Ladies and gentlemen, good day and welcome to the Somany Ceramics Limited Q4 FY 2025 results conference call hosted by SKP Securities. I now hand the conference over to Mr. Vaibhav Pachisia from SKP Securities. Thank you, and over to you.
Thank you. Good evening, ladies and gentlemen. It is my pleasure to welcome you on behalf of Somany Ceramics Limited and SKP Securities to this Q4 FY 2025 financial results conference call. We have with us Mr. Abhishek Somany, MD and CEO; Mr. Shrivatsa Somany, Head Bathware; Mr. Sailesh Raj Kedawat, CFO; and Mr. Kumar Sunit, Head of Strategy and HR. We will have the opening remarks from Mr. Somany, followed by the Q&A session. Thank you, and over to you, Abhishek.
Thank you, and welcome everybody for the full year and also the Q4 earnings call. I will begin with the overall scenario of the industry. A lot has happened between the last one year. There has been a weaker week demand scenario, which continued to impact both domestic and exports, specifically exports, which was down 30% in FY 2025. From a high of INR 20,000 crores, it went down to approximately anywhere between INR 16,000 crores and INR 17,000 crores, in terms of the number of exports. That got really impacted due to the external factors of freight and various freight corridors, which was open in and out. As far as we are concerned, our total sales grew by 5%, and volume grew by about 3% in Q4. Operating margins largely remained the same at 8.2% in Q4. Gross margins decreased by about 2.8%. So this was something which has been changed in the last four quarters.
Although, we were able to maintain a decent margin overall, but there was a little pressure on the margin considering it was Q4 and a little bit of extra discounting, which happens towards the end of the year. Capacity utilization had decreased by 8%, which means that for the entire year, we were down to about 81%, and last year Q4 was 89%, and this is the similar number for the entire year. Gas prices moved up by 5%, nothing major. But this is looking good again because I think the oil prices seem to be going down and rupee dollar is also rupee has strengthened. I will come to capacity utilization once again. Overall capacity utilization, 81%, down from 86% last year and 81% in Q4, down from 89% last year.
Sales went up by 4.7% year-on-year and 2.6% for I'm sorry, 2.6% year-on-year and 4.7% for the quarter, last quarter to this quarter. EBITDA, like I mentioned, was under pressure because the entire year we've sold less, expenses have gone up. Therefore, the EBITDA is at INR 221 crores, which is 8.4% for the entire year, down from 9.8%. Frankly, probably this is probably the better ones in the industry where the erosion has been far less. This has come out of operational efficiencies and also keeping a very close check on costs, which we continue to do. Further to that, I think you would have seen the PAT and the PBT numbers. Subsequently, it is down. If you see the PAT numbers, I think we still have one puzzle to solve, which is the MAX plant .
That is the newest plant and obviously in a very tough year, expensive tiles become difficult to sell and that was more difficult to sell. The entire consolidated loss which has come is from that plant. Otherwise, every single other plant is profitable. What was not profitable, we have taken out of our kitty, which is Acer Granito Private Limited and also Amora Tiles Private Limited. So we're looking very good for next year. This is one piece which we need to solve, and it's already getting better. Capacity utilizations are higher in this plant, and we're on the way to making this also profitable very soon. As far as the mix is concerned, ceramic, PVT, and GVT, ceramic stands at 33% for the quarter and 34% for the year. PVT stands at 28% for the quarter and the year, and GVT stands at 39% for the quarter and 38% for the year.
Bathware sales is something which we're very bullish about. The sales grew by 18% in quarter four and 11% in the whole year of 2025. This is very encouraging and we hope to do again double-digit growth in bathware for next year. Overall gas pricing, I'm sure that would be a question. INR 47 is the overall gas pricing. This is purely gas and no other mixed fuel in this. It's just the gas pricing is INR 47 per standard cubic meter in quarter four, and INR 44 in standard cubic meter in the whole year. So this is marginally up, and if you see the whole year, it's not made much of a difference, just 44 to 34. Capacity utilization in sanitaryware. I talked about the tile capacity utilization. Sanitaryware capacity utilization is 96% in the sanitaryware plant, and we are running at optimum capacity in the faucet plant.
Brand spends, we maintained at 2%. It was marginally higher last year. But in absolute number, it is the same figure. So brand spends are at 2% of FY 2025. Working capital days increased marginally by five days. Most of this was on trade receivables, so approximately three days on that. The net dealer addition, we continue to add new dealers. The net dealer addition has been 181, and also 30 new showrooms is the net addition in showrooms. We are guiding. We are bullish, so we are guiding again this year for a high single digit, very low double-digit kind of guidance. Most people have shied away from guidance, but we're definitely guiding because we are bullish. EBITDA margins should improve by a percent and a half if that happens. Brand spend will also increase in proportion to about 3.5%.
