Grasim Industries Limited ($GRASIM)

Ladies and gentlemen, good day, and welcome to the Q4 FY '26 Earnings Conference Call of Grasim Industries. [Operator Instructions] I now hand the conference call to Mr. Ankit Panchmatia, Head of Investor Relations of Grasim Industries. Thank you, and over to you, Mr. Panchmatia.

Thanks. Good evening, and thank you for joining Grasim Fourth Quarter and Financial Year End 2026 earnings call. The financial statements, press release and presentation are already uploaded on the website. of stock exchanges on our website for your reference. For safe harbor, kindly referred to costly statement highlighted in the last slide of our presentation. Our management team is present on this call to discuss our results and business performance. We have with us Mr. Himanshu Kapania, Managing Director, Grasim Industries and Business Head, Birla Opus Paints; Mr. Hemant Kadel, Chief Financial Officer, Grasim Industries. We also have with us Mr. [indiscernible], Business Head of Chemicals [indiscernible] and Interlease. Mr. [indiscernible], Business Head of [indiscernible] Fibers business, Mr. Sachin Shah, CEO, [indiscernible]; and Mr. [indiscernible], CEO, Birla Pivot. Let me now hand over the call to Mr. Himanshu for his opening remarks. Over to you, sir.

Good evening, everyone, and thank you for joining Grain quarter 4 earnings call. Happy to share that FY '26 has been another landmark year in Grasim journey of transformation a journey that has steadily evolved the company from being a leader in select manufacturing businesses into a diversified platform of high-growth future-oriented enterprises. Over the last several years, we have enviously built capabilities across manufacturing, consumer-facing businesses, digital platforms, financial services and next-generation building materials ecosystem. The outcome of these investments are in our results. Consolidated revenue stood higher at INR 1,721 crores, or exceeding USD 18 billion in terms, registering compounded annual growth rate, CAGR, of 18% over period FY '21 to FY '26. It's truly remarkable to note that Grasim stand-alone revenue have also reached an all-time high of INR 41,039 crores, showcasing an impressive compounded annual growth rate of 27% during the same period. What we are witnessing today is the emergence of a structurally stronger grain with multiple engines of growth, sharper strategic clarity and enhanced resilience across cycles. The key pillars of our transformation has been our unwavering commitment towards building leadership positions across every business in which we operate. Historically, Grasim has built category-leading business through an operational excellence and disciplined execution. Today, that philosophy continued by our expansion into new age opportunities like paints and B2B e-commerce business as well. Starting with Paints, first, I want to take you back to a moment not too long ago. when we announced entering the decorative range business in year 2021, the market had questions, plenty of them. Could the newcomer, truly challenge and industry dominated by deeply intent [indiscernible] decades for brand loyalty, distribution network and sizing power. Was this ambition too tall? Today, I'm here to give you the answer. In quarter 4 FY '26, Birla offer delivered revenue growth of 52% year-on-year on a like-to-like basis. Further, excluding SBIC on a like-to-like basis, the growth statutory rises to 71%. In an industry where single-digit growth is celebrated, we have doubled our top line in 1 year. That is a growth of 100% revenue in FY '26 versus FY '25. The FY '26 performance is heartening despite the business was still not under full scale operations as current plant was commissioned in October 2025. But revenue alone does not tell the full story. What truly matters is market share because market share in paints is trust made visible. As per internal estimates, the decorative paints industry revenue stood approximately at INR 15,500 crores in quarter 4 of FY '26, including listed and unlisted paint measures code, wood finish and water proofing companies and others. However, this excludes the industrial paints and other non-decorative revenues. Our revenue market share expanded by approximately 90 basis points quarter-on-quarter, strengthening our position as the #3 player in the organized decorative paint sector. The FY '26 revenue market share expanded by 370 basis points over FY '25. When you combine below office with our Birla White business only we are now nearing the #2 position in Indian decorative paints. That is not a distant aspiration anymore. It is within striking distance. Let me take you through key [indiscernible] paints performance. Firstly, on the distribution front, Birla expanded its presence across 11,500 towns crossing 50,000 dealers build [indiscernible]. With 146 Depot, Birla offers ensure serviceability at industry benchmarks. The institution sales channel has built a sizable foundation and grew 43% quarter-on-quarter and 212% year-on-year with over 10,000 sites built in quarter 4 FY '26 alone. Birla Opus products now have 70-plus specification approvals from multiple governments and other departments across cities with a similar number under various stages of approval. The distribution sales channel is working on a robust pipeline of 45,000 sites in various stages of work across 650-plus towns. Secondly, the team continued its focus to drive secondary sales from dealer counters to contractors and consumers. The strong quarterly revenues have been possible on back of strong secondary by over 4.5 lakh active contractors who apply superior Birla Opus products. The 10% free paint promotion continues on 10 and 20-liter packs across all merchant top coats and waterproofing range, excluding subeconomy coats and under court primers. The strong relationship with pain contractors, the key influencers continue to scale strongly on back of digital first foundation platform through our contractor app focus is helping the team to engage on a scale level in convictions with the centrally controlled tinting machine analytics show strong cogent and shape consumption across geographies Pan India. With nearly 37,000 active printing machines in operations, the printing data continues to guide decent-making and understanding of consumer consumption trends. Birla Opus continues to accept contractors and painters workforce with industry-based schemes and all the benefits, which remain unmatched even today. besides working on programs to build painter skill sets and nonenergy benefits, including wellbeing and education support for his family. The repeat purchase by contractors is given on back of superior quality, which helps their reputation in the market and with the customers. Birla Opus continues to grow steadily also amongst the architects and interior designers. In short, [indiscernible] influencer segment, where partner network has now crossed 3,000 