Ladies and gentlemen, good day, and welcome to the Kajaria Ceramics Q4 FY 2026 earnings conference call hosted by Spark Institutional Equities Private Limited. 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 the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Girish Choudhary from Spark Institutional Equities Private Limited. Thank you and over to you, sir.
Yeah, thanks, Yusuf. Good evening, everyone. Thanks for joining. We have with us the senior management team of Kajaria Ceramics, including Mr. Ashok Kajaria, Chairman, Mr. Chetan Kajaria, Vice Chairman, Mr. Rishi Kajaria, Managing Director, Mr. Kartik Kajaria, VP and Head, Adhesive Division, Mr. Sanjeev Agarwal, CFO, and Mr. Parveen Gupta, VP Finance. I would request Mr. Kajaria to start with the initial remarks post which we will have a Q&A session. Over to you, Ashok Ji.
Thank you, Girish. Good evening, everyone. It gives me great pleasure to welcome you to the quarter four FY 2026 earnings conference call of Kajaria Ceramics Limited. As already said, joining me on this conference call is the senior management team of Kajaria Ceramics. I am pleased to inform that this quarter we achieved a volume growth of 11%. This is a result of several efforts made towards unification of sales.
During the first nine months, this unification meant realignment of inventory across channels, manpower alignment, and as a result, resulted into flattish growth. After which we experienced good momentum and demand since January 2026, which was a result of efforts made by us in the first nine months. The production has fallen by 7% during the quarter due to shutdown of our Morbi plants in March, which have since started from 16th of this month.
In Q4 2026, our consolidated revenue increased by 12% to INR 1,373 crore compared to the corresponding quarter last year. EBITDA margin for Q4 stood at 19.19%. Margin improvement is a result of cost optimization and some improvement in sales realization over Q3, along with all-round efficiencies in production, sales, and supply chain management. I would also like to mention here that there has been a huge disruption at Morbi players in terms of costlier fuel, labor, and cash flow. As a result, Kajaria and other players who have multi-locational plants will have a great advantage as we go forward, and their volumes have for the year 2026-2027. For us, the journey has just begun, and we remain optimistic about the current year's performance and beyond.
Let me share with you some data for the quarter. Segment-wise financial performance. Tiles segment grew by 11% year-to-year at INR 1,212 crore in quarter four of 2026 compared to INR 1,088 crore in quarter four of 2025. Bathroom segment registered a 6% growth in revenue, reaching INR 117 crore in quarter four compared to INR 111 crore in quarter four 2025. Revenue from the adhesive grew to INR 44 crore in quarter four 2026 as compared to INR 21 crore in quarter four 2025. EBITDA improved in quarter four 2026 to 19.19% as compared to 10.01% in quarter four 2026.
PBT. The profit before share of profit from JV exceptional items and tax for the quarter grew to INR 228 crore in quarter four 2026 as compared to INR 85 crore in quarter four 2025. Tax for the quarter grew to INR 136 crore in Q4 2026 as compared to INR 43 crore in Q4 2025 due to higher volumes and improved realization. As of 31st of March 2026, the working capital cycle improved by 14 days to 51 days as compared to 65 days on 31st of December 2025, mainly due to decrease in inventory and receivables. We'll continue to focus on reduction of our working capital cycle as we move forward.
Sanjeev?
Hello. Hi, this is Sanjeev Agarwal. I would just like to say that in our presentation, in slide number nine, the inventory figure has been interchanged to debtors inadvertently. We have uploaded the revised presentation to the stock exchange and to our website also. Please read inventory figure as debtors and debtor figure as inventory.
With this, I take this opportunity of thanking you all for joining us today. Over to moderator for Q&A please. Thank you.
Thank you very much, sir. 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 withdraw yourself from the question queue, you may press star and two. Participants are requested to use handset while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. First question is from the line of Keshav Lahoti from HDFC Securities. Please go ahead.
Hi. Thank you for the opportunity. Congratulations on strong set of numbers. Sir, I wanted to get a sense from Q4 growth. One is because of unification, and secondly, we believe because of this Iran thing, the Morbi has taken a shutdown. Is it possible to bifurcate how much volume growth could be coming because of the Morbi shutdown? Secondly, how are the things looking on Q1 side?
This volume growth is not because of only the Morbi shutdown. In January and February also we had a volume growth. It was consistently throughout quarter four, in Jan, Feb and March. What was your second question, please?
Sir, how are the things looking in Q1? Q1's things should be stronger than Q4?
The momentum has started now. It looks like a good 2026, 2027 going forward. We cannot break it on quarter-wise, but the good momentum has started now, I would say.
