the end of this year or by next year, your Opalware plant will be fully utilized. So how are you thinking about expanding capacity there?

Jasdeep, currently, at this stage, we are not thinking of any further expansion. We would like to conclude the entire utilization of the capacity. And as I mentioned before, the borosilicate plant, there is a big capacity addition compared to our current sales. And there are many products probably which are similar, let's say, in Borosil, for example, we have a lunch box, which is a glass lunch box plus you have an Opalware lunch box, right? So we may then choose to focus on one versus the other depending on our capacity and see how we can sell more of one versus the other. I mean I don't know. The point is we would like to stabilize the borosilicate operation as well as improve the capacity utilization there before we decide now what next to do. So I think for the next 12 or 15 months, let's say, till at least March of '25, we are not looking at any further CapEx in this -- in the production because we just want to focus on what we have.

Got it. So what are the broad objectives of the capital raise, which has been proposed?

Well, the capital raise is proposed -- obviously, there's debt on the books. There's also -- there is CapEx to be done in the future, which -- so I don't -- I mean this is something that we'll have to discuss at the Board level exactly how the proceeds will be utilized, but it will naturally broadly be used for 1 of the 2 purposes.

And the next question is from the line of Gaurav Gandhi from Glorytail Capital Management.

Congratulations on the great set of numbers and overall development of business. My question is more related to our domestic appliances business like mixer, grinders, cookwares or storage range. Looking at so many brands and competition in the space, so in what terms our products different or better in terms of quality, design and how should you look at attracting consumers towards our brand?

Okay. In terms of the quality, look, we have a product management team. This quality is determined by many factors, for example, understanding what's available in the market, understanding what customers need, what customers have a view. We do a lot of focus group studies with customers to understand what they like, what they don't like. And we also look at what's available from our suppliers because we don't manufacture these products. So we have a fairly intensive understanding of when we want to launch a product, where we want to place it, pricing also matters. There's a price and value kind of crossover point where you need to decide where you want to place the product. So at this -- this is all done at the starting point itself. And I would say we are placed in the, let's say, in the premium range of appliances, and therefore, we don't wish to play in the mass market of home appliances. So the Brand Borosil means quality, it means trust, it means reliability, performance and so on. So therefore, any product we launch should adhere to those guidelines. So I know it is a bit touchy-feely, but that is really what it is. And there is a product management team who decides how to do this. And you are right, there are many competitors. But frankly, end of day, it's a huge market. There is space for many players to play, and we are also one of the players. And the fact is that our appliances business has grown substantially. If you look at our non-glassware sales, that's testament to the fact that we've been able to grow or stretch our brand from being a glassware brand to including products like steel and home appliances. And every year, we've seen growth there. So we feel fairly comfortably placed. We've not deployed any capital in the business in terms of manufacturing assets. It's working capital and it's, of course, a team. And we generate a reasonable return on capital. So the business continues, so we are happy to be a part of it.

And the next question is from the line of Dhaval Shah from Girik Capital.

Congratulations to the entire team for great execution. My question is on the ramp-up of the new borosilicate furnace. How do you see the ramp-up happening there given it's a premium offering to the market and all of new products are going to be introduced? And in order to prepare the market for accepting such large volumes coming in, did we take any price cut over the last 1 year in the borosilicate range? So these are my 2 questions.

So look, as far as the brand -- I mean, the product offering, yes, right now, we may have 30, 40, 50 SKUs in borosilicate. We'll be doubling that in order to have a bigger range, which -- and that's by having our own manufacturing that allows us. So the bigger range itself should expand the market, at least that's the thesis. Coming to pricing, yes, it is a premium product, and that's also one of the reasons why the revenues -- or rather the tonnages sold are slightly on the lower side. Now having our own manufacturing does give us the leverage to reduce or to make the pricing more compelling so that more users get too interactive with the product. And our clear feeling is that once people start using the product, they will always go back to buying it. Right now, when the product itself starts at a higher price, then people are afraid to enter it. But once you launch it at a price which is attractive, then you'll find that there's a lot of repeat purchase. So we will definitely play on the pricing, which is afforded to us by the fact that we are producing it from a cost perspective. So as far as the exact percentages, I would not like to comment on, but we would -- our immediate focus will be to expand the market, and that's 2 ways. One is to give some attractive entry-level products at attractive pricing, plus also expand the product range so that the customers have more choice to choose from.

