Ladies and gentlemen, good day and welcome to the Cello World Limited Q1 FY 2027 Earnings Conference Call hosted by ICICI Securities. Before we begin, a brief disclaimer. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions, and expectations of the company as on the date of this call. These statements are not guarantees of future performance, and it may involve risks and uncertainties that are difficult to predict. As a reminder, all participant lines will be in 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. Manan Goyal. Thank you, and over to you, sir.
Thank you. Good morning, everyone. On behalf of ICICI Securities, we welcome you all to Q1 FY 2027 Results Conference Call of Cello World Limited. Today, we have with us senior management represented by Mr. Gaurav Rathod, Joint Managing Director, and Mr. Atul Parolia, CFO. Now, I hand over the call to the management for their initial comments on the quarterly performance. Then we will open the floor for Q&A session. Thank you, and over to you, sir.
Thank you. Good morning, everyone, and a very warm welcome to our earnings conference call. Joining me today is our CFO, Mr. Atul Parolia, and our Investor Relations Advisor, HCA. Our financial results and investor presentation have been uploaded to the stock exchanges and are also available on our website. I hope you had an opportunity to review them. During quarter one of financial year 2027, we reported revenues of INR 527 crores while maintaining healthy profitability. EBITDA and PAT margins stood at 22.2% and 13.9% respectively. In our previous earnings call, we indicated that we would see a soft patch. In response to the rising input cost environment, we implemented price increases across most of our product categories. These price revisions enabled us to fetch better gross margins in a weak demand environment.
The Writing Instrument division delivered a healthy performance during the quarter, registering 52% year-on-year growth driven by healthy contribution from the Cello brand. The consumerware business, which is our largest product category, delivered a muted performance during the quarter due to multiple factors. Consumer demand continued to remain subdued as discretionary spending was impacted by inflationary pressures and the prevailing macroeconomic uncertainties. Steel bottle sales were not comparable with the corresponding period last year as we did not have the imported inventory to support demand this year. We have already commenced our in-house manufacturing of steel bottles at our Hassan facility. Currently, eight manufacturing lines are operational, although they are yet to reach optimal utilization. We expect these lines to ramp up over the next few quarters, enabling us to gradually recover and cater to the demand in this category.
Capacity utilization in our glassware business remained at about 60%. Customer response to our product quality has been encouraging. However, the scale-up has been slower than anticipated, primarily due to continued dumping from China. We also saw weaker export demand for most of our products during this quarter. Revenue from our moulded furniture and allied products business stood at INR 80 crore, broadly reflecting the prevailing industry demand trends. We also witnessed strong momentum across e-commerce channels. These channels now contribute around nearly 16.3% of overall revenues while continuing to deliver healthy profitability.
In this dynamic environment and broader macroeconomic uncertainties, our focus remains on the factors within our control. During financial year 2027, we will continue to strengthen our operational efficiency, rationalize our product portfolio, realign our distribution strategy, deepen market penetration, and improve our working capital discipline. With a focus on maintaining strong balance sheet health and a robust operational structure, we remain confident of steadily improving our performance as demand conditions normalize and the benefits of our ongoing strategic initiatives begin to reflect in the business. With that, I would now like to hand over the call to our CFO, Mr. Atul Parolia, who will take you through the financial highlights. Thank you.
Thank you, Gaurav, and good morning to everyone. I will be sharing the financial details for the quarter gone by. Revenue for Q1 FY 2027 stood at INR 526.7 crore. Our gross margin for the quarter stood at the healthy level of 52.4%, a sequential margin improvement. EBITDA for the quarter was INR 117.1 crore, translating into an EBITDA margin of 22.2%. Profit after tax stood at INR 73.4 crore with a PAT margin of 13.9%. In terms of revenue mix, consumerware contributed 63.6% of the total revenue, followed by Writing Instruments, 21.2%, while moulded furniture and allied products contributed remaining 15.2%. Channel-wise, general trade contributed 71.1% of the total sales.
The online channel increased its contribution to 16.3% from the 10.4% in Q1 FY 2026, with profitability remaining in line with the general trade channel. Export accounted for 7.3% of the sales, while modern trade contributed 5.3%. On the profitability ground, consumerware reported a gross margin of 55%, Writing Instruments delivered gross margin of 53.8%, and moulded furniture recorded a gross margin of 39.5%. With this, I would like to open the session for question and answers.