active forms across [indiscernible] estimated to reach the second largest AID network in the industry. Thirdly, on the product front, Birla Opus added 42 new products in FY '26, major leaps in in-house wallpaper, be launch of painting tools under sub-brand artists see waterproofing products on the subcategory [indiscernible] and many more in the merchant and [indiscernible] range. With this, the product portfolio expanded to 2 products and 1,850 plus SKUs serving a wide spectrum of customer differences and market segments. Birla Opus saw robust demand for its merchant and water proofing products where the revenue market share has crossed double-digit mark. The premium and luxury products contribution steady at 65% by value across all categories. Birla Opus continues to benchmark its product offering with the competition in real field environment. And even now, 75% Birla Opus product ranked #1 in product superiority versus like-for-like competition basis blind product test by specialist applicators across emergents, waterproofing, name, wood finish distemper, et cetera. totally on the brand front, 1 out of every 2 consumers spontaneously recall Birla Opus brands. This is no mean feat. Birla Opus brand continues to be built on its already #2 position in unaided top of mind recall and increasing its cap with earn #2 and #3 legacy players. The brand has a strong 90%-plus awareness, which is built on back of continuous innovative campaigns. The recent high [indiscernible] campaign in IPL 2026, reaching 10 ticket celebrities to campaign in new era of [indiscernible] from individual endorsement to a collective validation, voice echoing [indiscernible] supporting companies for security has garnered major traction. Look out for our latest [indiscernible] campaign with existing and new celebrities and growing uniqueness of Birla Opus products. Honest mission of enhancing customer experience in organized detailing of paints, Birla Opus exclusive branded franchise retail outlet is a major milestone, crossing 1,200-plus cores across 700-plus towns as per our estimates, this is the largest organized retailing network in India, now elevating pain purchase experience not just in metros, but in mid and small towns, including [indiscernible]. Our premiumization efforts continue with expansion of our full stack GST compliance and attractive transparent, affordable professional painting services [indiscernible] now available in over 6,000 [indiscernible] through pain gals across 400 tons. To our understanding, this is amongst the only professional painting services, offering attractive financial options with 6- and 12-month EMIs at nearly no additional cost, an important tool in this inflationary environment. In [indiscernible] with our industry [indiscernible] to office assurance campaign, Birla Opus [indiscernible] to build brand trust and bring them lacks of leads and thousands of project registration and contractor enrollment, where Birla Opus products and services were eventually delivered with Opus assurance. The fifth strong pillar is the installed capacity of 1.3 miles per annum, which is 24% of the industry capacity, and the brand remains focused to drive its revenue market share in line with the capacity share in the midterm. The utilization steadily increasing across plants and with the rising of good scale of our 6 plant Kharagpur, which was commercialized in quarter 3 FY '26. The average distance traveled by a product has come down by over 30%, helping optimizing of loyalty costs while improving serviceability to the market. Now let me share an update on price hikes and raw material situation. As you will recall in the last investor call, will offer proactively shared announcement to raise dealer prices by 2% to 6% in January and February 2026 across a range of products. This [indiscernible] to test the channel and consumer reaction by creating the gap with industry peers in first phase of pricing. I'm happy to share that the initial response to the price gap reduction is encouraging with primary and single sales continue to be strong during this fourth quarter. We are, therefore, delighted to share that in March 2026, below us on its own cross the coveted 10% revenue market share mark based on nationwide retail satiation by us. I'll give you a moment to absorb this. In April 2026, Birla Opus announced its second and third phase of price increase to offset the raised input cost. These multiple price increases have been staggered for implementation within quarter 1 of FY '27, a large percentage of decorative paints, raw materials and entire packaging materials is [indiscernible] to crude derivatives. The volatile geopolitical environment and steep depreciation of our currency against dollars have resulted in spiraling of cost of goods to as high as 20% to 25% of COGS, and we are still counting the impact. This level of increase is unprecedented and even now the raw material prices are unstable and unpredictable. Through these increases, Birla Opus have tried to cover the input cost escalation or if such global underpass prong meter prices could further escalate and may remain elevated for a foreseeable future. We understand the industry has never seen such high inflation that has forced the entire industry to take multiple price hikes back to back. This [indiscernible] situation makes demand forecasting difficult, and we need to closely monitor the situation as impact of price rise is slowly be fed by consumers and contractors in second half of quarter 1 and entire quarter 2 FY '27. April 2026 primary sales performance remained in line with March and Birla Opus continues to monitor the secondary sales trend closely on a weekly basis, along with price [indiscernible] of demand. With the inflation impact on input costs expected to continue until much after the war component, its impact on medium-term consumer demand remains uncertain as demand last curve will be fully tested in this period. Despite cost pressures, the company will continue to offer 10% prepaint consumer proposition. In spite of cost price increase, what I can confidently say Birla Opus remain committed to driving market share gains and focus on our ambition to become #2 player at the earliest. While we steer business towards guided INR 10,00 crores profitable revenue in the third year of full-scale operations. Shifting focus to second new business will be which represents Grasim's commitment towards BT-enabled B2B e-commerce ecosystem. I want to take you to a world that more people never see, but one that powers everything around us. Every building you walk into every road you drive on every factory that produces the boots on yourself behind all of this trailing fragmented and deeply insufficient supply chain for raw materials. [indiscernible], cement, chemicals, polymers, vitamins and other building videos. These are the building blocks of India's growth story and for the securing them has looked the same