In general, Q1 historically is low in the industry and Kajaria. Q4 cannot be compared with Q1. The whole year is going to be much, much better.
Okay. No, I got it. I was asking more on year-on-year, April- on- April basis. The momentum, whatever the double-digit volume growth, that might be continuing April also, possibly might be at an accelerated pace, was my question. My, sir, first question was that I understand it's because of both unification and Morbi. I was just trying to ask, possible to bifurcate this growth. Just let's say for example, what has been your growth in, let's say, January and February, the first two months when we are not seeing the Morbi disruption?
As the Vice Chairman said that the growth is not just because of Morbi, because we have started getting the growth from the month of January itself.
Okay.
It was Jan and Feb were, volume growth were 8%.
Eight percent to nine percent.
Eight percent to nine percent, and then it continued in March also.
Understood. Got it. That is helpful. What sort of price hike you have taken in the market because of inflation in gas prices, and how are the gas prices now and in last quarter Q4?
Can you repeat the question, please?
My question is, what sort of price hike you have taken because of increasing gas prices? What have been the gas prices region-wise in Q4 and, like, currently?
We have taken a price increase of roughly 12%-13% in our North plants, Morbi has been slightly higher, around 16%-17% because the gas prices have gone up much higher there. That's been the region-wise price increase, South is also in the similar lines.
More or less we have covered the cost of increase of gas. With some added margin, but more or less covered the costs which have gone up.
Sir, region-wise gas prices for Q4 and currently, how it stands?
See, there is a varied combination. You see, what has happened, in the month of March, all the plants in Morbi were shut down. Almost, there's no calculation [inaudible] as far as Morbi is concerned. We have started the Morbi plants on 16th of April. As far as the gas prices in North are concerned, the Government of India made a restriction that you will get for the first few days 80% and 65%. It's a varied price, as you might be aware. Exact number is difficult to say, but calculated way, the prices have gone up quite a bit.
We have different type of gases, yeah. It's not in our non-Morbi plants.
Understood. Well, thank you so much.
Thank you. Next question is from the line of Sneha from Nuvama. Please proceed.
Sir, thank you guys for the opportunity and congratulations on great set of numbers. Just continuing with the last participant's question, you generally used to give a break up of North, South and West average gas prices. Could you give that to us for Q4?
North is roughly INR 55.54 per SCM for quarter four. South was INR 49.6, and West was INR 46.57.
Could we have current prices too, if possible?
Yes.
What are the averages looking like today?
April the price in North is roughly INR 62.5. South is around INR 81, and West is INR 79.
Sure. Like the Chairman and you know—
These are gas prices. Yeah. Gas prices, not the complete fuel. Gas prices. Yeah.
Understood. You're saying that you also have biofuel because of which the average fuel price is likely on the lower side. Is my understanding correct?
Yeah. Correct. Yeah. Average fuel price will be lower than the gas price.
Understood. This is where we would have some advantage versus Morbi. What would be the current mix of biofuels, 20%-25%, if I'm not wrong.
Around 15%.
North plant is about 30%.
Thirty percent. For the biofuel.
The whole. Yeah, yeah. It has North plant, three plants.
It has North plant. Yeah.
There is no biofuel there. In there they are using coal as a fuel in Morbi. South.
South also about 20% [inaudible] .
Understood. Understood. Secondly, sir, an extension to this, given there is a steep increase in gas prices and the way, you know, we have taken price increases too to manage the margins. Any end user demand impact that we are seeing on ground, not just because of the price increases. I think we are seeing it across the construction space. Like we have seen sharp increases, let's say in wood, in, you know, HRC, I mean, across the board. Are you seeing any amount of hit taking place on the construction sector?
Not really. I think the demand is there. That is a very small segment in the entire real estate project. Just for that price increase, they will not stop their construction. We are looking at a good demand for the year.
Any guidance that you want to give?
See, guidance, as you are aware, I have always given, right? It didn't work out. After I give the guidance you people say that, "Look, not done this." My request would be going forward not to give any guidance and we perform. We perform. Prove to you people that we are doing a good job as a team.
Perfect, sir. Got that on the volume front. Anything on the margin front that margin could stabilize your?
Margin, we are confident that, with the current scenario, we should be maintaining between 18% to 19%.
Perfect, sir. Thanks a lot, sir. I'll get back in the queue.
Thank you. Thank you.
Thank you. Next question is from the line of Praveen Sahay from PL Capital. Please go ahead.
Thank you for opportunity and many congratulations on good set of numbers. My first question is related to the fuel. As the, you had given that the fuel prices has increased in all the three locations. If I look at your fuel expenses as a percentage of sales has been down. Is that impact has not reflected in the Q4 or the price hike which you had highlighted already taken, you know, that's the impact as well?
