Ladies and gentlemen, good day, and welcome to the Q4 and FY25 Earnings Conference Call of Kajaria Ceramics Limited, hosted by Equirus Securities Pvt. Ltd. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star, then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Pranav Mehta from Equirus Securities Pvt. Ltd. Thank you, and over to you, sir.
Thanks, Aruja. 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. Kartik Kajaria. From the finance team, we have Mr. Sanjeev Agarwal, CFO, and Mr. Praveen Gupta, DVP Finance. I will straight away hand over the call to Ashok sir for his opening remarks, post which we'll open up the floor for questions and answers. Over to you, Ashok sir.
Thank you, Pranav. Good evening, everyone. It gives me great pleasure to welcome you to the Q4 FY25 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 Q4 FY25, we witnessed very strong demand in domestic as well as export market. We grew our tile volume by 2% in Q4 FY25. In the full financial year, we have attained a 6% volume growth, reaching 115 million sq m. The EBITDA margin for Q4 FY25 stood at 10%.
The reasons for decline in margin are another muted quarter of the Bathware division, some loss in UK operations, and provision of doubtful debts in plywood division, as we have decided to close this division. We had set up plywood division in 2017, hoping that due to implementation of GST, there will be a shift from unorganized products to branded line. But this didn't sit well, and we have decided to close this division. Our Nepal project, which commissioned in September 2024, has operated at 50% utilization in Q4 FY25. India's tile exports have experienced a 20% fall in value in financial year 2025 to INR 16,000 crores versus 20,000 crores last year. This was largely attributed to increased trade rates due to the Red Sea crisis and other ongoing geopolitical disturbances. The industry scenario is a bit challenging.
We have initiated certain measures to optimize our sales and marketing resources. We have started this with four states and shall take it further as we go along. Due to competitive reasons, we shall not discuss this in detail in the successful execution of the same. We are also exploring certain other measures, including cost-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 result in improving margins going forward. Now for this quarter segment-wise financial performance. Tile segment remained flattish at INR 1,088 crores compared to INR 1,092 crores in Q4 F24. But the segment registered an 8% year-to-year growth in revenue, reaching INR 111 crores compared to INR 102 crores in Q4 F24.
The plywood revenue decreased to INR 5 crores as compared to INR 33 crores in Q4 FY24. Revenue from Adhesives grew to INR 23 crores in Q4 FY25 as compared to INR 14 crores in Q4 FY24. But for the quarter, we grew by 58% to INR 43 crores in Q4 FY25 as compared to INR 102 crores in Q4 FY24. As of 31st March 2025, the working capital days decreased by 7 days to 31 days compared to 31st of March 2024. The low number of days in March 2025 is due to reduction in plywood business. With this, I take this opportunity of thanking you for joining us today. Over to moderator for a few minutes.
Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Rahul Agarwal from Ikigai Asset Management. Please go ahead.
Hi sir, good evening. Thank you for the opportunity. And good to see the balance sheet discipline in a very tough environment, so congratulations on that. Sir, two questions I had. Firstly, to start with, on industry growth versus what Kajaria has done. For four years, Kajaria grew 6% on volume. 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.
Industry should have grown by about 2-3% in the financial year which ended in March 2025 domestically, and as I said, exports have regrown by 20% in financial year 2025.
Sir, what do you think about the next year in terms of outlook? Any comments? Qualitative also will help.
You see, two things. The market has been muted, but at Kajaria, with all these things, what we are planning, we should do much better than the industry.
Do you see revival in exports next year?
Exports will definitely go up with the things easing out worldwide, and also the freight rates are the lowest today. So with this, exports should start picking up, and I think I personally feel that exports should touch INR 20,000 crores again this year.
Go ahead, 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 prices?
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 now, one of the plants, Kannur, Kerala, gas has become slightly cheaper than propane, so they have shifted to gas. So in north plant, we are the only using gas, as you know. In north, the flexibility is there whether to use propane or gas, depending on the prices prevailing in that particular market.
So would you say that we will have a cheaper fuel price going forward, like next year versus this year?
It's too early to say. Because prices have revolved around 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.
Go ahead, sir. All right, that's all for my side. I'll get back into queue. All the best.
Thank you. The next question is from the line of Sonali Salgaonkar from Jefferies Group. Please go ahead.