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 your 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 Rakshit Desai from IIFL Capital. Please go ahead.
Hi, sir. This is Percy Panthaki here. Just wanted to understand on the glassware unit. At the time of making the CapEx, was the expectation that the China dumping is going to be a short-lived kind of a phenomenon?
Percy, I think while we had made this investment, the conditions were a little different. The dumping was not as much. But in any case, the ramp-up has been good. The revenue has constantly been increasing of the glassware plant. At another 10%-15% utilization, we will reach healthy profitability. I think we still stand by the whole idea of putting up the plant and the CapEx, and we should see the fruits pretty soon.
How much was the sales in the current quarter from the new plant?
It has increased substantially. It is in the tune of about 30%-35% increase over the last quarter.
Over Q4?
Over Q1 of last year.
Okay. What would be our capacity utilization at this point of time?
Capacity utilization still stands at 60% only because we have been using older stock as of yet. We had a lot of stock that we had built up as well. We have been eating up that stock, and that is why the capacity remains at 60%.
When can we expect, I mean, what can we expect in terms of sales from this unit for the full year FY 2027?
There should be a healthy growth. As I said, we have already seen 30%-35% growth in the first quarter. I think that should be the number, hopefully, for the entire year.
Would we be touching about INR 150 crore or no?
A lot more than that. That was last year. It will be quite a lot more than that.
Okay. Understood. Secondly, on the rest of the consumer ware division other than the glassware, how has the growth been? What does the festival season look like? Is there going to be any kind of phasing between Q2 and Q3 on a year-over-year basis? If you can give some idea.
Sure. As I mentioned that on the consumer side, the major problem has been the steel products, because we have had stock out situations and while we have been producing at our new plant, it takes time for the plant to start producing all kind of items. When we were actually at our peak, when we were still importing, that time we had about 150 SKUs. Today we are playing with 20 SKUs. This will increase to about 50 SKUs, 55 SKUs over a period of the next couple of quarters. I think that's how the ramp-up is happening. We are left with very limited SKUs. The SKUs will be a bigger issue. But at the end of the day, that's the only way things are going to move as we have access to no other product line.
Okay. Lastly, can you comment on news items regarding a promoter stake sale? What is the thought process behind that? What are the timelines? What is the extent of shareholding that you would like to sell, et c?
See, already as we have— I'm Atul here. As already we have explained with the NSE and BSE that we have nothing as such yet. And we—
Sorry, could you hear me?
Sorry, there has been a clarification that has already been put out. I think you can refer to that. Currently there is no other comment on this that we would like to make.
Okay. That's all from me. Thanks and all the best.
Thank you. Participants who wish to ask questions may press Star and One at this time. The next question is from the line of Praveen Sahay from PL Capital. Please go ahead.
Yeah. Hi, sir. My first question is related to the consumer opalware business. How has been the opalware business? How has been the growth? How much the contribution has been?
It has been a tough quarter overall for the consumer ware category. Of course, there has not been much of a growth in the opalware category for this quarter. But it is one of the worst quarters anyway for opalware because the first quarter is the slowest. Opalware really picks up from the second and third quarter. I think it looks like a good festive season ahead. But the growth has been muted for this quarter, at least for opalware.
Okay. And overall in the consumer business, how much of the price hikes have you taken, and is that enough for the inflation in the commodity?
Right. I think the price increases have been different across our product lines. Starting from 7% to almost 20%. The price actually has been quite significant, and that is one of the reasons also why volumes have dropped in this particular quarter, because it takes a little time for these price increases to take effect. But we have seen crazy increases in input costs, and we had no other choice but to increase our prices.
But these prices are absorbed in the market.
Yeah. Now it has been absorbed because over time, and that is why you see a demand a little bit because of the price hike. But now, I believe it has been absorbed in the market.
All right. Certainly on the in-house manufacturing of steel bottles, already you highlighted it will take a time for a ramp-up. By when you are expecting whatever the sales which got impacted because of non-availability of the imported product get compensated with your in-house manufacturing?
I think we are ramping up. As I said, we are at only about 20, 25 products currently, and we used to play in around 150 odd SKUs. I think we will offer these 50 SKUs, 55 SKUs, which were contributing our major sales. It will take another couple of quarters to really see the full impact of gaining the entire sale back of what we had lost due to the non-availability.