We took a price hike in early March.
Okay.
That has resulted in—l ike, your question was fuel price is down in the Q4?
Yeah, fuel prices as a percentage of sales has been down.
That is because of the lower production. We produced less 7%. We sold more, and we are comparing the percentage on sales. Sale is higher and production is less. Sale is higher by 10%, 11%, 12%, and production is down by 7%. As a percentage, the fuel price has gone down. In fact, actually, the price per square meter has gone up.
Right. Got it.
You're seeing the absolute number.
Yeah. Yeah. Correct, sir. Second thing on the price hike, as you said, that early March you had taken the price hike. In the coming quarters or this quarter Q1, we will see the entire benefit of what, 12%-15% of increase in the prices in our realization?
We should see definitely some increase in the price realization.
We cannot quantify any number because it's a very dynamic situation. We have taken the price increase. We might have to give some discount as well.
Absolutely. Like in project we might be a little more flexible in terms of our pricing.
One thing is there, the prices will be much higher than the what we realized earlier.
Right. Right. Last question, sir, because Morbi yet to fully resume or, you know, come to the force. Such benefit what we had received in the Q4 in terms of the volume growth, please, we can see in the coming, like this quarter and the coming quarter till the Morbi is not coming back with the fully production?
No, from 1st of May now, Morbi is also starting their production. GSPC is giving gas to whoever wants to take it in Morbi. That quarter four scenario is not there anymore. Now gas is available to anyone who can take it, produce and sell. That is the current scenario going forward from May 1st onwards. You see two things are happening. One minute, one minute. Let me explain to you.
Yes.
Two things are happening. For the first time in last five years, the gas prices are going up like this. The gas prices, which was INR 47 or INR 48 landed, is as of today is INR 84.50 landed for the Morbi players, which includes the tax, which includes the calorific value utilization. Point number one. Point number two, for the extra price you have to give a bank guarantee to GSPC. Third point, when it comes to pricing, you have to select these prices. Morbi has, as we are all aware, Morbi has always reduced the prices.
First time they have to take a 35%-40% hike. A product like 4 ft by 2 ft, which was selling at INR 20 a square foot, has to be sold at anywhere between INR 27-INR 28 because that is the impact of gas. How can they sell cheaper? They are not sure whether they can sell at these prices. As of today, nobody knows how many plants will run, how many plants will be able to run properly. The plants which will run properly are, one, who has created a brand in Morbi. There are a few players, I would say 10, 12 players who have created a brand for themselves. Yes. Secondly, who are outsourcing for organized players or some other players who have backup demand. Yes, I will produce and they will buy.
There is a lot of questions to be answered on Monday's call because first, second, third is a holiday from people are expecting to start. Monday you will know how many players started the plant. That would be my answer to that.
Thank you so much, sir. That's really helpful to understand the current situation. All the best, sir, for the future.
Thank you. Before we move to the next question, a reminder to the participants, to ask a question, you may press star and one. Next question is from the line of Sonali Salgaonkar from Jefferies India. Please proceed.
Thank you for the opportunity and congratulations on a good set of numbers. My first question is the production. I was just trying to align the numbers. The production is down by about 7%. The sales is up by 12%. Is it fair to assume and interpret that there was a lot of finished goods inventory lying with you earlier, which was ready, which you sold off in March? Going forward, with that inventory liquidation behind us, our sales would be more in line with our production. Is that the right way to look at it?
Sure, right. First, the inventory has gone down because of this, the shutdown of Morbi. Our inventory has gone down. Secondly, going forward, currently all our plants are running at full production. With a combination of our own plants running at full production and our stocks, we'll be able to service all the sales orders.
And outsourcing.
Outsourcing as well. Outsourcing still is a little problem. It's still a little problem because as we just said that Morbi, a lot of plants are still shut down. We have enough stocks and our plants are at full capacity to service the market, to do our numbers.
Understood. Just as a follow-up, what is the current capacity utilization of our plants? If you could please break up that as the outsourcing in Morbi and in the other regions. How much percent of our supply is coming from Morbi?
Sonali Ji, our production will be, as Rishi said just now, from 16th of April, all the plants are running at full capacity. The, today, as Kajaria, we are outsourcing to the extent of almost 27%-28% of the materials from Morbi. There is a question mark we get in the month of April, and April was of course tough, but how much we get in May. Things could get normal as we go forward, but right now that's a question mark because many plants, as I just said few minutes before, are not running. They are not running for a simple reason. The gas they got, started getting gas is only from 16th of April and then again from 1st of May for the people who have not started the plants yet. As we go forward, we'll know.