Sir, thank you for this opportunity. Sir, my first question is a little broad-based. So how do you see the real estate cycle right now? And even in the past two to three years, when the real estate cycle was sort of steady, just on the tile 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 retail operations over a period of next six months to nine 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. Yes. Yeah. For the real estate market, so as we said earlier, our turn comes realty plus two, so see, now this year, I think things should be much better. If the industry grows, if 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. How the real estate cycle is broadly steady, right? It's not seeing any rather.
It is stable. It is stable. So yeah, we should get good. As the demand increases in the market, we should get a good share out of it.
Understood. Sir, my second question is in terms of any pricing actions you have taken in Q4 or you are planning to take in Q1, especially given the challenging environment.
Your voice was not clear. Can you repeat your question?
So, Sonali, can you repeat?
Yes. Yes, sir. 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? Yeah.
Oh, so pricing, we are not touched till now, but now we are increasing our pricing. We are increasing our pricing a little bit to see how it goes.
Okay. And that quantum could be?
Sorry?
Quantum of pricing.
Very well. Very well.
Understood. And this will be across bathware and tiles?
No, it's not across all the division. It is a select type of product, and we will take it as we move forward.
Understood. Sir, just one last question. Any guidance for FY26? Because this is the fourth quarter. So just in case to understand, any volume or margin guidance you would like to give at this point in time for FY26?
So, Sonali, at this stage, we are not giving any guidance. And best possible scenario is the current environment. So I think we 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.
Of course, sir. No problem at all. Thank you, and all the best to the team.
Thank you. Thank you.
Thank you. Ladies and gentlemen, in order to ask a question, you may press star and one. The next question is from the line of Sejal Gupta from SC Securities. Please go ahead.
Yes, good evening, everyone. My question is, sir, you have been guiding and forecasting an ex growth for your company, which you have not been able to achieve. When the management guides something to the investors, we really rely on that. And when obviously you are not being able to achieve those numbers, it brings a lot of disappointment. I just wanted to understand, what is the reason of this forecast failure at the end?
No, you are absolutely correct. We have been guiding for the last three 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. See, Kajaria Ceramics is there. The leader is portrayed as always optimistic. So by giving guidance, he is always bullish, and it happens or not, it's not in our hands sometimes. In this time, this has been a we will agree for three, four years what we've been guiding. We have not been able to do. So that is why we are refraining ourselves from giving any guidance. Rather, we will perform and then say anything. Because some of the things we forget that some things sometimes are not in our hands. We try our best. We will do our best.
We will do the right thing. Whatever things in the past we have done, anything, not correct, we are correcting everything. So you will see a much better picture.
Okay. I just hope that this year we should perform well because it has been quite some time that we need to see some good performance coming out of the company. My second question is, we have a plant in Nepal. Could you just make me understand what is the reason of opening up for a plant in Nepal? And what kind of profit and loss are we making in that plant?
Here in Nepal, we put a 5 million square meter capacity plant, which makes ceramics and PVT. The total market size is roughly 2,500 crores. The basic thought process behind it was there's a huge customs duty from India to Nepal, which is 50%-55%. By putting a domestic facility, we have become more competitive and, once again, more market share in the Nepal market. We operate 49% capacity in quarter four with a yield margin of 12.5% currently. Going forward, the volumes out there should improve.
As of now, are we making any loss at that plant, or is it a profitable plant?
As of now, Mr. Sejal, as of now, the numbers are not very important because this is just a few months operation. So we'll be able to give a right picture after, let's say, after first half of four. Then we'll know because what had happened that when we put up a plant in Nepal, then the situation 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 if you just go to information, we are not losing money. We are making money. That is certainly to improve every quarter.
Sir, as I understand, because this is my thought process. When any management goes outside India, that means 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've already started in London. That is also bleeding.
Nepal is like India, and looking at the demand, we have a local partner there, and we just started the operation six months back. This year should be much better.
Yeah, because what I am seeing in the company is your plywood business, which you have obviously taken a call to shut down. And your London UK business is not doing well. So I must concentrate on India business and 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?
I mean, this is not relevant at this point of time because we are not bleeding. And Mr. Sejal, I will request you to please allow the other participants to ask a question, please.
Right. Right. Thank you. Thank you so much for your answer.
Thank you, Sejal. The next question is from the line of Sneha Talreja from Nuvama. Please go ahead.