phone call, handshake, opaque pricing, related deliveries and limited access to credit. If the market measured in hundreds of billions of dollars, and yet until very recently, it operated almost entirely offline. That is the opportunity we saw. That is why we build up it. One of the primary challenges is the highly fragmented supplier ecosystem, which makes it difficult for buyers to identify and engage with reliable vendors. Additionally, the absence of transparent pricing opened these [indiscernible] and suboptimal purchasing decision. [indiscernible], especially MSME also grapple with working capital caching, which hampered their ability to procure food, efficiently and on scale. Further complicating procurement process is the inconsistency of applied as well as inefficiencies in logistics that can result in delays and increased costs. Product discovery remains limited, restricting access to a wider range of goods and innovative solutions. Finally, there is significant gaps in technology adoption among MSMEs limiting their ability to streamline procurement operations and benefit from digital advancement. By focusing on these critical pain points Birla Pivot aim to create a more integrated transparent and efficient B2B procurement ecosystem. Coming to financial performance of Birla Pivot, the pace of scale-up has been extremely encouraging and ahead of our revenue guidance. Let me start with a number that I think captures the momentum better than anything else. Our revenue for quarter 4 FY '26 more than doubled on a Y-o-Y basis. This business is in a striking distance away from our annual revenue guidance of INR 8,500 crores. Now in a business that is really a few years old, doubling revenue is not just growth, it is validation. It tells us that the market was waiting for someone to solve this problem at scale. And we are doing exactly that. What is driving this? It's not one thing. It is all cylinders firing together. New buyers are joining the platform at an accelerating pace [indiscernible] combining that with larger, more frequent orders. We are adding new product categories expanding new geographies every lever, we track active buyers, average transaction value, transaction volumes are steadily moving up. This was also a seasonally strong quarter, and we capture the demand beautifully. Now let me paint the picture of how -- why our B2B commerce reach has [indiscernible] Birla Pivot is now delivering to over 5,000 [indiscernible] across more than 400 cities, and we have crossed 5,000 retail touch points. Think about that for a moment, from metro construction sites to Tier 3 towns, where contractors is building a school or a small factory. We're reaching them, giving them access to the same quality products, the same transparent pricing, the same reliable logistics that were previously reserved for the largest player in the main markets. This is not just commerce, that is democratization. And our product portfolio keeps expanding. We are now scaling categories like seal, bitumen, copper and aluminum ingots and [indiscernible] with leading Indian and international brands to offer a breadth of SKUs that no single distributor could ever match. We are becoming the one-stop destination for building material procurement in India. But here is what truly sets Birla Pivot apart. This is not a marketplace with catalog and checkout button, we have built an integrated operating system for purpose build models, modules working in concert. All what gives us a unique edge is that we are not a startup parachuting into this space. we are grasping industries, part of [indiscernible] deep relationship across the building materials value chain from cement to chemicals to metals, our supply-side credibility, brand test and on-ground presence are most that no pure play digital platform can applicate overnight. We are still in the early innings. Revenue has more than doubled, but the runway ahead is enormous. Our focus going forward is clear, deeper by our engagement with smaller AI-driven insights, expand our product categories and geographical footprint, still our embedded finance capabilities, so more MSMEs can participate in India's growth and relentlessly improve the platform experience so that once they buy comes to Birla Pivot, they never want to go back to the old ways of doing things. Before I hand over the call to Hemant for financial performance and covering other businesses. Let me spend some time on macro scenarios. We're living in a period where the world is simultaneously witnessing extraordinary opportunities and unprecedented uncertainties across continents, businesses and governments are navigating a rapidly changing global order shaped by geopolitical tensions, inflationary pressure, supply chain realignment, technological disruptions, climate concerns and change consumer aspiration. Crude oil prices and volatility in raw material cost continues to impact manufacturing and global trade logistic network that once prior type efficiency are now being redesigned for reliability and strategic security across sectors from chemicals and metals to technology and consumer goods organizational balancing growth ambitions with cost discipline and operational agility. At the same time, the world is undergoing one of the biggest technological transformation industry. article intelligence, automation, digital platform, data-led decision-making are reshaping industries at an unprecedented pace. The competitive advantage today is not made the scale, but the ability to innovate faster, adapt quicker and stay closer to the customer needs. Yet amidst these global challenges, there is also optimism emerging economies, especially India continued to demonstrate resilience and long-term growth potential. India today stands out as one of the fastest-growing major economy, supported by strong domestic consumption, infrastructure investments, digital transformation, manufacturing expansion and a young entrepreneural population. However, in the backdrop of a recent caution expressed on mindful spending and responsible consumption, the metrics for businesses and households alike is clear. This is time for calibrated optimism and disciplined decision-making. While India continues to remain one of the world's fastest-growing major economies global uncertainties, including geopolitical tensions, commodity price volatile and inflationary pressure requires is approach towards expenditure investment. The emphasize today is not on slowing aspirations, but on prioritizing efficiency, value creation and long-term sustainability. For businesses, this translates into sharper capital allocation, cost leadership and process the enhancement. Such periods open strengthen economic resilience as [indiscernible] spending, combined with strategic investments, creates a stronger foundation for sustainable growth in the years ahead. Let me now hand over the call to Hemant for his remarks. Over to you, Hemant.