The other thing I want to highlight is the MAX plants, which are getting stabilized with 55% capacity utilization. The minute this hits 75%-80% capacity utilization, which is very soon, in a couple of quarters, we will have a complete reversal over here. If you see our debt levels, our total debt levels are INR 188 crore, down from last year from INR 233 crore. We're looking good even on that. Even currently on the standalone basis, we do not have any debt and neither do we consume any working capital. These are some of the highlights. I would like to bring up another highlight, which is the sales breakup in channels, government, and private. Our entire year, 81% is channel, 10% is private projects, and 8.5% is government. in quarter four, this has improved. It's 9.3% in government and 10.5% in private projects.
The government and the private project next year we think would go up to about 25%, and the channel would go down from 80%- 75%. These are the highlights and we are looking very positive for next year, looking for a good year after many years. Thank you so much.
Should we begin the question and answer session?
Yes, please.
Thank you. We will take our first question from the line of Keshav Lahoti from HDFC Securities. Please go ahead.
Hi, sir. Just a few things. The cost structure of employee expense and other expense also possibly. We can see sequentially there is an improvement of 420 basis points due to employee cost and other expenses. However, that is completely offset by lower gross margin. What has changed, and is it a one-off in this quarter, or will that gross margin continue in upcoming quarters also?
No, I think the gross margin will come under control. This was the last quarter we were under pressure to get our sales with the better capacity utilization and also sell more and not lose market share. It is like a one-off. We will definitely increase the gross margins. A lot of work has gone around that while we keep continuing to reduce employee costs further.
Okay. By- [crosstalk].
Keshav, if you want to comment something.
By reducing employee cost, is it fair to assume that FY 2026 overall employee cost would be lower than FY 2025?
We are trying our best to reduce the employee cost. If it is as a percentage, it will definitely be lower. I can only talk as a percentage. I can't talk in absolute terms. But yes, in percentage terms, it will be lower than FY 2025.
Understood. Got it. Sir, how are the trends looking in export side? How you see FY 2026 will shape up?
Wrong person to ask. We don't export very much. Morbi is the largest exporter, but what I hear is there are green shoots there. It should be 100% better than INR 16,000 crore-INR 17,000 crore. By how much better, I'm not too sure.
Understood. Got it. Thank you. I'll come back in case.
Thank you. We'll take our next question from the line of Madhur Rathi from Counter Cyclical Investments. Please go ahead.
Yes. Hello, sir. Thank you for the opportunity. Sir, I wanted to understand this significant difference between our consolidated and standalone numbers. I understand because MAX plant not operating at full level. But was there any other factor for such a stark difference between both of these?
It is just in that, the MAX plant. In fact, for the first nine months, we also had certain losses from the Amora and the Acer plant. That has been taken out of the picture. Now the problem to be solved is only the MAX plant, which we are relentlessly doing, and within this financial year, you will see that coming down. That would be a very big upswing for us. You will not see such a large difference once we get control over the Max factor.
Okay, got it. Sir, earlier you used to guide that at 60%-65% utilization, this plant would be breakeven. Currently we are seeing that it needs to go to 70%-71%. Sir, so why is that? Has the product mix or utilization of the products, are we producing lower ASP product and that kind of scenario?
Yes. 55% is for the higher utilization product, but looking at the market and looking at the current conditions, I think we are forced to produce a little bit of the lower margin products also, and therefore I am saying 75%. You are absolutely right.
Sir, what would be the probability for us reaching this kind of capacity utilization in FY 2026?
No, for sure we will run up to this kind of capacity. It is just a question of how much would be the value add and how much not. Otherwise, it is a given that by H2, we would be at 70% capacity for sure.
Got it. Sir, just a final question, sir. Our competitor, Kajaria Ceramics, has grown its volume at 6%, but it is way lower for us. Sir, why is that?
That is because we stayed away from introducing a lower quality and a lower realization material. I think if you see their sales, the sales have gone up, but their erosion of EBITDA is far, far, far more than ours.
Got it. But sir, with this MAX plant we are focusing on the lower volume, lower value kind of a product.
No, no, no. MAX plant lower volume is a sensitive MAX plant lower volume is a comparative statement. The lower margin business of MAX is still higher margin than the normal plant.