Our plants are running full. As rightly said by Rishi , our stocks have come down by almost 1.5 million sq m in the month of March itself because the Morbi plants were shut down and we sold more. That's how we have stocks have come down and we also realized better cash flow because of tightening of the norms.
Got it, sir. Very clear. Just one last question from my end. Exports definitely Gulf accounts for about 25% of the overall.
Your line is not clear, Sonali.
No, voice is not clear.
Sorry. Sorry. Is this better now, sir? Apologies.
Yeah, better.
Is this better? Yes.
Yeah.
On the exports, we understand Kajaria doesn't export, but Morbi used to export about 25% of its sales in Gulf. With that getting impacted, do you foresee more competition once the Morbi starts producing from the 1st of May? Also we understand that they have taken price hikes, but with us taking about 15% price hikes, do you think that the competition could be more from Morbi in the domestic market?
I think you didn't hear, Sonali Ji. I said two things. One, they have taken a price hike of 35%-40% for a simple reason. That's the impact of gas only. I'm not talking about other inputs like packing and all that, but just the impact of gas is roughly about 35%-40%, number one. Number two, as the plants were closed, the question of export doesn't even arise. In the month of April, the exports has hardly been INR 400 crore-INR 500 crore. Why? I give you two reasons. One, the plants didn't run.
Secondly, lot of exports to Gulf are affected. Give you a small example. Before the war on 28th of February, the freight was $300 for UAE. Today, the freight for UAE is almost $4,000. How can they export and how will the buyer will get? These are the factors which are hurting the industry.
Sorry. My question was that once Morbi starts producing from 1st of May, and I agree with you that the exports are definitely impacted, would that increase the competitive intensity in the domestic market? That was my question.
That is what I said earlier. Out of 500, 600 plants which people say in the industry, in the industry community, which I agree, not more than 150. As of today, there are only about 70, 80, 90 plants which are running. As I said earlier, few minutes back, that on 4th of May, you will know that how many plants are running. Our estimate is not more than 150- 160 plants ultimately will run from 1st of May. If they run, there is a big shortage as it is in the domestic market. Why will they export and have this headache? They will rather feed the domestic market because domestic market is important.
Coming to competition, there is already a big vacuum. If you go to Morbi today, you will find many plants don't even have a single box. Everything has been sold. That's a scenario which has been told to us by people. "Okay, sir, we have no material." What the dealer said, during the month of March, who were buying from Morbi, they told them, "Yeah, I give you money of the past, I give you money of the present, give me whatever you have at the old prices." They have cleared their stocks entirely. It's a very, very positive scenario for the so-called organized players who have multi-locational plants going forward for the whole of 2026.
Got it, sir. Very clear. Thank you and all the best.
Thank you, Sonali.
Thank you. Next question is from the line of Rahul Agarwal from Ikigai Asset. Please go ahead.
Hi, sir. Very good evening and congratulations for a very good number. Firstly, on the Bathware side, this INR 50- crore buyout of the PE investor, is it for the entire 15% stake or is it lower?
It's for the entire 15% stake. See, they invested $10 million eight years back. We bought the entire stake for INR 50 crore by mutual discussion and negotiation.
Got it, Sanjeev Ji. The second question on the cost side, you obviously mentioned that 18%, 19% EBITDA margin is achievable next year. When I look at, you know, this year, there have been a lot of cost saving efforts which you have made. The staff cost of INR 530 crore for FY 2026, the number looks like stabilized at INR 130 crore per quarter. How should we look at this cost going forward for the other expenditure and staff cost?
Sorry, what was your question? The staff cost?
Sir, I'll just repeat myself. My question was that this year it was a restructuring year for Kajaria. You've done a lot of effort on the cost side. For fiscal 2026, the staff cost is now stabilized at INR 530 crore, which is INR 130 crore a quarter, and other operating expenditure has also come down substantially to INR 480 crore, right? If this is the base for fourth quarter run rate, how should we look at fiscal 2027 on expenditure side?
In the similar grounds, we are not looking at. You see, you have not calculated one thing. For the year 2025, 2026, in volume way, overall volume, we grew at 3%. We are talking about a much positive growth going forward, as we have seen in the quarter four at 11%. We are saying that it'll be much better growth as we do it because we are not giving any numbers, as I said, but we'll do much, much better as we go forward, number one. Number two, some cost increase will be there, of course, because when you start a new year, some cost increase will be there. But very marginal. It will be very marginal, and it'll be much more nullified by the volume growth which will happen. Oh.