Good evening, team, and thanks a lot for the opportunity. Just a couple of questions from mine. Just extended to one of the previous participant questions in terms of real estate cycle, and the driver wanted to know where exactly was the weakness. Was it across Tier 1, Tier 2, Tier 3 markets, or was it related to project and retail segment? In case we can get some color on that along with liquidity situation now on ground.
See, the whole industry didn't go down. Industry was really good about 2-3%. We still did better than the industry. Going forward, we hope that the industry grows and we perform much better than them.
Yes, this is an industry-level question only. But the demand you are saying is across B2B, Tier 1, Tier 2, Tier 3, and even in projects or retail market. I mean, that's the color that I'm seeing.
Correct. Overall, the demand was overall. Absolutely there.
Okay. And now we are expecting improvement. Any specific areas for 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 get better from all sides, all fronts, whether it's Tier 1, Tier 2, Tier 3, or better projects. Projects have also been now started. A lot of projects are happening. So hopefully, things should get better. If things get better, we'll also do a much better job.
Wonderful. Last quarter, you had also mentioned that there was a certain amount of pressure on realization because the project share had increased. As an FY25, what does that share look like for project versus retail?
Yeah. The project share is approximately 30%. And it is more or less maintained like that. So there's not much difference as far as that is concerned. Share of project is 30%. And retail is 70% to the dealer network.
Understood, sir. Thanks. Thanks for that, sir. Lastly, on the margin front, we have mentioned a couple of one-offs. Could we quantify that? What were the losses in UK operations, or what were the provisions that we have taken for plywood division? That would help us just understand the normalized level of margins at the end of this quarter.
We have clearly mentioned the plywood. We have taken INR 14.5 crore one-off. That is for some compensation we paid to our JV partner for which we agreed to enter into JV. And then later, when we decided not to go further in this plywood business, so we paid some compensation to them. And INR 6 crore is also to a vendor. So in plywood, we have taken around INR 14.5 crore one-off. And in London, we have taken around INR 7 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 is 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 and 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 not spare any area, 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 still?
No, no. We cannot quantify it.
Understood. Thanks. Thanks a lot to the team and all the best.
Thank you. We'll take our next question from the line of Rishikesh Bhagat from Kotak Mutual Funds. Please go ahead.
Hi. Good evening, so on plywood, fair to assume that most of this impairment matter is done. Now there's nothing pending, so I think one quarter it will.
Sorry, sorry, Rishi. No, it's 98% we have done. So only INR 2-3 crore will come in the first half. 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 P&L is concerned, except INR 2-3 crore expenses or maybe some under provision or over provision of debt. Small, small.
Just earlier participant's question on Bathware. I know you spoke that there is no one-off, but broadly, what will be the PBT margin or EBITDA margin for Bathware because I believe incrementally there was thought that this might drag because of new plant will gradually reduce as the utilization improves.
So this year, because the margin was 8% last in 2024, this year we could do just 4% because of the late implementation of the new plant. So the expenses have gone up, and we have not the sale was there. So this year, the Bathware margin was low. And we hope the margin will improve next year better.
Okay. 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. That's how we should look at it.
They are except. If you see our investor release, we in PI, everything is in business loss except Rs 14.5 crore.
Okay. 14 and a half. Okay. Thanks. Thanks.
Thank you. We will take our next question from the line of Keshav Lahote from HDFC Securities. Please go ahead.
Hi. Thank you for the opportunity. So we can see your JV has turned profitable. We can see some INR 17 million profitability. Is it due to Nepal JV?
Sorry?
Nepal JV.
We used to record loss, but this time it is 17 million profit for this quarter. Is it due to Nepal JV?
No, no, no. Nothing to do with the Nepal JV. Nepal number is very, very small.
Got you.
What is that INR 17 million pertaining to for this quarter?
Every million means 1.7 crore.
7 crore. INR 7 crore.
Sorry? INR 7 crore. INR 70 million. INR 7 crore.
In consolidated, we can say 7 crore profit from JV.
That, I think there was some entry reversal of the earlier period this year. So this profit belongs not to this quarter for some entry reversal by auditor in this quarter.
Understood. Got it. So Nepal, you mentioned that Nepal is operating at 50% utilization. So it would be fair to assume that as the sales would also be 50%, our sales would be lower.
What about sales at about 50%? Sales about 50% and gradually it will grow from here. As I said earlier, we are not making losses in Nepal. We are still profitable, but the profit is very, very marginal. 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 operation. So any figure, whether it is profit or loss, even if I say I've made a profit, but that's not our loss, whatever. So I will request you to wait for some time. Let us perform for six 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 clarification, I need the profit. You mean operating profit right now, your profit, right?
