Kajaria Ceramics Limited (500233) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Q4 and FY '25 Earnings Conference Call of Kajaria Ceramics Limited hosted by Equirus Securities Private Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Pranav Mehta from Equirus Securities Private Limited. Thank you, and over to you, sir.

Thanks, Puja. Good afternoon, everyone. On behalf of Equirus Securities, I welcome you to this post result conference call with the management of Kajaria Ceramics. From the promoter side, we have Mr. Ashok Kajaria, Chairman and Managing Director; Mr. Chetan Kajaria, Joint Managing Director; Mr. Rishi Kajaria, Joint Managing Director and Mr. Karthik Kajaria. From the finance team, we have Mr. Sanjeev Agarwal, CFO and Mr. Parveen Gupta, EVP Finance. I will straight away hand over the call to Ashok sir for his opening remarks, post which we'll open up the floor to question and answers. Over to you, Ashok, sir.

Thank you, Pranav. Good evening, everyone. It gives me great pleasure to welcome you to the quarter 4 F '25 Earnings Conference Call of Kajaria Ceramics Limited. Joining me on this conference call is the senior management team of Kajaria Ceramics. Our consolidated revenue for the quarter stood at INR 1,227 crores including plywood, indicating a 1% year-to-year decrease compared to the corresponding period last year due to low tile volume growth and decline in plywood sale. In quarter 4 F '25, we witnessed very soft demand in domestic as well as export market. We grew our tile volume by 2% in quarter 4 '25. In the full financial year, we have attained a 6% volume growth, reaching 115 million square meters. The EBITDA margin for the quarter 4 '25 stood at 10%. The reasons for decline in margin are another muted quarters of the bathware division, some loss in U.K. operations and provision of doubtful debts in plywood division as we have decided to close this division. We had set up plywood dividend in 2017, hoping that due to implementation of GST, there'll be a shift from unorganized products to branded one. But this thesis didn't work. Hence, we have decided to close this division. Our Nepal project, which commissioned in September '24 has operated at 50% utilization in quarter 4 '25. India's tile exports have experienced a 20% fall in value in financial year '25 to INR 16,000 crores versus INR 20,000 crores last year. This was largely attributed to increased freight rates due to the Red Sea crisis and other ongoing geopolitical disturbances. The industrial scenario is a bit challenging. We have initiated several measures to optimize our sales and marketing resources. We have started this with 4 states and shall take it further as we go along. Due to competitive reasons, we shall not discuss this in detail till the successful execution of the sale. We are also exploring certain other reasons including customer optimization, strengthening the brand, enhancing the reach and repositioning our value proposition to the end customers. We hope that these measures should make us more competitive and grow much better than the industry and the results in improving margins going forward. Now for this quarter segment-wise financial performance. Tiles segment remains flattish at INR 1,088 crores compared to about INR 1,092 crores in quarter 4 F '24. Bathware segment registered an 8% year-to-year growth in revenue, reaching INR 111 crores compared to INR 102 crores in quarter 4 '24. The plywood revenue decreased to INR 5 crores as compared to INR 33 crores in quarter 4 '24. Revenue from adhesive grew to INR 23 crores in quarter 4 as compared to INR 14 crores in quarter 4 '24. PAT for the quarter, de-grew by 58% to INR 43 crores in quarter 4 '25 as compared to INR 102 crores in quarter 4 '24. As of 31 March '25 the working capital days decreased by 7 days to 51 days compared to 31st of March '24. The low number of days in March '25 is due to reduction in plywood business. With this, I take this opportunity of thanking you for joining us today. Over to moderator for Q&A.

[Operator Instructions] The first question is from the line of Rahul Agarwal from Ikigai Assets.

And good to see the balance sheet discipline in a very tough environment. So congratulations on that. Sir, 2 questions I had. Firstly, to start with an industry growth versus what Kajaria has done. For full year Kajaria grew 6% on volumes. I just wanted to know how did the industry pan out overall on domestic side and your outlook on domestic and export sales for the next year? That's the first question.

[indiscernible] should have grown by about 2%, 3% in the financial year which ended in March '25 domestically. And as I said, exports have degrown by 20% in financial year '25.

Sir, what do you think about the next year in terms of outlook? Any comments, qualitative also will help.

You see 2 things. The market is still muted. But at Kajaria, with all these things what we are planning, we should do much better than the industry.

And do you see revival in exports next year?

Exports should definitely go up with the things easing out worldwide and also the freight rates are the lowest today. So with this export should start picking up. And I think I personally feel that exports should touch INR 20,000 crores again this year.