Okay. Lastly, on the moulded furniture. From the last three quarters, we are seeing a decline in the number. What exactly the reason for that and when you are seeing this outlook to improve?
See, I think moulded furniture, we have always said that we don't expect much of a growth in this particular segment, as it is a heavily crowded segment. For us, we are just preservation of silent revenue and good profitability is the key. We do not see any great future growth in this particular category. But we would like to maintain our revenues and maintain our profitability in this segment. This segment is not going to be a revenue driver for us even in the future, as I've always said.
Yeah. Is that a declining mode continue in the entire year?
No, not declining. It comes back. If moulded furniture you see across years, it has always been a similar number. It kind of goes down in one quarter but picks up the next quarter. There are a lot of other institutional sales also that come in. It depends on the timing of that as well. It is not that it is going to be a declining trend. I think we should try to, or we will be kind of maintaining the top line.
Okay. Thank you, sir. All the best.
Thank you.
Thank you. The next question is on the line of Anu Parakh from Anand Rathi. Please go ahead.
Yeah. Hi, sir. Am I audible?
Yes.
My first question is on the Writing Instrument segment. Our gross margin has contracted after the Cello acquisition. What would be the steady state of margins we can assume going forward?
I think you are right that it has kind of gone down a little bit. That is because we are realigning our complete product range in the Cello portfolio. When we bought it, there were a lot of items that were not making money for the company. I think we have rationalized those products. We are introducing newer products in place of that. It is kind of transitionary, this effect. We should see similar numbers to the Unomax brand that we have been operating in. At least in the next couple of quarters, you should see similar numbers for both brands.
Understood. On the glass side and the opalware, how much, if you can just compare the year-on-year growth or degrowth in revenue in Q1 of FY 2027, and was the gas issue has affected or does the issue still persist?
So in terms of numbers on the opal glass side, it has been a marginal growth. It is not degrowth. The gas issue, the availability of gas is now there, but it is of course, at a very high price, which is about almost 80% higher than the price that we were getting in March. So of course, there is an impact on margins due to that as well, because a lot of it could not be passed on during the quarter. But we have taken price increases, and that has kind of helped negate some of the input cost increases. But the gas price increases have been extremely substantial.
Is the issue still there, and are we planning for more price hikes?
More, sorry? More price hikes? No. I think, I do not think we will be able to do any more price rises. I do not expect it to go above this level as it was this time. But I do not think we can do any more price increases because a lot of the products that were coming from China, the prices have not increased there. The input cost for them remains pretty much the same, while it has increased substantially for us. But hopefully, it will not go up beyond this. It already, I believe, has reached its peak.
Understood. Sir, what was the sales contribution for SS bottles in Q1 FY 2026 versus Q1 FY 2027?
I think Q in quarter one of FY 2027, it has kind of dropped substantially. That is the main reason why you see a degrowth in the consumer wear segment. It is because Q1 of FY 2026, we had a lot of material. We were playing in about 100 and 110 SKUs, and today we are down to about 25. I think it is a substantial degrowth in the steel segment, which has contributed to a degrowth in the consumer wear segment overall.
Understood. In terms of the CapEx plans for FY 2027?
Yeah. I think CapEx plan, there is nothing major coming in this year. It is only going to be maintenance kind of CapEx that we would be maintaining. Having said that, there could be an addition of a few lines in the steel segment, which we will plan soon. That is the only CapEx, but it will be very small.
We have set up eight lines and two more are pending.
We are planning of two more, yes.
When can we expect so?
That will, of course, come by next year. We will be placing orders soon for that because we wanted to first ramp up the production on new lines. While we are doing that, we are also planning for the future where we will have to add lines. These should be commissioned early next year.
Okay. Lastly, on how has been the demand in July, and what is the channel inventory level now? Is it below the normal or normal or above normal level?
I think the channel inventory correction has happened in this quarter as primary from the company has dropped, but secondary has improved, though it was not a very good environment for demand. Still there has been a slightly better secondary that has come in. Which is, I think, going to help us in this quarter.
Thank you.
Thank you.
Thank you. Before we take the next question, we would like to remind participants that you may press Star and One to ask a question. The next question is from the line of Karan Gupta from Asit C. Mehta Investment. Please go ahead. Mr. Gupta, your line has been unmuted. Please go ahead with the question.
Yeah, am I audible .