Thank you for your remarks. And one thing before I start, history has shown that moments of disruption often create the foundation for the next era of growth. The global environment may be complex but it is also opening new avenues for collaboration, transformation and value creation. Those who can adapt with agility, invest with foresight and execute with discipline will define the future of industry and enterprise. With this note, I would start with our biggest business building materials, which includes cement, pains and B2B e-commerce. Himanshu sir has already covered paints and B2B e-commerce. Let me give you a few highlights of our cement business. [ UltraTech ] continues to strengthen its leadership in one of the most important sectors driving India's infrastructure and housing growth story. In April 26, UltraTech crossed a historical milestone of 200 million tonnes per annum of total grade capacity. This makes Sulfate the world's largest cement company outside of China. To put that in perspective, we have nearly doubled our capacity over the past 6 years. And we remain firmly on track to reach 20-plus million tonnes per annum by March 2028. On profitability, total operating EBITDA per ton stood at the highest mark of INR 1,253 for the past 2 fiscal years FY '25 and FY '26 combined have delivered cumulative efficiency gains of INR 15 per tonne. This is not a one-off. It is the result of sustained focus on fuel mix optimization, logistics efficiency and operational excellence across our plants. These structural cost ever give us confidence that margins will continue to improve even in a competitive selling environment. The Board of [indiscernible] UltraTech Cement has announced a strong dividend payout of INR 240 per equity share subject to the shareholders' approval at the AGM. The dividend declaration underscores UltraTech's resilient business model backed by a long-term commitment towards scale, operational efficiency, sustainability and nation building. For Basin, the total cash inflow from this dividend would be nearly INR 4,000 crores, excluding Texas. Coming to cellulosic fiber, [indiscernible] before you tremendous confidence in the trajectory of this business. That is not just keeping pace with the global trends but actively shaping the future of sustainable textile. Let me set the stage with a powerful facts. Cellulosic fibers are the fastest-growing segment in the Indian fiber basket, expanding at CAGR are nearly 2x that of other fibers. This is not a temporary blip. This is a structural sift driven by sustainability, cotton constraints and rising consumer demand for eco-friendly fabrics. Our Phase I [indiscernible] capacity at [indiscernible] of 55,000 tonnes per annum, part of the total proposed 110,000 per annum expansion is progressing well. The macro environment is firmly in our server. China's operating rates have climbed to 92% in Q4, up from 87% a year ago, selling robust global demand. At the same time, China's inventory levels have dropped to just 11 days, a clear sign that Sala is tight and demand is accelerating. Our [indiscernible] segment delivered revenue of INR 4,614 crores in Q4 FY '26, a commanding 14% increase year-on-year. Full year revenue surged to INR 17,104 crores from INR 15,897 crores, up 8% year-on-year. This growth was powered by drill engine of volume expansion and a deliberate pivot towards higher value specialty fiber. EBITDA stood at INR 588 crores in Q4, up [indiscernible] and full year EBITDA was up 15% to INR 1,761 crores from INR 1,524 crores. This was not just about volume. It was about operating efficiencies, a favorable product mix and the tailwind of demand pulp prices. Now let me talk to let me walk you through the strategic positioning of our Chemical division, which continues to be a cornerstone of Grasim's diversified growth store. Our [indiscernible] business maintains undisputed market leadership with a real capacity of 1.5 million MTPA. We are expanding from 1,505 [indiscernible] to 1,530 [indiscernible] while evaluating additional capacities driven by growing demand from diverse end user industries like alumina, organic and inorganic chemicals, textile and FMCG industries, et cetera. Caustic soda sales volume stood highest ever at 321,000 tonnes in Q4 and 1,232 [indiscernible] for full year FY '26. Specialty Chemicals revenue grew 5% year-on-year. However, higher input prices, mainly ECS practically partially impacted profitability in that segment. Our revenue mix is evolving well. Specialty Chemicals now contribute 27% and chlorine derivatives 22%, reflecting our diluted shift towards higher value downstream products. Our financial services subsidiary, [indiscernible] Capital represents a compelling play on India's long-term financialization [indiscernible], backed by a diversified and scalable financial services platform spending, lending, asset management, insurance and wealth solutions. As India witnesses rising household serving shifting from physical to financial assets increasing insurance penetration and rapid credit formalization that compete strategically position across multiple high-growth segments rather than relying on a single business cycle. Its ability to consistently grow revenue and expand the lending book and assets under management demonstrates strong execution capability given it volatile macro environment. with rising incomes, formalization of the economy and expanding digital infrastructure and increasing investor participation through SIPs and mutual funds, we believe that [indiscernible] is well placed to participate in multiple structural growth trends simultaneously, making it a diversified proxy for India's revolving financial ecosystem. [indiscernible] Capital Board has approved capital days of INR 4,000 crores, while we have equity shares through frequent allotment. Given the growth prospects, [indiscernible] Board has approved an investment of INR 2,880 crores, maintaining our stake at 52.3% on a fully diluted basis. Coming to the other segment, both renewable and Textile business has delivered robust performance. For the quarter, revenue for the renewables business grew by 60% year-on-year and textile business was higher by 14% year-on-year. Renewable EBITDA grew by 55% and Textile business EBITDA stood at INR 35 crores compared to a loss of INR 8 crores. I'm pleased to share that the growth of Grasim has announced a final dividend of 500% amounting to INR 10 per equity share underscoring our long-standing commitment to create value for the shareholders. This marks the 63rd consecutive year of uninterrupted dividend payments reflecting our financial strength, resilience and consistent focus on rewarding shareholders across business cycles. With this remark, I will now open the floor to Q&A.