Got it, sir. And sir, second question was on fuel price both gas and propane, I think what are the trends you are seeing currently? Because I think the cheaper crude should help going forward. So any outlook on fuel pricing will help...

See, currently, we are paying about INR 38 cumulative for all the plants. Right now, gas is at par with propane like in our south plant, just one of the plants at Kalahasti, gas has become slightly cheaper than propane, so they have shifted to gas. So in north plants we are only using gas, as you know. In Morbi, the flexibility is there, whether to use propane or gas, depending on the prices prevailing in that particular month.

So would you say that we will have a cheaper fuel price going forward like next year versus this year?

It's early to say. It's too early to say because prices are related to Brent. As you know, Brent is slightly low right now, but it's difficult to make a commitment for next year. It will all depend on how things shape up as far as fuel and gas is concerned.

The next question is from the line of Sonali Salgaonkar from Jefferies Group.

My first question is a little broad-based. So how do you see the real estate cycles right now? And even in the past 2 to 3 years, when the real estate cycle was sort of steady on the tiles industry, and this is more of an industry level question, I know we have grown faster than the industry. Why are we still seeing as an industry a single-digit volume growth in tiles?

See, as far as Kajaria is concerned, as I said, we are now unifying our entire operations over a period of next 6 months to 9 months. And with this, I think things should be much better as far as we are concerned, and we should do better than the industry.

Before the real estate market. So our -- as we said earlier, our turn comes, we are T plus 2. So hopefully now this year, I think things should be much better. As the industry grows in the real estate, if there's a boom in the market, if things are all good, I think we should definitely get a good share of the market.

Understood. The real estate cycle is broadly steady, right? Not...

The market is stable. It is stable. So yes, we should get good -- we should -- as the demand increases in the market, we should get good share out of it.

Understood. Sir, my second question is in terms of any pricing actions you have taken in Q4 or you're planning to take in Q1. Especially given the challenging environment?

Your voice is not clear. Can you repeat the question?

Yes. Apologies for that. Is there any pricing action that you have taken in Q4? Or do you foresee to take in Q1 considering that the market is quite challenging right now? As in any price cuts in bathware or tiles?

So pricing, we have not touched it. But now we are increasing our pricing. We are increasing our pricing a little bit to see how it goes.

Okay. And that quantum would be?

Sorry?

Quantum -- quantum of price increase. Understood. And this will be across bathware and...

No, this is not across all the division, it is a select type of product, and we will take it as we move forward.

Understood. Sir, and just one last question. Any guidance for FY '26 because this is the fourth quarter. So just to understand any volume or margin guidance you would like to give at this point in time for F '26?

Sonali, at this time, we are not giving any guidance and best possible scenario in the current environment. So I think you have to wait for a quarter or so before we come out with some numbers and then we'll talk about it, if you permit us.

[Operator Instructions] The next question is from the line of Sajal Gupta from FE Securities.

So my question is -- Sir, you have been giving a -- you have been guiding and forecasting an X growth for your company and which you have not been able to achieve so when the management guide something to the investors, we really rely on that. And then obviously, you are not being able to achieve those numbers, brings a lot of disappointment. I just wanted to understand what is the reason of this forecast failure at our end?

No, you are absolutely correct. We have been guiding for the 3 years we have not been able to perform, I agree on behalf of the management and as I said just now to Sonali that this year we are not guiding and will perform. Mr. Sajal one thing is there the leader is -- promoter is always optimistic, by giving guidance he is always bullish that -- and it happens or not in our hands some time and this time this has been -- we will agree for 3, 4 years, what we have been guiding we have not been able to do so that is why we are refraining ourselves giving any guidance. Rather we will perform and then say anything because some of the things we forget that -- some things sometime are not in our hands. We try our best, we will do our best, we will do the right thing whatever things in past we have done anything not correct, we are correcting everything so you will see much better picture.

Okay. I just hope this year we should perform well because it has been quite sometime that we need to see some good performance coming out of the company. My second question is you have a plant in Nepal, could you just make me understand what is the reason of hirings opening up for plant in Nepal and what kind of profit and loss are we making in that plant?

Sajal, in Nepal this is a 5 million square meter capacity plant, which makes ceramics and GVT. The total market size is roughly INR 2,500 crores and the basic thought process behind it was there was a huge customs duty from India to Nepal, it is 50% to 55% that put in the domestic facility we are -- we have become more competitive and going to get more market share in the Nepal market so we operate 49% capacity in quarter 4 with EBITDA margin of 12.5% currently. And going forward the volumes out there should improve.

So as of now are we making any loss at that plant or is it profitable plant?