Got it. Got it. And on the appliances side, I understand that we are currently outsourcing the entire manufacturing to mainly from China. Now what will be the strategy going forward? Is it going to be the same Chinese model? Or are we also planning to find some vendors here given overall government focus is also to have more domestic sourcing across all the industries? What is your thought process? Maybe some policies might come, which could be negative for us in terms of importing the appliances in the completely finished form. Some thoughts on that side.

Yes, frankly, that's -- we have already -- this was known to us sometime ago and probably the whole industry is aware of it. And we have been onshoring a lot of our sourcing. So it's not the fact that everything comes from China. We have increased the percentage quite substantially of Made in India appliances, and I see this increasing further and further. The manufacturing ecosystem for many of our appliances has been developed in India with high quality and with attractive pricing. And many of those, therefore, we have already moved to India. Of course, we are working with vendors to further enhance this. And I would say that in the next, let's say, 3 years, a vast majority of our appliances would be Made in India and not imported at all. So we are on that path. The Chinese took 20, 25 years to build their manufacturing ecosystem. So India may do it faster, but it will take some time. So let's assume that in the next 3 to 5 years, the scenario will have allowed us to onshore most of our products, not just appliances, but across our categories.

Got it. And last question is on the opalware industry. How do you see the competitive intensity? I understand it has increased. And so is it coming -- is it really getting difficult in terms of managing the margins and how do you see going forward? And also what new capacities are going to come on the Opalware side in India? And what is the existing installed capacity in India? And over the next 2-year period, how do you see the installed capacity going to in Opalware?

See, both our competitors who manufacture opalware in India, both are absolutely fantastic players. They have great products, and they are very mature players. And we have the utmost respect for them. They have done a great job in expanding the market, as have we. And I think, as an industry, we have been able to successfully grow this whole -- we have successful kind of changed the way Indians eat in more stylish plates and in better-looking product, which is also more utilitarian because you can, let's say, microwave it. You can -- it's toughened, so it doesn't chip or break easily, it's stylish. So I think all 3 of us have done good jobs over here. As far as capacity -- so these are all mature players. I don't see competitive intensity in a sense where margins -- these are high CapEx businesses. You need to have enough EBITDA to keep funding the business, both from a maintenance CapEx perspective as well as from a growth perspective. So when you have a high CapEx business, you need to have reasonable margins. And I think all the players are mature enough to understand that. And new capacities, at the moment, there has been a slowdown in the market in general. So I do not think anyone would really add much new capacity today. But what happens 2 years down the line is hard to predict. But as of today, I don't hear that anyone is adding capacity. But again, my information may not entirely be accurate.

Okay. Okay, okay. So overall, at an industry level, the opalware industry must be operating at nearly full, 85%, 90% capacity? Would that be...

I don't want to comment about that. I already shared the number with someone earlier. I don't know what others are operating at, so hard for me to make a guess there.

And the next question is from the line of Priyank Chheda from Vallum Capital.

Sir, what would be our institutional sales in Opalware? Was it only in Opalware or was it into other categories also? I wanted to confirm this. Would you be able to quantify that? So that it becomes very easy for us to have a comparable figure down the line in the next 12 months, if we have this figure in the hand.

I'm sorry, I don't share the data by channel, okay? So I'm sorry, I can't share that information with you. But institutional sales are across all products. So we don't drive what our customers buy when they're gifting. We have -- we show up at the customers' end with our catalogs, and they decide basis budget, basis so many factors what they want to buy. And we would not -- we want sales. So we will not say that you only buy opal from us and don't buy something else. So we are open to -- we have a big range of products and the customers buy from us. Opal also is a successful one because you can really -- you can -- the price points are very attractive for opal. You can give a gift of 2 cups or 2 mugs. Anything from that, too, you can give a dinner set as a gift. It's a very wide range of pricing. So there's something for each, let's say, budget. So it is an attractive area, but I apologize, I can't share with you the numbers.