The, and the price increase which has taken place from 1st of April, because actual second price increase only came from 1st of April. In terms, I mean, absolute number, there could be some increase in, mainly in case of labor and all. In terms of as a, as, Chairman sir has said, as a percentage of sale, it will be lower. Daily cost —administrative cost as a percentage of sale will go down.
Will go down. Will go down.
Very clear, sir. Last question, sir. When I look at the production, you know, my sense is for Kajaria, in-house production is about 60, 65 million sq m . Please correct me if I'm wrong.
No, it is 84 million sq m .
Eighty-seven.
Eighty-seven.
Eighty-seven. Yeah. C omplete your question, but including this.
Yeah. I was actually breaking it down into three parts, own capacity, joint venture, and outsourcing. I was looking at own capacity and joint venture is about 89 million sq m, I agree with you. The question—
Eighty-seven million.
Eighty-seven million. The question I'm asking is this fourth quarter, when I look at production, looks like the JV production obviously is declined purely because of some, you know, gas supply issues in Morbi.
That happened in the month of March. Don't forget that happened only in the month of March. January, February, Morbi has been also normal.
Yes, sir. Yes, sir. Just from 16th of April, when you are saying that gas is available for all of our plants, should I assume it is also for our outsourcing partners and joint venture plants put together?
Absolutely. Absolutely, yes. Joint venture, yes, outsourcing still. Our joint venture partners, yes. Outsourcing partners is a question mark. We are not completely outsourcing 100% from each of the outsourcing partners. We have done some percentage of our sales. If they can't run the plant fully on their own, then they will not produce just for us a small percentage of the sales. That's a question mark as we go forward. We will get to know more about it as the events unfold.
Got it, sir. That is almost 30 million sq m we have sold from outsourcing partners last year. That will all get compensated from your in-house production from JVs and own plants. Is that correct?
It is not that the whole outsourcing will stop. The outsourcing will reduce that too in initial months. Morbi has already started, if from 1st of May, more plants will open. They will have to sell. They will have to sell to Kajaria first. It is a one- or two- month disturbance in the supply. It is not a permanent disturbance. When we are ready, when we are giving assurance, as Chairman sir said, if the plants are running, who have the brand and who have confirmed order. There can be a situation that we are outsourcing from 20 plants. We may outsource, let's say, from 12 plants going forward.
No. You see, last year we sold 180 million, produced at about 87, 80, 86 million. We outsourced about 32 million sq m sometimes. As Sanjeev was just saying, suppose A doesn't run, we will tie up with B. The question is very simple. Material availability is not a problem for Kajaria. If Kajaria has to outsource, this year we have to outsource almost 40 million plus, right? We'll outsource from A, if not A, B, C. As plans move on, this problem is limited to probably for the month of April and May. As things normal, people will come forward to our this thing and say, "[Non-English content ] Why don't you buy from us?" Outsourcing will not be a problem in terms of square meters as we. Initially it's a problem.
Yeah. Initially it's a problem. Going forward it will not be a problem.
We'll be realigning our suppliers as a solution.
Got it, sir. Got it. Very clear, sir. Thank you so much, and wish you all the best for fiscal 2027.
Thank you. Next question is from the line of Ritesh Shah from Investec. Please proceed.
Yeah. Hi, sir. Couple of questions. Sir, first is, if you could please help clarify. Sir, [Non-English content] you told us Morbi will need an increase of 35%. I think you said INR 20 and then INR 27. Sir, you also said, initially that 16%-17% price increase in West and ours will be in similar lines. I just wanted to understand the timelines for both the numbers.
Nai, you see, what you have not understood, Morbi per se was selling a product let's say at INR 20 a square foot. That's a 4 ft by 2 ft price , right? Today, as far as they are concerned, their costs have gone up by 35% because of increased price of gas. Their price have gone up from INR 20 to INR 27 or INR 28, depending on the customer. As far as Kajaria is concerned, I was already selling at a higher price. My price increase is only 15%, 16%, which covers the cost of gas and this thing. That is what the scenario is.
Uh-
If you talk to Morbi, if somebody supplies you from Morbi, he was earlier supplying you at INR 20, today he is supplying you at a minimum price of INR 27, INR 28, maybe INR 29 also square feet . Their cost escalation is 35%-45%.
There are two things. One is the Morbi price is cheaper, and our prices, the brand price are higher. The same cost will be less. Same amount of increase will be higher percentage for Morbi and less percentage for Kajaria, number one. Going forward, the difference will minimize. Number two, our gas prices have gone up much higher than the non-Morbi.
Nai, you see, for Morbi, whatever we outsource, he's talking about that. Our prices were already higher when we were selling, so the difference will minimize.