[Operator Instructions] The first question is from the line of [indiscernible] from Nomura.

Congrats on a good set of numbers. First question is on paints. I wanted to just understand your view on how should 1 think about the growth from here on as you've already attained scale with respect to dealer reach and tinting machines similar more to quite a few of the legacy players. So how much more growth do you foresee coming from for the penetration of dealer reach and increasing printing machine reach? Or will the growth largely come from improving throughput? So that's my first question.

Thank you, Mahesh. So we will get -- we are very confident of growth and the first and foremost industry is likely to move from a single-digit growth to a double-digit growth in FY '27 while we observe the impact of raise prices and elect of demand. But all trends shows that this is going to be a double-digit growth here. With this, as far as OpEx is concerned, there is a lot of growth that is possible for us. And we see growth both in numerical distribution expansion and improved throughput. Let me cover the numerical distribution expansion. We are currently at presence on large and small towns to 11,500. We are anticipating to cross this to beyond 15,000 at the end of this financial year. And the second is even the existing towns, there is a lot of scope for us on an overall basis because the total number of dealers in the industry is excess of 100,000. But the largest component of growth has obviously come with the existing dealers having faced its success with the one range of our category of products. For example, some of them have done [indiscernible] and others have done enamel. With the confidence with the first range of products, they are likely to be able to expand to the entire range. I'll repeat, we have emulsions, enamels, waterproofing, wood finish [indiscernible]. And for our franchise partners, wallpapers and exclusive products. We also see expansion through expanding the retail networks. So we are -- we remain very confident that we achieved a triple-digit growth last year, and we remain confident of a high double-digit growth. Sorry, I'm going to pass [indiscernible] incrementally on the [indiscernible].

Yes. So like just to reinforce the fact that numeric expansion in -- across the market for dealers will continue to play an [indiscernible] important goal. But like Himanshu said, expanding the product range will be critical to build the throughput per dealer.

Sir my second question is, if you can talk a bit on the profitability front on the paint sector, you've highlighted in the PPT that there is improvement in performance of pain when you speak about the building materials segment, which was also led by paint on the EBITDA level. Is this largely due to getting scale? Or do you -- or given that now you've got some scale, there is some reduction in rebate to dealers or there is a reduction in the discounting. How should one think about that? And one clarification, you had highlighted that 3 years after your full operation, you would want to reach INR 10,000 crores. So should we consider FY '26 as first full year of operation because it's only been 2 quarters since your 6 plant has commissioned. So FY '28 would be the third year or FY '29 you would be considering as a third year? So that was my second question.