No problem. No problem. And what would be our -- it's hard to reinstate this question on another lens. What would be our consumer or tertiary sales? Maybe if you can help us on the YTD number, that would be also great.

Tertiary sales, you're seeing from our customers to their customers?

Yes.

Well, frankly, we know this number for trade, for general trade. And I mean, for large-format stores, we don't get the data. So the large-format stores will not give us the data. For canteen stores, we don't get the data. So we'll not have that information. Of course, the -- from an Amazon perspective, we know the tertiary sales and from a trade perspective, we know the tertiary sales. But if your question is how much stocking has happened in the system, which I guess is where you're kind of leading to, I don't believe there's an overstocking in the system of any great amount. And this is basis inputs from my sales team, so we track our secondary and tertiary sale data quite closely. And we don't think that there's been, let's say, dumping from our side to the system. I don't have any -- I don't have hard data which I can share with you.

Got it. So can we get a sense on the qualitative aspect on what would have been the channel growth we have or are present onto our 5 channels? So which channel would have given us higher growth?

Whatever growth numbers you see, they have been fairly consistent across our channels. So I would not say something is dramatically off. In fact, all the channels are double-digit growths.

And any significant success on the export side of Opalware or onto any of the other borosilicate part?

Borosilicate [Foreign Language], so it's nothing reflected in the December numbers. As far as Opalware is concerned, we have been selling in exports for quite some time. And I can't say that there has been something dramatically different than before. It's growing, like I said, along with all our other 5 channels in India. It's a sixth channel for us. It's growing -- also growing double digit, but I can't say that there's some single order or one-off item which has dramatically enhanced our performance there.

Got it. Just a last question on a very broader industry perspective and particularly for Opalware. So what -- the kind of industry structure is that the market overall size remains very small. While we have a matured players into this industry, our consumer kind of is yet to mature from a steel, melamine to opalware. So what kind of a work that is required to be done in case you can help for industry to at -- for an overall industry perspective so that the size becomes INR 3,000 crores, INR 4,000 crores kind of a acceptance on the consumer level?

See, while you may say this, I'm only at partial agreement with your point. The point is that when we acquired this opal glass plant in 2016, there was only one player at that time, that was La Opala. You know the revenues they had at that time, maybe like INR 250 crores, INR 300 crores, if I'm not mistaken. At that time, when we bought the business, our revenues would have been INR 45 crores, INR 50 crores. And that was the size of the business. Now today, fast forward, what, 8 years, you'll see 3 players. And the 3 players -- from 2 players, 3 players and the 3 players put together would have, let's say, INR 1,100 crores, INR 1,200 crores turnover, maybe INR 1,100 crore turnover, which is a big jump from, whatever, INR 250 crores, INR 300 crores to INR 1,100 in 8 years. So that itself is a big jump in my opinion. Yes, it's a -- I can partially agree, yes, this market should be INR 3,000 crores, INR 4,000 crores, which is where we should be heading. But in order to achieve that, I think we have to just keep doing more product innovation. I think that's an area where I think we may not have done a good enough job, I'm talking about Borosil. We -- I believe that our opal products can be premiumized much better than what we have done. We -- the cups, mugs, the servingware which we have, we can probably add more SKUs there, which will further enhance the size of the market. At the end of day, people buy a product when they see a variety and they see the utility aspect of it, which maybe we need to do a better job with. And that's something we are working on to enhance our ranges and to improve the utility for, say, drinking tea, drinking coffee or snacking. I don't think we've done good enough job there. And that's where we are working on, at least from Borosil's perspective, I would say.

So more SKU expansion and the category expansion is what can drive a faster consumer acceptance, correct?

100%. 100%, yes.

Got it. And just to add to a perspective onto this industry aspect, would imports or unorganized players doing unbranded part would have a significant role to play in this industry? And if you can also add to why HoReCa remains kind of an underserved industry for organized players like us?