Mr. Sajal, as of now the numbers are not very important because it is just a few months operation and so we will be able to give right picture after let's say after first half for sure. Then we will know because what had happened that when we put up a plant in Nepal then the reason was different. Now, the situation is a bit tough that is why we have not been able to utilize our plant at full capacity. That's fine. But Sajal just for your information we are not losing money, we are making money and we'll continue to improve as we go along.

Because as I understand because once -- so this is my thought process management goes outside India, that is either the demand in the country is slowing down or you think that you have already fulfilled the demand in the country and then you go out of the country to set up the plants because you see your plant in London or that you have already started in London that is also bleeding...

And looking at the demand, we have a local partner there and we just started operation 6 months back. This year, it should be much better. So...

Because like what I'm seeing in the company is your plywood business, which you have obviously taken a call to shut down and your London, this U.K. business is not doing well. So why not concentrate on India business rather than going outside India. In case you are bleeding, I don't know, in case, do you plan to wind up this business at some point of time or you want to continue with Nepal now?

This is not relevant at this point of time because we are not bleeding. And Mr. Sajal, I will request you to please allow the other participants to ask the questions, please.

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

Couple of questions from my end. This is just extended to one of the previous parts and question in terms of real estate cycle, I would rather want to know where exactly was the weakness? Was it across Tier 1, Tier 2, Tier 3 markets? Or was it related to projects and retail segment in case we can get some color on that along with liquidity situation now on ground?

See, the whole -- the industry didn't grow it on industry is grew about 2%, 3%. We still did better than the industry. Going forward, we hope that the industry grows and we'll do much better than them.

Yes. This is an industry level question only that the demand you were saying was across weak, be it Tier 1, Tier 2, Tier 3 and even on projects for retail market. I mean, that's the color that I wanted.

Correct. Correct. Overall the demand was very poor...

Okay. And now we are expecting improvement. Any specific areas or Tier 1, Tier 2 projects retail any specification that you would want to add here?

So going forward, see, India is going to grow and we expect the demand to increase from -- be better from all sites, all fronts, whether it's Tier 1, Tier 2, Tier 3 or whatever projects. Projects have also doing now started -- a lot of projects are happening. So hopefully, things should get better. If things get better, we will also do a much better job.

Last quarter, you had also mentioned that there was a certain amount of pressure on realization is because the project share had increased as on FY '25, what does our share look like for project versus retail?

Yes. The project share is approximately 30%, and it is more or less maintained like that. So there's no -- not much difference as far as that is concerned. Share of projects is 30% and retail is 70% to the dealer network.

Understood. Sir, lastly, on the margins we have mentioned a couple of one-offs. So could we quantify that what were the losses in U.K. operations or what were the provisions that we have taken for plywood division that could help us just understand the normalized level of margins attained this quarter?

We have clearly mentioned the plywood, we have taken INR 14.5 crore one-off. That is some compensation we paid to our JV partner for which we agreed to enter into a JV and then later when we decided not to go further in this ply business. So we paid some compensation to them, and INR 6 crores is also to a vendor. So in ply, we have taken around INR 14.5 crores one-off. And in London, we have taken around INR 70 crore loan write-off this year. Apart from the loss, we have already been reporting in the earlier quarter. So this is additional in this quarter.

Understood. And bathware, where are we in terms of margins here?

There's no one-off in bathware.

Understood. And then one last one, if at all, I may. You have also mentioned you will relook at the cost structure. While I understand the staff aspect, I'm not getting into that, but what are the other measures the company is taking in terms of cost cutting? And what's the eventual target EBITDA margin, if at all, we are looking at something.

It is not one area. All the areas we will be looking. We will be looking all the areas, we will not spare any areas. So we know the cost is very important, and we are cognizant of the fact that unless we reduce the cost it will reduce our competitiveness in the market. So we will focus on cost this year.

Understood, sir. But any target margin, sir?

No, we cannot give -- quantify it.

We'll take our next question from the line of Hrishikesh Bhagat from Kotak Mutual Funds.

So on plywood, fair to assume that most of this impairment order is done now, there's pending so in subsequent quarter it will...

Sorry, sorry, we should get it most -- no, it's 98% we have done. So only INR 2 crores, INR 3 crores will come in the first half. That is the -- that will be the salary of the people who are remaining with the company. And so apart from that, we have taken everything in this financial year. So you are not going to see any surprise in the next quarter or year as far as ply is concerned, except INR 2 crores, INR 3 crores expenses or maybe some under provision or over provision of debt -- small...

And just earlier participant's question on bathware. I know you spoke there's no one-off, but broadly what will be the PBT margin or EBITDA margin for -- because I believe incrementally, there was thought that this drag because of new plant will gradually reduce as utilization improve? So this year, because the margin was 8% last -- in '23, '24, this year, we could do the 4% because of the late implementation of the new plant. So the expenses have gone up, and we have not -- the sale was less. So this year, the bathware margin was low. And we hope the margin will improve next year better.