So FY '26 is what internally we're taking as our first full year operation, even though the paint started -- or the 6 plants started in the third quarter of last financial year. So we don't want to -- we want to [indiscernible] targets for ourselves, and we will take first full year operations of FY '26. So in the sequence of profitability, we want to again repeat in the order of our priority. Our order of priority is number one, we want to become the #2 decorative paints operator in India; the second sequence of priority for us is INR 10,000 crores; and third sequence of priority is profitable. We already use all the 3 words together, but we're not getting them in the sequence that we would like to achieve. Having said that, where does the one profitability come from? Profitability for us, we have invested ahead of time on fixed costs. And you can see that both in terms of largest number of sales and service stores. And second is the ahead of time investment and brands. These are both are under fixed cost nature. And as steel goes up, we will cover and give us the EBITDA benefit. The second profitability angle is to get better returns because of our variable costs and the variable costs will again come us being able to, a, get better reach as we are buying ability increases so we can negotiate better prices. So -- and with the 6 plants coming in, optimization of our plants on power, optimization of our logistics costs, all of this will result in bringing down our variable costs. There is also some optimization on products as we have introduced our products with a single supplier. We are in the process of bringing in the second and the third supply, which gives us an bringing competition among raw material suppliers. We will also get not only scale benefits or other level of cost benefits. So these are the routes for profitability. But as I mentioned, the sequence is for us remains #2 position, then getting our revenue and finally, achieving profitability.

The next question is from the line of Pathanjali Srinivasan from Sundaram Mutual Fund.

Congrats on good set of numbers. I have a couple of questions. So firstly, in your earlier remarks, you mentioned that we are within striking distance of becoming the #2 player I think last year, the #2 player in India is approximately INR 10,000 crores of sales. So how close are we when we say we are in striking distance? What is our range that you're mentioning here?

I clarify this. I'll read from the notes that I -- the presentation we made, combined revenue of Birla Opus plus Birla White [indiscernible] business, which is what is measured by all of the all the paint meters, brings us nearly to the level of the existing #2, excluding industrial revenue. Okay. So this is it. So when you quote a number, that number is annual number, and that number includes industrial plus separators. When we quote the number, we quote only the decorative part of the business. We improved the book side of the business. That is the statement that I made as a starting point. which is the current situation as far as quarter 4 of FY '26. Going forward, our ambition and stated ambition is on its own Birla Opus in the decorative paints business, only in the decorative paint business, not including the industrial paint business, will likely be #2. I hope it's clear. The numbers that I quoted we have internal estimates. We do market research, and we get firm conformations of multiple sources, and we are very confident that the numbers that we have are trending towards what we have quoted. .

Yes, sir, that provides a lot of clarity. My second question is related to something one of the previous participants asked. So with respect to throughput per dealer, how -- where would we stand versus the industry benchmarking? And how -- what is the leeway that is there for growth?

I'm going to give...

So this is Sachin. When you look at dealers, dealers operate typically in a various scale of operation, whether it's A class, B class, C class dealer, depending upon what kind of business they are doing. In each of these subsets, we are -- we have a fair market presence, and our throughput is in line with our fair market presence. And consequently, that gives us a fair bit of comfort that we are aligned to the industry throughputs and in each of these dealer sets.

So just to add, obviously, we are not market leader. So the throughput is best for the market leaders. They have in our assessment about between 20% to 25% additional dealers. It is the reason why they are such a strong market leader is the throughput that they get from the dealers because as Sachin mentioned, the proportion of category dealers business is set is significantly higher than our proportion that. In the case of number two, that we have a focus on number one and number two as we have asked the number three, they have a different mix they have a reverse pyramid that they have a larger proportion of key categories will constitute their business and a disproportion. We are -- our business is far more democratized because we are more national presence as well as evenly distributed. That's why our effort is more to be able to through the -- into the route of distribution to expand throughput in each of the categories of business, whether it is A, B, C and D far more than what we currently have. This is what I can give you at this point of time.

I get the strategic part of what you're saying, sir, but I just wanted to know a rough indexing in terms of because we have started some time back. I would not expect a recently started dealer to have a high throughput, but some of our earlier dealers have the leased fairly like a comparable throughput to some of the established players? Or are we still like further away from that? I'm just trying to understand if you get more growth from the existing distribution because we are still like relatively new in the market in terms of the number of dealers that we have over a 2, 3-year period. So if you could give me some color on that will be very helpful, sir.

Right. So like I was mentioning about the 4 different classes of dealers, A, B, C, D. Just to give you a rough index, while each subsegment has been growing robustly in line with our overall growth. Just to give you a perspective, from a range and then the top dealer would be stopping almost 2 to 2.5 the bottom dealer as well as if I were to look at throughput per dealer, it ranges between 4 to 5 bottom dealer. So obviously, our strategy of focusing on the top dealers driving business from the top industry contributing dealers is also paying which dividend basis [indiscernible] bit go-to-the-market strategy of expanding the range availability in the large dealer sets.