Yes. Absolutely.
Yeah. A couple of questions. On the demand side that you are saying not very good environment, are you also facing some bit of competition from the domestic players in your consumer wear segment?
In which segment, sorry?
Consumer wear segment.
Yeah.
How has been the competition in that segment for steel bottles, maybe for glassware, opalware?
Right.
That is one thing. The second one is on the glassware, opalware, what is the contribution of overall consumer wear in quarter one, and how it has been in the quarter one FY 2026?
Yeah.
Yeah. You can also share the capacity utilization, I think for glass, where you said 60% right now. So for the opalware also you can share. So that's two questions. Then I think you allow me to then ask one more.
Sure. I think on the glassware, opalware is at 80%, 85% for this year, and glassware stands at about 60% utilization. Overall consumer wear side, there has always been competition. It is not that there has not been. Of course, when demand becomes worse, the competition intensity increases a little bit. Given that is transitionary. I think as demand situation improves, then I believe the next couple of quarters should be good when secondaries have been better than primary. I feel that overall there is a place for every competitor. That is how consumer wear is stacked at this point of time.
Okay. The percentage of sales, glassware, opalware in Q1 FY 2026?
I think it has slightly increased from last year as it has contributed a little more than the other segments. Partial, the marginal increase, I would say.
Okay. Around 30%?
Separately. Right.
Okay. And for FY 2027, FY 2028, just broadly the target is to ramp up glassware, opalware capacities or what. I mean, for the FY 2027, FY 2028 target. And what is the marketing spend that you have done in quarter one FY 2027?
I think two major factors. I think opalware, glassware, we want to keep increasing our share of the market, which we are doing already. Glassware even more significantly than opalware. Opalware we are almost at complete capacity, not much capacity is left. Apart from that, steel is of course one thing that we want to ramp up because that is going to give us the maximum revenue increase plus profitability. Because while we have started production, at lower efficiency levels, margins are lower. And as it increases, we should see better margins also in that particular category. I think we are gunning for two definite things here. One is, of course, glassware ramp up and steel plant ramp up.
Okay. And steelware capacity utilization?
We are in there, yeah.
Hello.
Hello.
Yeah. Steelware capacity utilization in quarter one.
Steelware, there is no fixed utilization at this point of time because the efficiencies are not fully there. As the efficiencies ramp up, I think in the next couple of quarters, we should be at peak efficiency.
Okay. Sure. Thank you.
Thanks.
Thank you. The next question is on the line of Achal Lohade from Nuvama Group. Please go ahead.
Yeah. Hi, this is Achal Lohade from Nuvama. Team, I have a couple of questions. First, if we look at the kitchen appliances companies results for last two quarters and particularly last quarter, they are showing actually very strong growth. While we are to an extent adjacency, we haven't really seen as much. I am just curious, is there a disconnect out here? Is there any specific product or region or competition aspect which is kind of impacting the growth in general?
I think, see, kitchen appliances is not completely comparable to us because it's more of a planned buy. There are cycles in that business, and it is kind of cyclical. If you see while it has improved, the entire industry has done well. You will have to see it from an industry perspective for us as well, because I think we are right in the middle. We are not luxury. We are not planned consumer durables. We are right in the middle somewhere. I think when there is inflationary pressures, initially we get squeezed. But I think later on it starts doing better. I think I would look at it from that perspective that the industry overall is a discretionary industry. It's not a planned buy or a consumer durable industry.
I think in the durable side, there is a cycle that is playing out and that is why you see increased demand there. We do appliances as well. We saw fantastic appliances quarter, appliances cookware. While we are very tiny in that category we saw significant uptick. I think it's more from the industry category perspective that things have happened in that side of product line.
Got it. In terms of the electrical appliances, any update on that? Are we expecting anything over next couple of quarters or it is still some time away?
Sorry, electrical appliances?
Yeah, I think kitchen appliances, the electrical appliances like the mixies and all that.
We are already doing that segment, though we do very niche products there. That is what I was telling you about, that we saw also a decent growth in that particular category. Though it's a small category for us, it's growing. It's growing at a decent pace. And we are trying to be on the profitable side of things there. We don't want to get into very massy products. I think that is why we have taken our own niche in that particular product line.
Got it. Any guidance on the overall growth and margins for FY 2027?