Got it. Sir, so when- [crosstalk].
Madhur, can I request you to join back the queue please? There are several participants waiting for their turn. I request you to join back the queue, please. Thank you.
Yes.
We will take our next question from the line of Sagnik Sarkar from SKP Securities. Please go ahead. Sagnik, please unmute your line and go ahead with your question. The line has dropped. We will move on to the next question from the line of Ashutosh Khetan from Asian Market Securities. Please go ahead.
Yeah. Hi, sir. I wanted to know the CapEx spends for FY 2026.
There will be only routine CapEx. Of course, there is no major CapEx required. Maybe next year we will be looking at a small CapEx, which we will tell you later towards the end of this year for the Bahadurgarh and the Kadi plant. Otherwise, we have only routine CapEx. Sagnik can jump in case you want to clarify.
What will be the advertisements? The advertisements spend you told was 2% for FY 2025 quarter four, sir.
2.5%.
2.5% for FY 2025, right?
FY 2026. 2025, 2026, yeah.
2025, 2026. The MAX capacity utilization was 55% for the quarter, right? For the year, what was it?
Lower. Lower than that.
Lower. Okay. Can you just break down the gas prices for the region-wise North, South, and West?
Yes. 40% is North and about 29%-30% is South and then equally distributed balance between West and East.
Okay.
Ashutosh, you are through with your questions? Thank you. We will take a follow-up question. The next question is from the line of Madhur Rathi from Counter Cyclical Investments . Please go ahead. Give me a moment, please. We have a question from the line of Madhur Rathi. Please go ahead with your question.
Yeah. Hello. Am I audible?
Yes, we can hear you. Please go ahead.
Sir, so one of the questions was on the gas price or fuel cost or gas pricing trends. Can this be reduced with a mix of applying different fuels or using different feedstocks to power our furnaces? Is there any possibility to decrease it going forward?
Yes. If you see, industry leaders have quoted a certain gas price. It is largely the same as us because they have quoted a blended price. If I had to blend the price, it would be more or less the same. So I am not at any disadvantage than industry leader, if that is your question. What I am quoting, INR 47 and INR 51, this is purely only the natural gas price. Nothing to do with the other biofuels, which we are also adopting and we are using to the maximum.
Got it. And sir, on our EBITDA margin trends, we have guided a 1%, 1.5% improvement. If the MAX plant reaches more than 75%, can there be a further upside for this margin?
Of course.
Structure?
Of course, if I go beyond 75%, of course, there would be slightly better addition to the margin.
Okay. Sir, thank you so much and all the best.
Thank you so much.
Thank you. Ladies and gentlemen, to ask a question, please press star and one on your phone. The next question is from the line of Sagnik Sarkar from SKP Securities. Please go ahead.
Yeah. Thanks for the opportunity. I have two questions. The first question is on the demand front. On the domestic side, we have seen that the demand is subdued for the last one year. If you could categorize tier-wise, I mean, Tier 1 cities versus Tier 3 cities, like which are the cities that you see where demand is most affected and where do you see green shoots? That is the first question. The second question is on the consolidated numbers. On the consolidated numbers, there is large variation on the power and fuel cost and the depreciation numbers. If you could explain both these numbers. Thanks.
Sure. I will let Sunit and Sailesh look at the second question. But the first question, our Tier 1, we sell approximately 20 something percent in Tier 1 and the balance comes from Tier 2, Tier 3, Tier 4. But I don't have a breakup between Tier 2, 3, and 4. Mr. Sagnik proceed to the next question.
Sir, the question was, where do you see the most pain and where do you see the green shoots in the Tier 1, 2, and 3?
I think the pain has been across the board. Small towns have been ailing as much as big towns. Small towns there has been deferred demand in the IHBs, which is the individual home, and in the big towns, it has been a delayed purchase, and all the products which have sold of the builders, their tiling stage has not come. I think there has not been any specific area of concern, and neither is there any specific green shoot that a particular town will do better than the other. Yes, of course, there are going to be the Delhis and the Punas and the Bombays, which from a big town perspective, there are a lot more development happening. Hyderabad is not down to that extent.
Otherwise, the Tier 2, Tier 3, Tier 4 towns, I do believe that there are certain green shoots like in towns in Madhya Pradesh, you have towns in Bihar, you have towns in U.P. Otherwise, I think we are very bullish about pretty much every Tier 2, 3, 4 town.
Okay.
Sagnik, does that answer your question?
Yeah.
Can I take the second question?
Yes, you can take.