I just ask for your benefits that you are absolutely clear, are older dealers who spend more than 18 months with us. our counter share is significantly higher, as high as 25% to 50% in these outlets and their throughput matches with the legacy pain operators. So the throughput as the dealer becomes older, and its comfort with entire range of products is there is tending to achieve the similar throughput as a legacy dealer is If that's the answer that you're looking for.

[Operator Instructions] The next question is from the line of Amit Gupta from ICICI Securities.

This is Navin Sahadeo. Am I audible?

Yes.

Sir, my first question was on the capital allocation. Now of course, our subsidiary has like announced a significant dividend. And just today also, there is an update in terms of INR 2,880 crores, we invest in [indiscernible]. [Technical Difficulty] Okay. I'll just repeat again. Am I audible?

Yes, please go ahead.

[Technical Difficulty]

The next question is from the line of [indiscernible] from Kotak Securities.

Congratulations on the good of numbers. So continuing in the previous [ participants query ] we noticed that out of the dividend of around INR 4,000-odd crores, we're going to invest roughly INR 2,900-odd crores in our NBFC business. Just wanted to understand, given the fact that previously, we used to distribute it to our shareholders. What will be the capital allocation strategy going ahead?

So I don't know there was the term of capital allocation. Just from a cash flow perspective, you can do your math, it's straightforward, net of x that are we receiving from our subsidiary in the cement. We would prefer to allocate that fund to a dividend to our existing shareholders as well as increasing -- maintaining our stake in adjustable capital. The entire revenues and EBITDA generated from grain will be reinvested in growth of cracking businesses. I hope that's clear.

Just to sort of clarify, sir, on this, whenever we need to increase our stake -- sorry, maintain our stake that is the only time where we will be sort of using the dividend. Otherwise, there will be [indiscernible]

No, no, we are not talking of long-term policies. [indiscernible] the current allocation of fund [indiscernible] at this point of time Grasim -- we have maintained for the last 3 years Grasim has maintained that we are in a growth business. We have introduced 2 new growth businesses, and we have to stabilize these 2 new growth businesses and grain support around there. So we are supporting the new businesses by reinvesting the surplus that is getting generated from the core businesses as well as now the ever this year is concerned, we have allocated the cash that we received to be able to expand to be able to maintain our stake in [indiscernible] Capital.

Got it, sir. So basically, for other sort of growth businesses, will be sort of using internal accrual. This is a one-off measure. Is that understanding correct?

Yes. Yes, yes, absolutely.

Got it. Got it. May I just ask a follow-up. What is our -- since we are past our peak CapEx as what sort of CapEx guidance should we sort of build in for the [indiscernible]?

CapEx guidance for 2027, we will be able to share you next quarter. We are just working on it. Give us some time.

The next question is from the line of Prateek Kumar from Jefferies.

Congrats on good results. My first question is on the new businesses. Can you -- I mean, while you have talked about it, but can you just add again on profitability path for pains and pivot business as company starts moving towards a revenue target individually for these segments in terms of profitability? And when can we look forward to get separate disclosures for this segment?

[indiscernible] we start with B2B.

This is Sandeep here. I'll give you a little bit of background on the profitability path that the lot is on. We had mentioned this as part of our results in Q3 as well. We have been steadily -- of course, our growth momentum has already been shared in the opening comments. You can see that we've been -- our growth momentum was far ahead of the guidance that we've given. On the profitability front, even our margin and EBITDA direction has also been very, very positive. Our goal for this financial year FY '27 is to exist with EBITDA breakeven, and we are well on that path. It might actually happen a little sooner as well. but fairly confident that we will exit this [indiscernible] financial year with EBITDA [indiscernible] And the priorities remain very, very clear that we will continue to drive the revenue growth trajectory, we'll deepen our presence in the categories. But at the same time, we will [indiscernible] financial year a little bit of [indiscernible]

On the paints profitability, if you -- there are 2 parts to the profitability. One is contribution and second is EBITDA. Now we had a significant improvement in both gross and net contribution in quarter 4, and we expect to maintain that momentum going forward. As regards investments that we're doing, we have a fixed cost, which which is now currently in a position to for a much higher market share because we are investing in manpower on a pan-India basis. both sales and service as well as investing on in brand so that we are ready for tomorrow. So as the contribution improves and scale improves, the the EBITDA losses has a glide path on a quarter-on-quarter and a year-on-year basis, till we reach the INR 10,000 crores, and the glide path has already started. As regard to final reporting, we should start that shortly.

And another question on capital allocation again. I know you talked about investing in [indiscernible]. But how about like within your organic business, you obviously incubated 2 new businesses a few years earlier. Do you also evaluate investing in new businesses, which can further add to your organic businesses in the next few years?