Yeah. Operating profit in Nepal, yes.
Understood. That is helpful. Thank you. That's it.
Thank you. The next question is from the line of Praveen Sahay from Prabhudas Lilladher. Please go ahead.
Yes. Thank you for the opportunity. 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 the utilization. So if any growth will come the way forward, how are you looking at the volume number to shape up, especially from the own manufacturing and the subsidiaries?
Our own manufacturing and subsidiaries are operating at almost 97%, 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, 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. And quarter on quarter from the last four quarters, we are continuously seeing your production number is quite higher as compared to the sales numbers. So why you are actually this production number is on the higher side inventory building or so?
No, it is no inventory building. We have, in fact, reduced our inventory.
Okay. The 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 the question. I'll clarify offline. 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?
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, South is 39, and West is 37. Average is 38.
Okay. Thank you, sir. That's it from my side.
Thank you. The next question is from the line of Ritesh Shah from Investec. Please go ahead.
Hi, sir. Thanks for the opportunity. Sir, the 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%-13%. So I just wanted to get addressed 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 was about 4%, roughly. And this year, we are targeting for about 8%-10%. I think roughly we have done about 6% as far as one year's comparison. We are trying to.
Okay.
Team is a lot more. We have penetrated to east, west, and south. So there's an additional 2% more. As we go now, we'll focus on that and try to reach to a level of 8%-10%.
Sure. Sir, the 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 Ceramics 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 Ceramics Universe. That's the only change. Nothing else has changed.
It's a normal product.
Normal product. Initial 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?
Correct. Galaxy includes all the three divisions: ceramics, PVT, and GVT. Star includes two divisions out of three. And.
And you're rebranding a strategy.
So, going forward, before six months, you should. Yes. 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 categories 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?
It's too early. We are doing it. Let us do it. Then give us three to four months. You'll see much more changes as we go along. It's too early to comment.
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 competitive intensity in the marketplace?
Channel inventory over a period of time has come down for a simple reason. Because of just the transit time has reduced. I think normally the channel now keeps stocks of about 30-45 days because of the change. Otherwise, the transit period has reduced drastically. So I think more or less that remains the same because of the large area products. Inventory level has reduced 30-45 days. Also because of multi-location factories, it has helped. Now, seeing the factories everywhere, that has really reduced the inventory at the dealer level.
Right. And then the pricing discounting among 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 peers that are approaching? So how should one read into the marketplace?
Demand is not normal. Demand is not weak. Demand weak only because demand is weak. It's normal. We are looking for a scenario, as Rishi said earlier, that real estate projects, some demand has started emerging. So the demand is normal, and as far as the 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 the 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 two brands which are very much. 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 we diversify to the rest of India, there will be a lot of other things, a lot of other expenses go up, a lot of running has to be done. But basically, right now, two major brands at the moment, 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, whereas Kajaria and Somany, we are located all over. But the moment they get out, a lot of other expenses happen, as you know. So we'll see the performance when they get out.
Thank you. 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 Single Family Office. Please go ahead.
Hi. Good afternoon, management. This is Nitin Sakhdher from the Green Capital Single Family Office. My question pertains to Kajaria International DMCC. While I understand that you have a robust real estate demand, any learnings as to what really went wrong in the UK, and how is the company taking it a step further and getting aggressive in the UAE real estate markets? It's not an honest question, but more from an investor point of view.
No, it's a good question. So Kajaria Ceramics invested earlier in Dubai and then in the U.K. So we obviously 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 operation, we realized the costs are very high of running it. So looking at the management bandwidth and looking at the domestic growth in domestic future demand in India, we said it is better that we give that showroom to the local partner only, while getting our equity back, and let them run it, and we continue to export. See, export will always be 1.5% of our business. Our main focus is domestic, domestic, and domestic. That's why the 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 that, 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's not a very big investment, it's a very small investment, and it is breaking even because of the showroom. We are at least getting some orders from the Gulf market.
Okay. The second question is, I know I showed you, sir, that before that there is an offset on the Plywood business, and some UK operations are shut down. And that's a new trend. Now, I think I understand as an investor, when the offset seems like a cleanup, where the book gets cleaned up, and then you go back on the trajectory of growth, is that understanding clear, and we should not expect any further larger offsets apart from the barring to three crore line of offsets?