I think you had two questions. One question was on depreciation and second question was on power.
Okay.
On depreciation, we have reassessed life of some of our assets, and that is where additional depreciation has come. And the depreciation figure which you are seeing in this quarter is going to be the new normal because there are some assets whose lives have got reinstated. On the power front, if you see the gas prices, this quarter is around 5% increase in the gas prices. This is getting reflected into our increased power cost. Plus, we have got more shutdowns in this quarter, capacity utilization has been lesser, wherein there is an incremental power cost which gets consumed in shutting down and restarting the plant.
Okay.
Thank you. Ladies and gentlemen, to ask a question, please press star and one on your phone now. We will take the next question from the line of Utkarsh Nopany from BOB Capital Markets. Please go ahead.
Yeah. Hi, good evening sir. My first question is on the pricing part. So wanted to know, have we taken any pricing action in the March quarter, and what is your sense on the pricing side in the near future?
No, we have not. In fact, the pricing has been under pressure that we wanted to sell more. On top of that, so much of the export material is coming into India. As far as pricing is concerned, I think currently I don't have any particular strategy to increase pricing. But what we have done is we've become far more stricter on our receivables, even more stricter than ever. Also, we have become stricter on our discounting, especially in the channel. The other thing which we're doing, I think, is to improve our product mix further. I'm not specifically targeting any price increase in the immediate future.
Okay. And sir, for March quarter, if I understand correctly, we have not taken any pricing action, and whatever the dip in the realization has happened in the March quarter on a QoQ basis, it is mainly because of the product mix factor. Is it correct?
No. It's also because of higher discounting.
Okay. And sir, second question is our EBITDA margin has contracted slightly on a QoQ basis despite steep increase in our revenue. Can you help us understand that why we have not seen the-
Yes, we have put in more capacity and therefore unutilized capacity has hit that margin.
Sir, I am not able to understand, sir. Can you please explain it once again?
I am saying that we have increased capacity in the last 24 months and that capacity lying idle, a lot of the capacity. We have had a lot of plant outages. We would have wished to run these plants at approximately 88%, 89%, but we have run it at 81% and that 6%, 7% has hit the cost because at the end of the day, labor we cannot lay off. It is not like Morbi. Morbi has zero ethics. They have zero labor laws. So for them to shut down a plant is very easy. They can shut it down overnight and bring back the labor overnight. We do not do that. When we shut the plant, the labor is sitting there, so that is a cost. So the cost of shutting down any one particular line for us is far more than any Morbi player.
That is what hit it, and in the ceramic industry, at any given time, capacity utilization gives the biggest upstream to the margin.
Okay. Sir, my point was that on a quarter-on-quarter basis, sir, our revenue has gone up substantially. We should have seen some benefit of operating leverage kicking in and our margin should have been-.
We have reduced our. Pricing was also reduced. Pricing is reduced and a lot of the advertising also kicks in in the end of quarterly and mostly quarter four. So both of those, and we have had more discounting to sell more material in quarter four.
Okay. Thanks a lot, sir.
Thanks.
Just to clarify, sir. Utkarsh, basically your question is with respect to sequentially growth in the top line. But at the same time, you see there is a declining gross margin, and that's predominantly because of two reasons. This is what Abhishekji was trying to explain to you. One was the 5% reduction in capacity utilization on a total level, which is a significant number in terms of operational efficiency. Second, the cost lever has also gone up, like gas price has gone up by 4%-5%. Right. So these two are two very important things which impact the gross margin significantly, and it has reduced. Then there is a third lever, which is in terms of pricing discounting, which we have just put in like incentivizing the channel to some extent, considering the tough market situation.
All of these three put together resulting into almost 4.5% gross margin reduction, declining gross margin. That is getting impacted in the bottom line.
Okay, got it, sir. Thank you.
Thank you. We will take our next question from the line of Abhir Pandit from Oldbridge Mutual Fund. Please go ahead.
Hi, sir. Good evening. Just wanted to understand on the bifurcation between retail sales and the project sales that you do. That is my first question. Also, sir, my second question is specifically, sir, that we are currently seeing a huge jump in real estate projects across India. Just wanted to understand how is it affecting your industry. Specifically, is it that the unorganized market is taking over market share in this space, or how is it going? Thank you.
Our project work is retail. I said earlier also, the channel is approximately 80%, and the rest is private projects and government projects. This in FY 2026, the channel will go down to 75% and project will go up to 25%. We are saying exactly what you see. A lot of the real estate projects are coming to finishing stage. A lot of the real estate projects will be taking tiles. We are going to get more aggressive there. You will see the project sales going up. We will take advantage of what you just said.