Well, as far as HoReCa is concerned, I can tell you that we are not focused too much on HoReCa just because pricing is quite challenging over there. And therefore, when we can speak to the end customers and sell branded product, why should we go and sell because brand does not really matter for HoReCa, except for very few hotels. So the vast majority want pricing. And that's not something -- we are not the low-cost producer. Low cost producer could be in China or somewhere else for that matter. So therefore, HoReCa has not been a naturally strong segment for us, and we are not focused much there. Coming to imports, I -- you see, opalware import themselves may not be that high. They are there, maybe 15%, 20% may be there. But the fact is that there's a lot of unorganized competition from many other materials. When a customer goes to buy a dinner set, they necessarily don't look to buy an opal dinner set. They go and buy -- they want to buy a plate, they want to buy a mug, they'll go and see what's in the market and they'll choose. So in essence, it's not opal that's a competition. It's all these other, let's say, materials or other products which are competition. And there, you see huge -- including steel by the way, you'll see huge unorganized competition. So it could be 30%, 40%, 50% of the market size. So that's something that if we do a better job, like I said, with more -- with better design, with more utility products, with more shapes and sizes, I think we can start eating into that unorganized space. And that's, let's say, a blue ocean, as they call it, which all the industry can kind of get benefited from.

And the next question is from the line of Anirudh Joshi from ICICI Securities Limited.

Sir, 2, 3 questions from my side. So let's say, if we manufacture one glass bottle in India versus, let's say, if we import same bottle from outside, let's say, China, or in case of Opalware, let's say, we manufacture one plate in India versus we import same plate from China, then what will be the difference in the cost considering all the freight cost all the way from importing as well as the customs duties, et cetera? So what will be the difference in the different products, let's say, in glassware as well as opalware both?

So in my opinion, production versus manufacturing, if you look at the cost, now again the question is how do you define costs, you take interest and depreciation or you take off just the cost of -- sorry, there's some background noise. Yes. So I was saying that it depends on how you define costs, whether you want to include interest and depreciation or not because a lot of the Chinese guys have fully depreciated plants, which have been operating for 20 years. So there, on the interest and depreciation, we take a big hit because of that. But if I was to remove interest and depreciation and look at operating costs, which are raw material, power and fuel and look at product costing on that basis, then I think we would be 15% lower than China. But if you were to compare a fully depreciated plant of China with interest and depreciation at very low levels versus a brand-new plant here, then definitely, our costs are higher. And the -- also with China, it's never a question of cost, they sell below cost because they're subsidized. And they are able to sell this product artificially low because of various export subsidies, CapEx subsidies, OpEx subsidies that they get. So it's not really a level-playing field. It's very opaque. So we believe that these guys are routinely selling product below cost and getting back money from the government to compensate for the losses that they make. So -- but again, the data from China is very hard to kind of understand because it's quite opaque.

Okay. Sure, sir. Understood. In terms of the growth rates across the regions, let's say, East, West, North, South or even if you break down between, let's say, metros, Tier 1, 2 cities, or rural markets, so how do you see the demand outlook across the multiple geographies that we operate?

Frankly, Borosil is still -- the story is the top 100 cities of India. We are not in the rural markets, yet we would like to be there. And maybe now as we expand our product portfolio, we get items which are more relevant to the rural consumer, maybe we'll start seeing some expansion, distribution expansion there. But frankly speaking, our main products are top 100 cities in India. And region-wise, I'm not seeing again a dramatic difference. I mean the difference also depends on our penetration. For example, in South, we are the lowest penetrated, whereas North, we may be the highest. So I'm talking about relative to us only. I'm not talking about relative to competition. I'm talking about just relative to our own penetration versus our market potential of that region. So growth has been quite attractive, for example, in South this year, but the base is low. So that's something that we have to consider. Absolute growth may still be a bit higher in North because base is higher, even if the percentage growth is lower. So our goal is that we should cover the length and breadth of the country. And we've expanded our retail presence to, I think, almost 25,000 retail outlets. We believe we can still expand this further at a reasonably good pace and even expand distribution. Because of the new ranges, we are seeing specific distributors for specific product ranges also which gives focus to the sales team as well as to the distributors themselves. So there are many ways to expand the base, which -- and we're doing them. Of course, some we succeed and some we fail, but that's part of it.