Okay. And just lastly, whatever you spoke about provision regarding this plywood, those are taken above EBITDA, right, in terms of -- this is over and above the impairment, and that's how we should look at it?

If you see my -- our investor release, it's very clear. We imply everything is a business loss except INR 14.5 crores.

We will take our next question from the line of Keshav Lahoti from HDFC Securities.

We can see your JV has turned in profitable. We can see some [ INR 70 million ] profitability. Is it due to Nepal JV?

Sorry?

So your JV earlier used to report loss, but this time, it is INR 70 million profit for this quarter. Is it due to Nepal JV?

No, no, no, nothing to do with the Nepal. Nepal number is very, very small.

So what is that INR 70 million pertaining to for this quarter profit?

INR 17 million is INR 1.7 crores.

INR 7 crores?

INR 70 million, INR 7 crores.

In consolidated, we can say INR 7 crore profit from JV?

That I think there was some entry reversal of some early period this year. So this profit belongs not to this quarter. For some entry reversal by auditor in this quarter.

So you mentioned that Nepal is operating at 50% utilization. So it will be fair to assume that whether the sales would also be 50% or sales could be lower? And what sort of utilization you're looking for Nepal?

So sales is about 50% and gradually it will grow from here. And as I said earlier, that we are not making losses in Nepal. We are still profitable, but the profit is very, very marginal. And as the volume increases, the profits will also increase.

Got it. By profit, you mean profit after tax, not EBITDA, right?

It is meaningless to talk about profit. As I said, we have just started the operations. So any figure, whether it is profit or loss, even if I say I've made a profit but that's not or loss, whatever. So I would request you to wait for some time, let -- we will -- let us perform for 6 months. That will be the real number we will be able to give you to what we have achieved in Nepal.

Understood. Got it. But just last verification I need by profit, you mean operating profit right now you're talking, right?

Operating profit in Nepal, yes.

The next question is from the line of Praveen Sahay from Prabhudas Liladar Capital.

So my first question is related to the capacity. And if I look at your production number with the capacity, you are at some 97% of utilization. So if any growth will come the way forward, how you are looking at the volume number to shape up, especially from the own manufacturing and the subsidiaries?

So our own manufacturing and subsidiaries are operating at almost 90%, 98%. But plenty of material is available in Morbi. So as we go along, whatever material we require, we can always outsource from there. So that is not an issue.

And related to that, sir, one, just a clarification because last year, the growth number, if I look at is of around 6%, but the production number is quite higher, comparatively. So -- and quarter-on-quarter from the last fourth quarter, we are continuously seeing your production number is quite higher as compared of the sales numbers. So why you are actually this production number is on the higher side inventory building or so?

No, there's no inventory building. We have, in fact, reduced our inventory.

Okay. Second thing, sir, because, see, if I look at your production number versus sales number, there is quite a difference. So that's why I asked this question. I'll clarify off-line if -- so next question, sir, is related to the fuel pricing. Fuel, you had given a INR 38 north pricing. How about the Morbi pricing South pricing and overall?

The average price is INR 38 for the area.

Okay. And any bifurcation which you used to give like South, West and North?

I can give you straight away. North is 38, 39 is South and West is 37. Average is 38.

The next question is from the line of Ritesh Shah from Investec.

So one is earlier we had indicated that we were creating specific teams for the government projects. And last year, we had done around 10% of the volumes. The number indicated for this year was around 12% to 13%. So just wanted to get a gist where we are on that number and how do we see this number going forward?

Last year, the number was close to about 4%. Out of 108 million we sold, the government projects was about 4% roughly. And this will be targeting for about 8% to 10%. I think roughly, we have done about 6% as far as government projects. Last year, the team was only for North. Now we have penetrated to East, West and South to give an additional 2% more. As we go along, we'll focus on that and try to reach to a level of 8% to 10%.

Sure. Sir, second question is, I understand we have launched a few brands in the retail network. I was just trying to understand what is the thought process, including, I think, specifically Kajaria Gres Universe. Is it a different type of showroom targeting the economy segment that we are looking at? How should we understand that?

So earlier, we had showrooms called Prima Plus in the ceramics vertical, which we just rebranded to Gres Universe. That's the only change. Nothing else has changed.

It's a normal product.

Nature has changed. Everything else stays the same.

Okay. So we have Prima Plus, we have Galaxy and we have World. Nothing else has changed, right?

Currently Galaxy includes all the 3 divisions, ceramic, PVT and GVT. Star includes 2 divisions out of 3. And...