Okay. Sir, just a clarification. Already we are seeing that there is good amount of execution going on. But in spite of that, there is a huge amount of pressure being seen by the organized tiling industry. Is it that the unorganized market, probably due to pricing pressure, is able to gain market share in this space?
Yes, originally they have gone and opened a lot of dealers and you will see this consolidation also happening. Every third foot you would find now a dealer, literally like how you would find a restaurant on the road. But every third, fourth shop is now a tile shop. That also is going to consolidate. All Morbi guys have gone and opened dealerships left, right, and center in their restoration business. But these are all one-time sales. The dealers are also fed up. The dealers are also now bullish that there will be a consolidation on that front. Yes, you could be right that there is a little bit of market share which has gone to Morbi at a very, very lower end in the last year.
Okay. That's it from my side. Thank you, sir.
Thank you. Next question is from the line of Nitesh Dutt from Burman Capital. Please go ahead.
Hi, thanks for the opportunity. I just have one question. You have given quite an optimistic outlook for FY 2026, both in terms of top line and EBITDA margin. Specifically on demand, what is it that is making you believe that you think demand would turn back in FY 2026? Have you already started seeing some of these trends in Q4 or in this quarter, especially in Tier 2, Tier 3 cities?
Yeah, so I think my optimism comes from quarter four. It was slightly better than quarter two and three. April has been slightly better than last year April. That is where the optimism is coming from. We do believe that a lot of these projects which I spoke about, which are coming to closure and tiles are going to start getting used over there. That also is optimism. Plus, I think last two years, what has happened is a lot of people deferred their purchases, putting their money in the stock market and putting the money in land. That party also seems to be getting over. Therefore, a lot of people will start getting focused on their basics of renovations, making new homes, and more importantly, these builders finishing that life. All of those three things are optimistic from a domestic point of view.
From international point of view, we are quite optimistic that freight rates have come down very significantly. As far as American tariffs are concerned, this is a positive for India from a tile market. Overall, I think exports will also grow.
Got it. Thanks a lot. One more clarification. I think in your opening remarks, you had mentioned 5% single-digit guidance. I just wanted to confirm that, if I please, Mr.
Yes. I have done.
Is that so? Okay. Got it. Thanks. I confirm that again.
Thank you. We will take our next question from the line of Ritesh Shah from Investec. Please go ahead.
Hi. Thanks for the opportunity, sir. Two questions. One is, are we doing anything different on the distribution side into the next fiscal or years ahead?
I think the only difference is that we are getting more focused line-wise. We are making our own distribution where we are having sanitaryware, we are trying to be only sanitaryware until we come to a certain scale and only then giving the other products and then the tiles and the three kinds of tiles, GVT, PVT, ceramics. We are again getting focused there. The tiles are becoming larger and larger. Dealer shops are not growing that large. Therefore, we are able to make more focused events. Those are the two things which we are doing differently. Otherwise, the other thing which we continue to do, which we were doing earlier, is to continue to increase our footprint in the Tier 3, Tier 4, Tier 5 towns.
Right. Sir, on the first part, what you answered, is it possible to give some numbers around number of stores, exclusive stores specific to GVT, PVT that we have or that we are trying to take?
I do not have the GVT, PVT numbers exactly, but that I can give you offline. But what we did is 181 net dealerships we added and approximately 41 new stores, exclusive stores we added.
Sure. Sir, my second question was, I think one of the earlier participants did ask you on volume growth for the larger peer was higher than us. You attributed it partly to lower quality and pricing. Is it possible if you can qualify these two variables when we say lower quality and pricing? Pricing- [crosstalk].
Not lower quality, lower product mix. I didn't mean lower quality. I meant lower product mix.
Okay, perfect. On product mix and pricing, I think on pricing, is it possible to qualify what is the price point that we start to sell at versus the market leader versus Morbi?
No, I'm unable to comment there. That's something which is kind of our. We wouldn't want to divulge exactly what we do in each segment. What is open to publicly is their erosion has been approximately INR 11, INR 12 . Our erosion is about INR 3, INR 4 . Price-wise, segment-wise, I will not want to divulge exactly how much I'm selling in comparison.
Correct. Last question, would we be open to launch SKUs which have a lower price point to go after that segment of the market to get volumes and gain an operating leverage? Are we open to that or it's a no-go zone for us?