Absolutely correct. Absolutely correct. As Rishi has already said, as far as supply is concerned, we have read through everything. There will be an impairment of about two, two and a half, three crores because of the manpower which is there, which will go by the end of May. But other than that, everything has been taken care of.
Okay. Thank you, Rishi. Thank you, Chetan. Thank you, Rishi. I hope we can get back to the domestic real estate market.
Thank you.
Thank you. We will take our next question from the line of Amar Maurya from Lucky Investment Managers. Please go ahead.
Sir, firstly, sir, what would be our revenue mix between Tier 1, Tier 2, and Tier 3?
See, we have one year said there is also Tier 4. Tier 1, Tier 2, Tier 3, Tier 4. Roughly, Tier 1 is about 15%-18%. Tier 2 is about 30%. Tier 3 is again about 30%. And the balance will be from Tier 4, roughly. Plus minus 20% here and there could be.
Okay. So, sir, in terms of the competitive intensity, majorly, we would have seen the pressure in which part of this segment?
See, pressure is everywhere. See, project is everywhere, but basically, you know the dealer. हमारे trade में, I would like to repeat that word, जो दिखता है, वो बिकता है. हमारे trade में, जिसने बढ़िया showroom बना दिया, and the entrepreneur is behind it, he is successful, whether he is taking it Tier 1, Tier 2, Tier 3, or Tier 4. अब वो पहले वाला concept नहीं रहा, because earlier, dealer used to be a retailer, come 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 a good promoter is behind that showroom, he is successful.
Okay. And, sir, like you know, everybody, I mean, we are of the view that the competition for Morbi is high, and that is the reason majority of the organized players are basically having a volume decline or volume slowdown. So how far do you believe this story?
No, no. First of all, you have to understand that overall industry has grown by 2%-3%, which I already said in my earlier remarks. Domestic market has grown by 2%-3%. So when you say 2%-3%, as we all know, 75% production of the country is in Morbi. So that means we have not grown. The organized players have either grown by 6% or 5% or 10% or 8%. I do not know. I mean, it's grown by 6%. So even when we have taken some from some. So as I said earlier, it is because of the commitment we'll make.
Okay. And, sir, now, normally in the real estate cycle, let's say normally we would have seen a significant pre-sale 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?
Year plus three. This is the year where it should better. This is the three years of complications in the real estate cycle started, as you all have been telling. This is the year where things should start looking around better, as we go on.
Okay. Perfect. Perfect. Thank you, sir.
Thank you.
Thank you. The next question is from the line of Nitesh Dutt. But before that, we would like to remind participants that you may star one to ask questions. Sir Nitesh.
Hi. Thank you for this opportunity. Sir, my question is on real estate cycle and what you have touched on earlier, so I believe there were a lot of launches around 2022 and 2023, as you mentioned, should get reflected in an upcycle for tiles companies and other building materials players in FY 26 and maybe FY 27, 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, etc., that you are seeing on the ground or any hard data on projects, etc., that you are tracking?
For Tier 2 and Tier 3, we are strengthening our distribution network. We are trying to make our dealers more exclusive. Right now, we have 1,850 dealers. Out of about that, 440 dealers should be about 430-450 should be exclusive who sell only Kajaria. Our strategy going forward is more and more people to come into a fold of selling only exclusively Kajaria tiles. With this, we'll definitely see a sales increase.
Sorry, sir, the demand of Tier 1, we are expecting the demand to revive at an industry level, right? Because of all of the real launch completions that will happen in FY 2022 and 2023.
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. Perfect. Any thoughts on what kind of industry growth should one expect for the next couple of years, FY 2026, maybe 2027?
Difficult to say, difficult to predict. But as we are 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.
Sure. Thank you. I'll get back in touch with you.
Thank you. The next question is from the line of Rahul Agarwal from Ikigai Asset Management. Please go ahead.
Hi. Thank you for the follow-up. Sanjeev ji, we just wanted to clarify one thing. As you said, INR 14.5 crore provision for U.K., that's INR 21.5 crore included in the other expenses line item in the accounts.
The INR 14.5 crore has been shown as a separate item, as an exceptional item.
Okay. But when I look at consolidated accounts, there is no exceptional which is reported in the financials. I'm looking at consolidated accounts.
Yeah. Exceptional is 14.5.
Just a second.
Yeah, sure. I clarified to you offline.