Percentage increase will—a s Rishi said earlier, we are increasing our [inaudible] 16%. They are increasing by 35%, 40%. That difference will minimize. Our price cost will not go up so much compared because I'm already more expensive.
Correct. Sir, just another clarification. Sir, Morbi you told us that INR 47 currently somewhere at INR 84. In our case, you indicated Q4 was INR 46.57, and April you said was INR 79. How should we look at the INR 79 and INR 84? Like INR 79 you also indicated was gas.
Our plants are not INR 79. I will explain it to you further, then you work out yourself.
Yes.
In North, we are getting gas from GAIL (India) Limited, and we are getting three types of gas. That's RLNG, then the Hazira , and then GCC. Government of India has already described the formula that you will get 80% of normal and 20% of—
Spot. Spot price.
Spot price. They started with that on 9th of March, then they reduced it to 65%, then 55%. They brought it back to 65%. As of today, it is 80%. Eighty percent is the normal, 20% is the spot price. As far as South is concerned, for South east Asia, we are in the same formula. For Srikalahasti, last year, last month, we paid a higher price because we had no contract of spot price. From 1st of May, we'll get it at normal price. We have entered into long-term contract with Philippines. That's the scenario. Is that clear now or would you like—
Yes.
More information?
Yes. I have some. Probably, I'll call Sanjeevji after the call. Sir, my second question was, how much is the inventory that we have, in million square meter? Is it closer to 18, 20 million sq m?
Inventory? Inventory would be around 11 million sq m total.
Eleven million square meters. Okay. Sir, Hello?
Yes, yes. Go ahead.
Sir, how much would be the inventory at the JV partner levels or outsourcing partners? I'm just trying to understand that we have significant advantage not only because of size, location, but also that the inventory that we have at our hand, which could also be low-cost inventory.
No, there is no low-cost inventory because the prices have already gone up from March, April, so there cannot be low-cost inventory. Inventory is a normal because whatever is being produced is being sold. What Rishi said earlier, we have inventory. Whatever inventory is there, it is okay because our plants are running at full capacity. There is a problem in what we were outsourcing. In outsourcing, last year we outsourced to the extent of 32 million sq m. This year we'll be outsourcing to the extent of 40 million sq m. As things normalize, we'll get materials from outsourcing. As I said, if A doesn't start, B will start, C will start. They will come to us and say, "Sir, you buy from us." Simple.
Correct. Correct. This is helpful.
It is not that we or somebody else has inventory of, one month or two months. In Morbi, for your information, they have cleaned up the whole act. There is no material. They have sold everything.
Correct. Wonderful. Wonderful. Sir, lastly, any specific reason for the buyback decision at this point in time? How should we read into it?
That's more—
Sorry.
The buyback decision is more to give the market the confidence that we are very confident of good numbers going forward. We feel that we are going to do well, and it's a better allocation of capital.
It is that buyback was not tax efficient. This from this time, it has become more efficient. This is a better way of returning money to the shareholder. One, we were having enough cash on the balance sheet, which is much more sufficient than our CapEx and other things. Two . It is tax efficient to the shareholder. Three, it will improve our ROE also.
This is very helpful.
Only because of the tax laws.
Yeah. Understood. Thank you. Thank you so much. Thank you for the answers.
Thank you. Next question is from the line of Utkarsh Nopany from Anand Rathi. Please proceed.
Yeah. Hi, sir. Sir, my first question is regarding the tiles production. If we see it has gone down by 7.5% in March quarter, but you have mentioned that all of our plants are currently operating at full capacity. Just wanted to confirm from you that whether our tiles production volume is not likely to get impacted in Q1 as we have seen in Q4?
The tile production was down by 7% in March.
In March quarter.
In March quarter, March the plant shut in Morbi plants.
March much lower.
Now, as I said, from 16th April, all our plants are running at full capacity, even the Morbi plants.
Like, on a YoY basis, we can see some bit of decline in our production in the current June quarter. Is it correct, sir? Because we have started the plant on 16th of April.
Correct. Correct.
Okay. sir, second thing, sir, like, you have mentioned that many plants in Morbi are still shut. whether our understanding is correct that also sales volume, for us might get impacted in the current June quarter, but it will go back to the normal level as things normalizes in Morbi?
You're absolutely correct. Absolutely correct.
Okay. Sir, third thing, sir, just wanted your sense, like our tiles sales volume has grown at only, say, 6% CAGR over the, say, last seven-year period. What would be your guidance on the volume growth, say, over the next 3-5 years for Kajaria?
Yeah, I think our Chairman has already said about this. We will not say over here.
Sir, I did not get you, sir. Like, when you have said. Sir, can you please repeat once again? What would be your guidance be?