No. I think if I was sitting at a 60%, 70% capacity utilization, maybe we would have thought of it. But at 81, I'm quite sure that a little bit of patience will prove a much more beneficial situation for the long run. Coming down the price is extremely easy. Once that happens, then it cannibalizes your mother brand, and then it's a slippery slope. So no, we do not want to have a lower product mix product. Therefore, we are sticking to our strategy. If that means that our success comes in a couple of quarters late, so be it, but we do not want to compromise the pricing on the mother brand.
Sir, thank you so much. All the very best. Thank you again.
Thank you. The next question is from the line of Sneha Talreja from Nuvama. Please go ahead.
Good evening, sir, and thanks a lot for the opportunity. Just a more of an industry nature question. If I look back to 2015 days or probably 2015, 2016 ending days, we always used to have very strong double-digit growth rate in the industry, be it for you, be it for leader. What are the changes that you would have seen in the last 10 years which have brought us here? One thing that probably I could think of is the overcapacity in Morbi. What are the changes that we have seen with respect to demand and on-ground acceptability of tiles, which is where we are seeing some amount of slowness here?
I've been in the industry, in the ceramic industry for about 20 something years, and I've never seen a year where there has been an undercapacity in Morbi. I think what has happened in the last couple of years is that the, especially just pre-COVID and after COVID, a substantial amount of sudden capacity increase happened. Looking at a very large export, that didn't happen, and that capacity has found its way in India. Some kind of could be earlier that in the last some little bit of market share has gone off the industry, off the organized industry to Morbi. This over time will start correcting once again.
When we think of the wave, currently there's been a wave of 20 different brands coming in, and we've seen the situation of these new brands, except a few of them, most of them have fumbled, most of them have had hiccups. We will see a consolidation even in this industry, exactly how the paint industry was maybe 35, 40 years ago, where there was a serious consolidation. I think it's time that there will be some kind of consolidation happening here unless exports actually move. I think that is one. Secondly, the base is much, much larger. I doubt whether we will be looking at very large double-digit growth. There may be a year or two again, which there could be, but otherwise, we need to look at the value growth. Other than the volume growth, we are also looking at improving our margins.
We are lower than industry there even today, so that's something which we are very focused. We have been able to do a lot of work on our balance sheet, and we'll see more of that happening this year. Also you will see more of that happening in terms of narrowing the margin. So we focus both ways. It's very easy for me to increase capacity or get other sales, buy sales, whether organically or inorganically, but that's only a slippery slope. While we are concentrating on margins, I don't want to become too obsessed and too greedy about that double-digit growth. It doesn't matter. What matters is how I may improve my EBITDA and my balance sheet is under complete control.
Understood, sir. Is there any way we can gauge the kind of an overall capacity that we are sitting with? Of course, you said that, going ahead, you see that easing out. But is there any number of industry you think getting utilized today? Structural reasons why you believe that operating leverage of the entire Morbi will go up and thus, we could see some sigh of relief.
I think 70, 80 plants is what I've told has shut. There are three issues which Morbi is going to face in the future, which has already been facing earlier. This is only intensifying. One is a lot of the financing which used to come from various sources in Surat, et cetera, has kind of dried up because that industry is also not doing very well in India. The second reason is that the land prices have absolutely shot up in Morbi. It's become that much more expensive to buy land. Thirdly, the taxation in Morbi, specifically in Gujarat has made it very difficult for people to come into an alliance, into a partnership, and then break the partnership.
People are getting much, much more careful in these casual partnerships in plants and where they join with a small partner, big partner, and then they leave whenever they want to. More importantly, what I see is happening in Morbi, which is going to affect their existence, is their patience to hold on to pricing, their patience to hold on to quality. Both of this has got compromised very, very substantially last year, and this has now started telling on the consumers and the dealers. We believe that all of these put together, we think another 70, 80 plants, if not more, will get shut in Morbi again this year.
These must be old plants, which are now getting uneconomical given the- [crosstalk].
Some old, some new. Some old, some new.
Understood. Thanks a lot for the opportunity, sir. All the best.
Thank you. As there are no further questions, I now hand the conference over to Mr. Abhishek Somany for closing comments. Over to you.
Thank you so much, gentlemen and ladies. This has been a very tough year, and we hope to have a much, much better year. Very confident, balance sheet is under place. No further expansions happening, no further expenditure happening in terms of CapEx. We are all geared towards utilizing the capacity more and also improving our value add mix. Looking forward to a good year. Fingers crossed, all should go well. Thank you so much.
Thank you. On behalf of SKP Securities, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.