So we have already announced expansion of our [indiscernible] business where at Harrier, we are adding capacity of [indiscernible] of 110,000 tonnes per annum. [ First phase ] is already on progress and second phase, we will announce. That is the CapEx plan, right now, we are implementing. And further CapEx plan as we get approval in terms of capital expansion, we will share with you.

One line answer on this, [indiscernible] cash flows before we look at any further. So there is no further business to be disclosed at this stage.

The next question is from the line of Amit Purohit from Elara.

Am I audible?

Yes.

Two things. One, I wanted to understand, you talked about 2 drivers for growth. One was distribution expansion. Second is throughput increase and during that, you highlighted that new product launches will also become and maybe improve the important part in terms of [indiscernible] I just wanted to understand. Are we under mixed in terms of product offerings when you compare it to number 1, number 2. That was the first question. Second is the -- I mean you indicated the targets remain seen despite raw material prices increase and all. Is there any, I mean, plans of some of the schemes and all are we looking at by you clearly highlighted that 10% scheme still continues, but just wanted to check if there is any business now change that probably could be a bar or you may look at it maybe after the quarter or so? How do I think about it?

So Amit, Sachin here. As far as product range is concerned, like Himanshu mentioned earlier, we have a full stack of products which have already gone into the market. In fact, in our franchisee stores, we have a large set of exclusive products also, which has been launched in the market. And today, we can confidently say that our dealer can be extremely satisfied and continue to run and scale up this business with the Birla Opus range of products. like-for-like, we are at even Stevens with respect to competition. While we will continue to identify white spaces, and continue to add more products in the future. But as things stand right now, we are full stack up. With respect to your second question on pricing and strategy in the market, while demand in very categorically laid down the [indiscernible] of first priority being the #2 player in the decorative paints industry. Second, achieving the INR 10,000 crores turnover and the third being profitability are entire endeavor, we continue to ensure that we are competitively boiled in the market to ensure the priorities are achieved. So if there is a need for being. So then we will continue to act accordingly in the market.

The next question is from the line of Rahul Gupta from Morgan Stanley.

Two questions. First, as you scale up both Pivot and Opus you will see benefits of operating leverage kicking in over the next 2 years. Now if I see your implied profitability numbers, you have been clocking [ INR 3 billion ] pretax losses every quarter for the last few quarters. Is it fair to say that this will come down materially through the year? Or is there a case that it may remain sticky for longer? So that's my first question.

Yes, it will come down.

Got it. My second question is now that sorry for harping it again. You have not guided on the longer-term capital allocation strategy. But given Ultratech and [indiscernible], are the 2 subsidiaries where your shareholding is more than 50%. Is it fair to say even on the longer-term perspective, you would want to maintain your 50% plus shareholding in both these businesses?

At this point of time, the answer is yes.

The next question is from the line of [indiscernible] from [indiscernible] Investments.

Congratulations on great set of numbers. My question is basically towards your other business segment specifically you mentioned towards the insulator division. So currently, if we see on that the there in a very big shortages on the transmission lines and all. So how are we are planning towards adding the capacity on the insulated division? And if you can break up how was the overall sales in the insulated dividend in the current year and the capacity utilized?

You're absolutely right that the Electrical segment is going very well. And there is a big order backlog versus versus what the market is demanding. And while we post this through others, you can imagine underlying our set of growth and numbers and [indiscernible] has been good and will continue to remain good for some time. Our insulation business is divided in 3 parts. So we have a porcine business. We are actually 1 of the world's largest instruments and probably the world is only insulate player that operates in parcel polymer long roads and polymer follow composites. As far as the porcelain business goes, we will only do productivity initiatives. We have no plans to increase our base [indiscernible] as far as [indiscernible] grows, we have recently did some capacity at function, those are sold out, and we are looking at further investing or increasing the capacity in business. So we are quite bullish on the segment. But it's not like we are planning to certainly double or triple our capacity. We will -- our aim is mostly to gain operational efficiencies out of our existing assets. and do incremental investments in polymer long [indiscernible]

So currently, we have a capacity of 50,000 [indiscernible] insulator. And you are expecting to remain at similar level, but you will be thinking more adding on the composite of the per given the market has been shifting from [indiscernible] to composite and -- so you will be thinking...

Sorry, you can't think of these capacities in terms depending upon the size of the insulator, the number can [indiscernible] studied this process, should make a larger insulator, it takes a lot of the cycle, right? And the smaller [indiscernible] mix of smaller cycle then. And we supply these to EPC contractors. So we supply against orders. It's not like our caustic business or pox business produced but we'll do it by a number of insulators and we do make to order for very specific projects for very specific customers

Understood. Understood. Lastly, if you can provide the sales number for the insulator for the FY '26 it will be very [indiscernible] also the EBITDA.

I think we have stopped disclosing this several -- a couple of years ago. It's part of our others. I don't think it's our intent to [indiscernible]

The next question is from the line of Rahul Singh, an individual investor. As there is no response from the participants and even that was the last question for today. We would now like to conclude the conference. On behalf of Grasim Industries, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.