No problem, sir, and just one more clarification on Bathware. You said earlier a bit about 4%, so when you say Bathware loss, it was a bit of loss in 4Q only. Is that what you referred to?
No, this loss was basically because of the new plant, which commissioned it, that made losses.
Yeah, yeah. Sir, only for the new plant, not on a consolidated, standalone basis, right?
The consolidated EBITDA kicked back.
What is the number?
The turnover was the top line was about INR 400 crores. The top line was INR 390, around INR 390 crore. And the volumes are the same.
Got it. Got it. Got it. That helps. All right, sir. I'm coming later. Thank you so much.
Thanks. The next line of Udit Gajiwala from YES Securities. Please go ahead.
Yeah. Hi, sir. 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 tiles specifically?
As we go along, we'll see. And as the market improves, we'll keep on trying to increase prices and improve the realization. But it will be a strategic and a way to change the pair as we go along. It's difficult to tell you any numbers right now. But as the market demand improves, and whenever we can get a better realization, we'll start increasing prices.
Understood. Understood. Thank you. Lastly, what will be the CapEx for the coming fiscal? That's it.
That will be around INR 150-INR 200 crore.
For this year?
For this year, it will be INR 250 crore.
Okay. 250. Perfect. Thank you for all the questions.
I wanted to clarify one point which before you, Rahul, has asked about the pricing. Actually, what it happened was that because of some accounting standards, the auditors have shown Plywood operation as a discontinued operation. So that is why the exceptional item has been merged with the loss in that account, in the audited accounts. If you see the notes to accounts, it is shown in the notes to accounts, the notes to accounts, which shows that there is INR 14.5 crore exceptional item. So this is for Rahul.
Okay. Thank you, sir. We will take our next question from the line of Utkarsh Nupany from BOB Capital Markets. Please go ahead.
Yeah. Thanks, sir. Sir, my first question is on your Capex plan. So we have a pretty strong balance sheet with a good cash plan. And our existing tile plant is operating at full capacity. Also, why we have deferred our investment proposal of coming up with a large-scale GVT tile plant in Morbi? Can you please shed some light?
So basically, there is enough capacity in Morbi. And if we want to, we can always outsource that in the future instead of putting our own 200 crore CapEx and putting up a fresh plant out there.
Sir, even for the large-scale GVT tile plant, you were 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 two lines of Continua Plus. We have only commissioned a plant in South India for Continua Plus, which makes big slabs. So we already have the capacity. And right now, the demand has been muted. So we don't want to invest that kind of money and just break the industry through. As the market improves, we right now have enough capacity available in Morbi, which we want to. 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.
Scrap this proposal for the tiles?
We don't want the proposal for the tiles.
Sir, second question is, sir, tile numbers, the March quarter. So even write-off related to the UK operations, the gross margin has come down to multi-year low level. So can you please explain the reason for margin pressure in that segment on a Q1, Q2 basis?
So this has been various decisions like write-off we have taken for London and Plywood. Apart from that, we have also taken some budget provision and maybe some too this time. So we hope that next year onward, 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 address the INR 7 crore write-off related to U.K. also, then also your margin has come down to Q1, Q2, Q2. So what is the reason for that?
The whole tile operation, we have shown tile profits.
What we've shown, 33, it's just 48.
It's 48 crore.
49 crore. It is not INR 49 crore you will add back. You will add back only INR 33 crore because INR 14.5 crore was the exceptional item which has been shown as a note in the auditor accounts. So if you exclude, if you add the INR 49 crore, obviously the margin will come higher, and sir, I am talking about the tile segment margin, which doesn't include the plywood segment.
We don't have the tile 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 margin will significantly improve.
And, sir, lastly on the tiles export front, so 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 export from India? So, can you please throw some light over there whether our understanding is correct or not?
We are thinking differently. We think as far as the Trump thing is concerned, right now India is leveling at 10%, and then we have put 26%. With all the efforts going on, it will not be more than 10%. And we'll be happy to note, this is for all of you, that there was an anti-dumping investigation against India and the U.S., and the duty has come out as zero. So imports of tiles to America will, whatever has happened last year, will be 50% more this year because of the anti-dumping thing. And India was the largest exporter of tiles to the U.S. So the market demanded continuation of export, which has come down. Even last year, in spite of anti-dumping threat, the exports were X. This year, it will be X plus 50% because there is no anti-dumping now.