I already said, [Non-English content ] guidance, as I said in the earlier years, it didn't work out for various reasons because we have no control over the outside atmosphere. We have a control over what we are doing, but we don't have the control over the outside atmosphere. Keeping in line, we have decided not to give any volume guidance, number one. Number two, we will perform as we move along in a positive manner. That's all at this stage.
Okay. Sir, lastly, like on the fuel side, sir, you have mentioned that our gas procurement cost in North is around, say, INR 62 versus say around INR 80 for West and South. Just wanted to know what is the reason that our gas procurement cost is so low in North compared to the South and the West region?
I think you didn't hear. One of the earlier speakers asked this question, I answered. Again, I repeat for the benefit of everybody. Government of India has set a certain formula. They have made GAIL as a nodal agency on that you will coordinate for the entire gas pipeline because of this war. What they have done as per government guideline, whatever you have lifted in the last six months, you will get 80% at normal prices, 20% export prices. Got reduced to 65%, then to 55%. Raised to 65% and again to 80%. As of this morning, we are getting our North plant gas at 80% at normal price and 20% export price.
As far as South Asia is concerned, we are getting in the same formula because there, the CGD company there is going by this. In Srikalahasti, we are getting gas from SingGas, and we have no such agreement for the month of April. We have to pay export prices. We have just entered into an agreement two days back, and we will get at normal prices in SingGas from 1st of May. That's the scenario. Morbi scenario, you are already aware. I don't have to talk about it. It's a very fluctuating thing. If I tell you, "No, I am getting gas at this price," you'll go, "Really." Because every day the norms are changing by Government of India and accordingly by GAIL. Whatever it is, we share the formula.
If required, so you can later work out and tell you the gas prices.
Okay. Sir, one thing, sir, if you can just throw some light, how is the supply of propane at the moment in Morbi in comparison to, say, January and February?
My dear, propane is not allowed for the industry.
Yeah.
Government of India has issued a circular on 5th of March that propane will not be supplied to industry. It will only be used for domestic LPG production. No industry is getting propane for your information.
Okay. Thanks a lot, sir.
Thank you.
Thank you. Participants, to join the question queue, you may press star and one. Next question is from the line of Saurabh Jain from HSBC. Please proceed.
Thank you for the opportunity and congratulations for a great set of numbers. I just wanted to continue from the previous question on propane. While we understand that in the recent times the propane is not allowed, but when the expectations are that the Morbi is going to get back the production line, what is your sense? Is it going to be like a permanent shift to natural gas and propane not being allowed to Morbi even for the long term? Is that a structural shift that you are assuming or when things normalize, then they might get back and shift back to propane?
How can we say that right now about propane? The propane price is INR 160, and it depends on the war situation. Right now, household cooking and fertilizer are more the priority sector for the Government to give propane to. This is a very fluid subject which we cannot comment upon because the price is also very high of propane.
Yeah, no, I wanted to get a sense because you are there closer to the industry. What is the inner circles indicating? Like Government is serious about making a permanent shift to natural gas or things can go back to propane in the long term point of view is what I am asking.
See, it's neither for you nor for us to decide. It all depends on the war situation, what is happening. Government's first priority to give is to give LPG to domestic, number one, which you are also aware, we are also aware. Second priority is to give to fertilizer because that's an area they can't afford to this thing. I just give you a small information. The fertilizer prices, there is a shortage of fertilizers in India, shortage of fertilizer in India, and the fertilizer is being sold at a 100% premium. The import of fertilizer which is coming is at double the price of Indian production. That is why the priority of the government is to make sure. Third priority, as you know earlier, was power. Industry was coming later. They are not giving any gas to the power industry.
They say, "No, I can't give you gas." Industry has been put on a priority number three. When I'm saying industry means all industry.
Sure. My second question is on the biofuel thing that you mentioned. Is it possible to share what could be the comparable biofuel cost for you on a per SCM basis?
Biofuel cost varies. I can share you. The Northern plants, the biofuel cost is about INR 20 per SCM comparatively. In South they're using coal. In Morbi they're using coal. In what do you call this, sir? You cannot use coal, that is why we had an option to use biomass.
Yeah.
Which the Government of India has allowed.
It looks like a very good arbitrage now, you know, getting biofuel at INR 20 compared to—
You see, let me tell you a little bit about the ceramic tile plant. Tile plant consists of two major facilities. One is called a spray dryer, one is called a kiln. Kiln can only be run on gas, natural gas or propane or LPG, which is gas. As far as spray dryer is concerned, it can be run on biofuel, it can be run on coal, it can be run on gas. We can only use biofuel in spray dryer. That is why when we gave you this information that 30% of the fuel today is biofuel, which is used in the spray dryer in Northern part of India.