We are in the process of rebranding our entire strategy. So going forward in 3, 4, 6 months, you'll see lot of changes. We are rebranding a lot of things to make it much easier for the customer.

Okay. But will the SKU placement in each of the category be also very different to what we had in the past?

Yes, it will be. It will be. We are consolidating our SKUs as well to make it easier for the customer.

Okay. Would it be possible to give some broader thoughts over here?

Ritesh, this is too early. We are working on it. Let us do it. And then we all said that give us 3 to 4 months, you'll see much more changes as we go along. It's too early to comment. The process of work has already started.

Perfect. Sir, would you like to comment on the channel inventory. Demand isn't great, but how is the channel inventory? And how do you look at the competitive intensity in the marketplace?

Channel inventory over a period of time has come down for a simple reason because of GST, the transit time has reduced. I think normally, a dealer now keeps stocks of about 30 to 45 days because of the range, otherwise the transit period has reduced drastically after GST. So I think more or less that remains the same because of the large range of products, this is the inventory level at various dealers 30 to 45 days. Also because of our multi-location factories, it has helped.

Since we have factories everywhere. That has really reduced their inventory at the dealer level.

Right. And on the pricing discounting amongst the larger players in the industry, how should one read into that?

Sorry, come again?

Basically, I wanted to understand on the competitive intensity in the marketplace. Given the demand is weak, how is Kajaria approaching the marketplace? How do you see our peer set is approaching? So how should one read into the marketplace?

First demand is not weak, it's normal. Demand is not weak. [Foreign Language]. We are looking for a scenario, as Rishi said earlier, that the real estate projects, some demand have started emerging. So demand is normal. And as far as competitive intensity is concerned, the organized players have no such thing that they are undercutting the prices. It is basically the competition is Morbi versus the organized players.

Right. Sir, if I just refine the question a little. If one looks at a few brands out of Morbi. Obviously, they have a low base, but they have grown at a significantly higher pace versus what we have reported. So how should we understand this? And how would we look to tackle this going forward?

First of all, there are 2 brands which have emerged. One is Simpolo, one is Varmora. By and large, they are doing a good job because they are operating from Morbi, as we all know. The moment they diversified to the rest of India, there will be a lot other things, a lot of other expenses move up. A lot of branding has to be done. But basically, right now, 2 major brands have emerged, which we value and which we understand. And at the same time, the moment they get-out of Morbi, it's a different scenario. Right now, we are all -- whether it's Kajaria, Somany, we are located all over but the moment they get out, a lot of other expenses happen as you know so we will see their performance when they get out.

Sir, we request you to rejoin the queue for follow-up questions. So the next question is from the line of Nitin Shakdher from Green Capital Family Office.

This is Nitin Shakdher from the Green Capital Single Family Office. My question pertains to Kajaria International DMCC. While I understand that UAE has a robust real estate demand. Any learnings as to what really went wrong in U.K.? And how are the company taking it a step further and getting aggressive in the UAE real estate market. It's not an analyst question, but more from an investor point of view.

No, it's a good question. So Kajaria DMCC invested earlier in Dubai and then in U.K. So we honestly got tempted by the good retail prices in the U.K. market. That is why we entered into a JV with a local partner there. And while -- during the operations, the costs are very high of running it. So looking at the management bandwidth and looking at the domestic growth in -- future demand in India, we said it is better that we give that showroom to the local partner only with getting our equity back and let them run it, and we'll continue to export. See export will always be 1%, 1.5% of our business. Our main focus is domestic, domestic and domestic. That's where our brand is very, very strong, and that's where we make the margin. So Dubai is still okay. U.K., we didn't have a very good experience. So rather than prolonging it, we still continue to export there, but we have continued to discontinue our retail venture.

Correct. So I'm assuming that Dubai will be continuous long-term investments, considering it's a very robust real estate market...

It is not a big investment, it is a very small investment. And we are -- it is breaking even because of the showroom, we are at least getting some orders from the gulf market.

And my second question is, I know Ashokji clarified before that there is offset on the plywood business and some U.K. operations are shutting down and bathware is mooted. Now I just wanted to understand as an investor, when the quarter 4 seems like a cleanup where the books are cleaned up and you then go back on a trajectory of growth. Is that understanding fair and we should not expect any further larger offsets apart from the barring INR 2 crores, INR 3 crores minor offsets?

Absolutely correct. As Sanjeev has already said, in as far as ply is concerned, we have written off everything. There will be an impairment of about INR 2 crores, INR 2.5 crores, INR 3 crores because of the manpower which is there, which will go by end of May. But other than that, everything has been taken care.