Okay. Sure. Understood. And last question, if you can indicate the profitability, the EBITDA margin that we get if we do sales from different channels versus exports, own website, general trade, B2B, modern trade, e-commerce, means I don't want numbers, but I just wanted to check if the profitability across all regions, across all channels is same, then it really doesn't matter whether we sell it to GT or MT or e-com?

If you look at a gross margin perspective, there's a very small gap, there's a very small gap between the various channels. It's a very, very small gap. So we are happy to sell in every channel.

No, no, I'm saying in terms of EBITDA margin per se.

EBITDA is a little bit harder to calculate because then how do you allocate some costs, especially overhead marketing costs, for example, very difficult to measure. That's -- because marketing costs are fungible. If I market something online and I only -- should I only debit it to my online sales, as an example or -- but -- or for example, on WhatsApp or on YouTube because those are all influencing purchase offline also. So it's a bit ad-hoc for me to allocate that expense. I'll just say an example, the same story goes on, let's say, management, the senior management fee, very difficult to allocate them by channel just because we -- every month will be a -- management is spending time in different areas. So how do we allocate those expenses? So while we do try and do it, frankly, it's a guess at best. But I can tell you that basis our data, all our channels are profitable for us. And we, therefore, we continue to invest in them. And that's the reason also why we didn't do HoReCa because we saw HoReCa was not really profitable for us.

[Operator Instructions] The next question is from the line of [ Vipul Kumar Shah ] from Sumangal Investments.

Congratulations for a very good set of numbers. Sir, my question is with the commissioning of this glass furnace, what will be your capacity? And what was the previous capacity? What is the capacity addition in tonnage?

So the capacity is 25 tonnes per day of the blast furnace. And normally, this furnace operates at 70%, 80% yield utilization or yields. So you can do the math. But this is the first furnace of its type in India. So there was -- earlier, we were importing this product and selling it. So we can't really compare it with any previous capacity because we were not manufacturing this product. So yes, that's the answer to your question.

So what type of cost saving we can expect with the commissioning of this furnace? Or it will -- so is that to do with the cost or it has to do with the quality, we get better quality with this?

I would say the quality will be comparable to -- we were importing from European producers earlier, and the quality will be actually comparable. Cost is where we get -- we get 2 benefits. One is the cost benefit, maybe 15%, 20%, we should be able to have a benefit compared to importing this from Europe. But on the flip side, the bigger benefit is really the product range and the availability of product because now we have to have -- the supply chain time is very long. When we have our own production in Jaipur, we can make products more or less on demand if needed. And we can also make a much bigger range. We can do a lot of trial and error with new shapes and sizes, and that also helps expand the market. So I would say the product range and availability at short notice would be really a bigger benefit when compared to cost. Because the cost benefit, we will have to pass on to the end customer in order to expand the market.

Okay. So we will pass on the entire benefit to the consumer just to expand the market?

Yes, in the short run, for sure. Yes.

And the next question is from the line of Monish Ghodke from HDFC AMC.

Sir, in Opalware category, is our pricing at par with the category leader?

For similar products, yes. For a similar product, yes, but the category leader does have some premium offerings which we don't have at the moment. So overall, probably, if I look at just the net realization, they will probably be higher than us because they have premium products, which we have not yet launched or which we are in a process of launching.

Okay. And sir, our gross margins, are they comparable with the category leader? Like they have some 80% gross margin and 40%. So are we also operating at similar levels in Opalware?

Yes, yes.

That was the last question. I would now like to hand the conference over to the management for closing comments.

Well, thank you for an engaging conversation and many good questions. I hope I was able to answer them to your satisfaction. Thank you for your support. The company has been trying hard to expand, and we've been doing a reasonable job of achieving this objective. And we believe we have a very strong medium- to long-term growth story, and we'll continue working towards this end. And I look forward to, again, interacting with you at the end of the quarter 4. Thank you.

On behalf of ICICI Securities, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.