Okay. You are related to the fact that it cannot be taken more than 30% as overall fuel mix.
You cannot use. Correct. Correct. gas.
Yeah, sure. I appreciate it. Just was trying to confirm it. Secondly, a lot of other players would also be like trying to secure this biofuel because it is coming at a lower cost and also, you know, the crop has also recently happened for mustard. Are you seeing any challenges in terms of, you know, procuring this material for producing the biofuel?
Only two plants, the only two plants in North are Somany and Orient. They are already using it. As far as mustard is concerned, there is no challenge. In the maximum production of mustard is in the state of Rajasthan, and plenty of mustard is available.
Got it. Second question, can you also give us some sense on how the growth trends are looking like in the month of April?
As we said earlier, we cannot give you month to month. Our CFO already said that April-June quarter is normally weak. Please try to understand two things. One, the Morbi plants are not producing at full capacity. Rishi just said that from 16th of April, all Kajaria plants are running at full capacity. Whatever we lose in production for 15 days in Morbi plants has to be taken into account. Morbi- outsourced plants are not running in full capacity. They will run as and when they are comfortable. Chetan also said that right now, say from certain plant, we are buying only 20% the capacity. He cannot run 80% unless he has a source to sell. That scenario will always be there. We cannot tell you what is happening in quarter one and on a daily basis.
Understood.
What we have said, we are looking about a very positive growth.
Yes.
Not only we at Kajaria, I also said in my opening remark, organized players like Kajaria, Somany and Johnson, who have plants all over the country, will get benefited by this process because there is too much damage in Morbi. Please understand that. Get all the information. You will have a lot of information when you go out there that there is a lot of damage. Nobody knows at this stage.
Thank you so much and all the best.
Thank you, sir.
Thank you. Next question is from the line of Arun Baid from ICICI Securities. Please go ahead.
Hi, sir. Congratulations on the good set of numbers. Sir, just how much was the ad spend this year in FY 2026, yeah?
It was around, I think INR 90-INR 100 crore in the whole last year. We did it less compared to the previous year because we did very hard negotiation. This year we are going to do much higher ad spend. Our new TVC has come, so we are just in the process of making plan on many channels or regional channels and others. This year the ad spend may be 40%-50% maybe higher than what we spend in the—
We're gonna have much more aggressive ad spend this year.
Okay. Second thing is, sir, you know, the salary hikes which last year was not given to employees, as you had mentioned, this year, have we taken any decision there?
Some action will be taken, but we are yet to take a call, but some action will definitely be taken in a positive manner because we are all part of the industry. We understand. They also understand that you as Kajaria are making money. We have to take a balanced call as we go through.
Okay. sir, third thing is, in last year Q1 call, Q1 FY 2026, you had mentioned that once we reach a run rate of INR 250 crore a quarter on the EBITDA front, that's INR 1,000- crore visibility, the salaries will be reinstated for the promoters. Sir, anything there you can help us with?
We have decided not to take the salary this year as well.
Okay. sir, it's postponed till next year, basically, whatever the numbers for this year, right?
He did not say it's postponed for the next year. He said we will not take this year.
Okay, fair enough, sir. Thank you very much.
Thank you.
Thank you. Ladies and gentlemen, as there are no further questions from the participants, I now hand the conference over to the management for the closing comments.
Okay. Hello. Thanks a lot. I think very good questions came out. On behalf of all of us, I would like to add one or two statements. I think great effort has been done by Chetan and Rishi as a team. After unification, I think they have done a lot of work in the last financial year, along supported by Kartik Kajaria in Adhesive. I must say that it has been a tremendous effort by these three people in taking the company to these heights. I am very positive that going forward, the results will be even better. A lot of good questions came. We have tried to do our best to reply them in the right way.
Just to apprise you guys, we have kept a lot of good senior people in the company. A new CHRO has joined. A Chief Marketing Officer joined for the entire branding of the company. A new Chief Digital Officer has joined to take over the technology part of the company. Even for Kerovit as a brand has been struggling for a while. For there also, we've got couple of very senior people. A Chief Business Officer to look after the sales, an advisor who's handling the factory, both veterans of the industry. We've also got a senior purchase guy. We've kept a lot of good people, and I think that is the reason which we are so confident that going forward, because ultimately the team has to work.
Very confident that going forward, we'll achieve what we want to achieve. A good, strong leadership team is in place now going forward.
Thank you.
Thank you.
Thank you, sir. On behalf of Spark Institutional Equities Private Limited, that concludes this conference. Thank you all for joining us, and you may now disconnect your lines.
Thank you.
Thank you.