We will take our next question from the line of Amar Maurya from Lucky Investments.

Firstly, sir, what would be our revenue mix between Tier 1, Tier 2 and Tier 3?

See, we have earlier said, there is also a Tier 4, Tier 1, Tier 2, Tier 3, Tier 4. Roughly Tier 1 is about 15% to 18%. Tier 2 is about 30% Tier 3 is again, about 30% and the balance will be from Tier 4, roughly plus/minus 2%, 3% here and there could be.

Okay. So sir, like in terms of the competitive intensity. Majorly, we would have seen the pressure in which part of this segment?

See, pressure is everywhere, but basically, the dealer [Foreign Language] because earlier dealer used to be a retailer become a wholesaler. Now after GST, the wholesaler concept is more or less out. It's either he is a retailer or supplying to projects. So keeping that in mind, wherever good showrooms have been created, good displays there and the good promoter is behind that showroom, he is successful.

Okay. And sir, like you know, everybody is -- I mean we are of the view that the competition from Morbi has [ tariffied ] and that is the majority of the organized players are basically having a volume decline or volume slowdown. So how far do you believe this story?

You have to understand that overall industry has grown by 2% to 3%, which I already said in my earlier remarks, domestic market has grown by 2% to 3%. So when you say 2% to 3%, as we all know, 75% production of the country is in Morbi. So that means they have not grown. The organized players whether has grown by 6% or 5% or 10% or 8%, I do not know. Kajaria has grown by 6% volume. So even then, as we have taken some volume from somewhere from somebody. So looking at that, as I said earlier, if the -- the industry, that commitment we'll make.

And sir, now normally in the real estate cycle, normally, we would have seen a significant presale in all listed real estate companies. So normally, I mean, in which year this real estate cycle comes to actual revenue for us in third year, fourth year?

3+3. And this is a year where it should be better. This is 3 years have completed since the real estate cycle started, as we all have been telling. This is the year where things should start looking around better as we go along.

The next question is from the line of Nitesh. [Operator Instructions]

Sir, my question is on real estate cycle, which a couple of participants and you have touched upon earlier. So I believe there were a lot of launches around FY '22 and '23, which, as you just mentioned, should get reflected in an up cycle for tile companies and other building material players in FY '26 and maybe FY '25. So that is largely on the Tier 1 side where you highlighted that 15%, 18% of your sales come from. Do you also believe that things are picking up in Tier 2 and to an extent in Tier 3 as well? And if yes, are there already some signals, et cetera, that you are seeing on the ground? Or any hard data on projects, et cetera that you are tracking?

So for Tier 1, Tier 3, we are strengthening our distribution network. We are trying to make our dealers more exclusive. So right now, we have 1,850 dealers. Out of that 440 dealers should be about 430, 450 should be exclusive who sell only Kajaria. So our strategy going forward is more and more people to come in the fold of selling only exclusively Kajaria tiles. So with this, we'll definitely see a surge in sales.

But demand, Tier 1, we are expecting the demand to revive a lot at an industry level, right? Because of all of these new launch completions that we started in FY '22 and '23.

We expect the demand to be there all India. We can't separate only Tier 1. Tier 1, Tier 2, Tier 3 entire India will -- the projects are happening everywhere. So that result will come from everywhere, all parts of India.

And Tier 1 is comparatively less -- more action is happening in Tier 2 and Tier 3.

Okay. Got it. Any thoughts on what kind of industry growth should one expect for next couple of years, FY '26, maybe '27?

It's difficult to say difficult to predict, but as we're committing that whatever the industry growth is, Kajaria will be better than the industry. We can guarantee that. How the industry will grow, it's very difficult to predict.

The next question is from the line of Rahul Agarwal from Ikigai Assets.

Sanjeevji, I just wanted to clarify one thing. You said the INR 14.5 crores provision and about INR 7 crores of U.K. that's INR 21.5 crores. This is included in the other expenses line item in the consol accounts? Is this correct?

No, no, no. They are not included in -- they're included -- INR 14.5 crores has been shown as a separate item. As an exceptional item.

Okay. But when I look at consol accounts, there is no exceptional which is reported in the financials. I'm looking at consolidated accounts.

Just a second. I'll clarify to you off-line.

No problem, sir. And just more clarification on bathware you said full year EBITDA was 4%. So when you say bathware loss, it was EBITDA loss in 4Q only. Is that what you referred, sir?

No, this loss was basically because of the new plant which got -- which commissioned late, that made losses.

Only for the new plant, not on a consol bathware basis, right?

The top line was about INR 400 crores.

The top line was around INR 390 crores. The [indiscernible] was INR 15 crores.