Okay. Thanks a lot, sir.
Thank you. The next question is from the line of Ashwat Rajan from Arihant Capital. Please go ahead.
Yeah. Hi, sir. Thank you for the opportunity. My question is on the broader scale. Since we've seen this whole supply in this industry for a while right now, what do you foresee in this? Do we see this supply to be diverted back into the export markets? And what is your opinion on this?
I want to say that this year, the exports should cross INR 20,000 crores for two reasons: one, the stability in the world markets, and two, the freight rates are the lowest. The freight here last year to the European markets has grown 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. As a result, part of these 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 you gained some market share there?
As I already said earlier that the domestic market overall has grown by 2-2.5%. We, at Kajaria, have grown by 6% in volume terms. We didn't grow to what we wanted. Our thought was that we'll grow double digits. We didn't go. 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.
All right, sir. Thank you so much.
So.
Thank you. We will take our next question from the line of Moksh Ranka from Aurum Capital. Please go ahead.
Hello. I wanted to understand the industry scenario regarding if I look at the industry, all players were actually focused on some one segment. For example, Kajaria would be on bathware. Somany would be on this tile. And then what happened is everybody started getting into everybody's domain. And that's the whole industry thing. So is this the reason for oversupply? Could you help us understand the industry scenario?
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.
It's a related business, right? All the tile companies, the bigger tile companies, whether it's Simpolo, or it's Johnson, or it's Somany, or Kajaria, they all are into sanitaryware faucets because it's a related business. Like I'll give you an example. We just opened two or three experience centers, big experience centers in South. Like in Chennai, we opened a 14,000 sq ft experience center with tiles and sanitaryware faucets. We are getting very, very good demand. The villagers are coming and saying, "Oh, wow. I didn't know that Kajaria has such a good range of sanitaryware faucets as well." So when the customer is buying the tile, he's also buying that. So it will work in our favor rather than your point of being an oversupplier or it's a wrong word. It's not like that.
It is a complementary business, and it is only going to give us good returns in the future.
Okay. That's it from my side. Thank you.
Thank you. The next question is from the line of Arun Baid from ICICI Securities. Please go ahead.
Yeah. Hi, sir. Sir, I understand you mentioned in the near term you don't want to give us guidance. But sir, from a medium-term perspective, do we believe we go back to that double-digit kind of volume growth with our historical margin which is 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.
Sir, I didn't ask for guidance for FY26. I'm saying with the measures you are taking right now and whatever you are discussing.
We are doing our best, and we will be doing very hard work. We'll be doing, and we will refrain from giving any guidance. Because when we give guidance, then we don't attend the guidance, and you people say, "You have not attended the guidance." So it is better not to give the guidance and perform.
Okay, sir. Thank you.
Thank you. The next question is from the line of Ritesh Shah from Investec. Please go ahead.
Hi, sir.
My name is Ritesh Shah.
Sir, can you detail something on the initiatives that we have taken on the technology side, including Salesforce Automation? Is it only done on a pan-India basis? Are we already reaping the benefits, or incrementally do we expect something out of it?
So, Ritesh, we've just started Salesforce Automation and DMS, also with the 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 basis. Trading of orders in the system for dealers and the Salesforce automation and everything.
Okay. That's great. Just for the sake of clarity, 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 reaching that we are looking at, or is it technology implementation, or is it the distribution widening thing that we are working on? What would be the single most important variable that?
There is no single big thing. There will be a combination of many factors.
Sure, sir. Thank you so much for the answers. You're very helpful. Thank you.
Thank you.
Thank you. The next question is from the line of Praveen Sahay from Prabhudas Lilladher. Please go ahead.
Thank you for the follow-up, sir. Just if you can give any clarification on your INR 250-odd crore of CapEx you are planning for 2026, is it only for maintenance or something else as well?
It's mainly for maintenance and for our new office, which will be maintenance. 250 was the last I said wrongly if I had said. 250 we did last year. This year the position is around 200 plus, and out of that, 100% regular maintenance CapEx and around INR 75 crore will be for the corporate office, and small, around INR 25 crore will be for 15, INR 15-20 crore for maybe Nepal.
Okay. That's really helpful. Thank you, sir.
Thank you.
Thank you. Ladies and gentlemen, I would now like to hand the conference over to the management for closing comments.
Thank you 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, sir. And I can assure you, on behalf of Kajaria management, which is here, that we'll 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.
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 line.