We will take the next question from the line of Udit Gajiwala from Yes Securities.

Just a couple of questions. One, on the pricing front, how do you see this year panning out in terms of your overall pricing for broad SKUs in tile specific?

So as we go along, we'll see. And as the market improves, we keep on trying to increase prices and improve the realization. But it will be strategic and a very strange affair as we go along. It's difficult to tell you any numbers right now. But as the market demand improves and wherever we can get a better realization, we'll start increasing prices.

Understood. Understood. And sir, lastly, what will be the CapEx that you incur for the coming fiscal?

That will be around INR 150 crores to INR 200 crores. For this year, it will be INR 250 crores.

I wanted to clarify one point, which before you Rahul has asked about the pricing. Actually, what had happened that because of some accounting standard the auditors have shown ply operation as a discontinued operation. So that is why the exceptional item has been merged with the loss in that account -- in the auditor account. If you see the notes on accounts, it is shown in the notes on account, there is a note on account, which shows there is INR 14.5 crores exceptional item. So this is for Rahul.

We will take our next question from the line of Utkarsh Nopany from BOB Capital Markets.

Sir, my first question is on your CapEx plan. So like we have a pretty strong balance sheet with a good cash balance. And our existing tile plant is operating at full capacity also. Then why we have deferred our investment proposal of coming up with a large slab GVT tile plant in Morbi. Can you please throw some light?

So basically, there is enough capacity in Morbi. And if we want to, we can always outsource that in the future, instead putting our own INR 200 crore CapEx and putting up a fresh plant out there.

Sir, even for the large slab GVT tile plant, you are of the view that there is an excess capacity in the market. So we are not intending to come up with a new plant?

See, we already have 2 lines of Container Plus. We are the only company which has a plant in South of India for Container Plus, which makes big slabs. So we already have the capacity. And as right now the demand has been muted. So we don't want to invest that kind of money and just wait for the industry to improve. As of industry -- as the market improves, we right now have enough capacity available in Morbi, which we can outsource from. Later in future, if we need to do, we'll do it. We'll again come to the Board. But right now, we didn't want to do it. So that's why we said we want to scrap this project. It was a proposal for the time...

Sir, second question is on your tile margins in the March quarter. So even if we adjust the INR 7 crore write-off related to the U.K. operation, then also our tiles EBIT margin has come down to multiyear low level. So can you please explain the reason for sharp margin pressure in the tile segment on a Q-on-Q basis?

So this has been various reasons, like some write-off, we have taken for London and Ply. Apart from that, we have also taken some debt provision and maybe some -- this time so we hope that next year onwards, the margin will be much superior.

No, sir, what I'm asking is that your plywood losses you have shown it as part of discontinued operation. Now if we adjust the INR 7 crore write-off related to U.K. also, then also your margin has come down just non Q-on-Q basis so what is the reason for that?

The whole ply operation, we have shown the ply losses. INR 48 crores -- INR 49 crores. It is not INR 49 crores, you will add back only INR 33 crores because INR 14.5 crores was the exceptional item, which has been shown as a note in the audited accounts. So if you exclude -- if you add that INR 49 crores, obviously, the margin will come higher.

Sir, I'm talking about the tile segment margin, which doesn't include the plywood segment.

We don't have the title segment exact margin. But yes, to answer your question, it will improve definitely going ahead. We have done a lot of corrective measures, which we don't want to talk about right now. We want to do our job. But yes, the margins will significantly improve -- will improve.

And lastly, on the tiles export front. So like whether our understanding is correct that the Trump tariff issue is likely to weaken the global tiles demand, which in turn may further impact our tiles exports from India. So can you please throw some light over there, whether our understanding is correct or not?

We are thinking differently.

See, as far as the Trump thing is concerned, right now, India is levied at 10% and then we have put 26%. With all the efforts going, it will not be more than 10%. And we'll be happy to note this is for all of you there was an antidumping investigation against India and U.S. and the duty has come out as 0. So imports of tiles to America whatever has happened last year will be 50% more this year because of the antidumping -- withdrawal of antidumping. India was the largest exporter of tiles to U.S. So the market demand will continue. So export will not come down. And even last year, in spite of antidumping threat, the exports were X. This year it will be X plus 50% because there is no antidumping now.

The next question is from the line of [ Ashwath Rajan ] from Arihant Capital.

My question would be on the broader scale. Since we have seen this oversupply in this industry for a while right now. What do you foresee in this? Do we see the supply to be diverted back into the export markets? And what is your opinion on the same?

I have already said that this year the export should cross INR 20,000 crores for 2 reasons: one, the stability in the world markets. And two, the freight rates are the lowest. The freight rate last year to the European market was close to about $4,000, which has now come down to $1,600, making India again, very, very competitive. So that INR 16,000 crores should go beyond INR 20,000 crores. The result part of the materials which were diverted to the domestic market will not be diverted here and the pricing part should look better as we go along.

Okay, sir. And on the market share front, have you gained any market share given some closure in the Morbi, some unorganized players have been experiencing closures. Have we gained some market share there?

As we said earlier, the domestic market overall has grown by 2% to 2.5%. We at Kajaria has grown by 6% in volume terms. We did grow to what we wanted, our thought was that we will go double digit, we didn't do. But definitely, we have gained market share. And as already said many times in this conference now that the coming year will gain much better market share to whatever corrections we are doing.

We will take our next question from the line of Moksh Ranka from Aurum Capital.

I wanted to understand the industry scenario regarding -- if I look at the history, all were actually focused on some one segment. For example, Hindware would be on bathware, Somany would be on just tiles. And then what happened is everybody started getting into everybody's domain. And that's the whole industry thing. So going to the -- is this the reason for oversupply? Could you help us understand the industry scenario?

And your question, you are not very clear what are you exactly asking, which division there is an oversupply. Tiles or bathware.

Both. Both I wanted to ask. I wanted to understand both...

Firstly, it's a related business, right? All the tile companies, the bigger companies whether Simpolo or a Johnson or a Somany or Kajaria they all are into sanitaryware and faucets because it's a related business. Like I'll give you an example, we just opened 2, 3 experience centers, big experience centers in South like in Chennai, we opened a 14,000 square feet experience center with tiles and sanitaryware and faucets. We are getting very, very good demand. The builders are coming. They're saying, Oh, wow, I didn't know that Kajaria has such a good range of sanitaryware and faucet as well. So when the customer is buying the tiles he is also buying that. So it will be in our favor rather than your point of being an oversupply or it's around, no, it's not like that. It is a complementary business. And it is only going to give us good returns in the future.

The next question is from the line of Arun Baid from ICICI Securities.

Sir, I understand you mentioned in the near term, we don't want to give a guidance. But, sir, from a medium-term perspective, do we believe we'll go back to that double-digit kind of volume growth with our historical margins rate of about 15%, 16%. Do you believe that is something which we can, as investors try to look at?

See, this is another way of asking the guidance. We've already said, we'll not give guidance so please don't ask...

No, I have not asked for guidance for FY '26. I'm saying with the measures you are taking right now and whatever you are...

We are doing our best, and we will be doing very hard work we'll be doing. But we'll refrain from giving any guidance. Because when we give guidance, when we don't attain the guidance, then you people say you have not attained the guidance. So it is better not to give the guidance and perform.

The next question is from the line of Ritesh Shah from Investec.

Can you detail something on the initiatives that we have taken on the technology side, including sales force automation? Is it already done on a pan India basis, are you already reaping the benefits? Or incrementally, do we expect something out of it?

So Ritesh, we've just started sales force automation and DMS also which is dealer management system. Both have started now. Benefits will accrue in the coming months, we just launched it. People are getting used to it because it was not in their culture and system earlier. But definitely, we see more efficiency generating out of it in the coming months as we go along.

And has this been implemented on a pan-India basis? Or is it certain pockets that we have implemented.

On a pan-India business, feeding of orders in the system of dealers and the salesforce automation and everything.

Okay. That's great. Just for the sake of reputation, sir, if I had to ask you one single variable which will help us drive volume growth into the next fiscal. What would it be? Is it the branding rejig that we are looking at? Or is it technology implementation? Or is it the distribution widening thing that we are working now. What will be the single most important variable that...

There is no single big thing. There will be a combination of many factors.

The next question is from the of Praveen Sahay from PL Capital.

Just if you can give any clarification on your INR 250-odd crores of CapEx you are planning for '26? Is it only for maintenance or something else as well?

Basically for maintenance and office we will be making. It's not -- 250 was the last, I said wrongly, if I had said 250, we did last year. This year, the projection is around 200 plus. And out of that -- INR 100 crore will be -- let's say around INR 100 crores should be regular maintenance CapEx and around INR 75 crores will be for the corporate office and small around INR 25 crores will be for adhesive and INR 15 crores, INR 20 crores for maybe Nepal.

I would now like to hand the conference over to the management for closing comments.

Thank you, Pranav. On behalf of the entire Kajaria team, which is here. I thank you all for organizing this. It was very interesting. A lot of good questions have come. And I can assure you on behalf of the Kajaria management, which is here that we will try to do the best possible this financial year, with all the corrections, which we are talking about. Thanks a lot. Thank you.

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