I think since we are here, at this point, I would not like to guide for anything. I think we will have to see how things improve in the next quarter. I am very hopeful of things improving quickly. I think I will be in a better place to give you guidance in the next quarter rather than this quarter because of what things have transpired. Of course, we are positive on the next quarter, but I think I will be in a better position in a couple of months.
Got it. Just a clarification. You mentioned the inventories are normal, right, in the channel or they are slightly higher than usual?
No, I think it has actually dropped because if you see our primaries have not happened as much in this quarter. Because there was old stock and which was priced at a lower price that has started clearing off. I think our channel partners sit at a comfortable position at this point of time.
Got it. That's all from me. Thank you, Gaurav.
Thank you.
Thank you. The next question is from the line of Akhil Parekh from 360 ONE. Please go ahead.
Thanks for the opportunity. My first question is on the consumer segment. If I look at last three years, right, I am not talking about last three quarters but FY 2023 to say first quarter of FY 2027, sales are largely flat for last three years and including the decline in sales for first quarter. So what has changed, right? I mean, I am sure they would have some kind of introspection internally with the management. There is something which has changed in last three years. At the same time what we do see in last year is the sales of quick commerce has gone up across the categories. Is it to do with the channel issue is there or there is a brand issue or is there a category issue which is kind of hurting our growth rate? That is my first question.
I think consumer wear has not been flat. It has grown over the last three years. While Writing Instruments and moulded furniture has been flat, that is why you see a very flat number. I think consumer wear as a segment has been growing. There have been different challenges at different times that we have faced. One, of course, for the last two, three quarters, it has been the steel wear. Before that it was the glassware kind of ramp-up issue and the dumping that we saw from China and continue to see. Apart from that, this is a growing kind of a channel. Last three years for most consumer wear categories has been low, so it has been an industry problem rather than our problem alone. Because we saw phenomenal growth from 2021 to 2023.
The growth was almost upwards of 30% in this category, which dropped to about 8%, 10% over the last three years. I think it will improve overall. We have entered the right categories. Glassware, we have taken a big bet on. Steel wear as we ramp up it will contribute very well to the top line because a lot of imports have now been curbed, so before anyone could import. I think we are going to see a market share gain there over the next couple of years. I think these categories are something that are also trend-based. As we go along, we have always said that we will enter newer categories and synergistic categories, which are horizontal categories, which will also fuel growth. I think every two, three years, the consumer wear category needs a refresh, needs smaller niches to be added.
That is where you see good margins in this particular category. If it was a run-of-the-mill commodity product, you would have seen very low margins, very high revenue growth. I think that is not the play that is there in the consumer wear segment. Consumer wear is a very specialized segment, and I think we should look at it from that way, and we should look at it from brand building perspective over years rather than a very quarter -on -quarter or year -on -year growth.
I think, while a lot of people have not grown, they have not maintained margins at all. We are at least trying our best to kind of maintain a healthy bottom line while still maintaining our top line. That is how I and the entire management kind of views this particular category. We will grow. There are good years and bad years in this category and somehow, the last couple of years have not been that great. Hopefully the next two will be much better.
When you highlighted online sales as 16% of our total revenue, will you be able to share how e-commerce has scaled for us for the last three years?
E-commerce has done also extremely well in the last one odd year. I think this channel is bound to increase quite significantly over the next few years, as I have always mentioned, and I think we are also taking a good amount of share of that market. I think it is good signs. We are reaching directly to the consumer rather than the dealer in the GT channel being the influencer. The product itself is reaching directly to customers. We are trying to promote more and more of our products in this channel. I think as this channel improves customer loyalty, customer brand equity keeps increasing.
Lastly, on the glass and steel at prevailing price, I think can we get peak sales from the glass facility and the steel facility? That is the last question.
At peak glass would be at about INR 250 crore -INR 275 crore revenue, which is from this plant, of course. Then we have other allied products as well. At peak steel wear plant currently with eight lines should be at about INR 300 crore. But of course, it is a brownfield after that. We will keep on adding our lines as we go along.
Sure. That we expect also to get completely-
Sorry to interrupt, Mr. Parekh. May we request you return to the question queue for a follow-up question? Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants in the conference, please limit your questions to two per participant. The next question is from the line of Utkarsh Nopany from Anand Rathi. Please go ahead.
Hello. Good morning, sir. My first question is like, if we remove the stainless steel bottle contribution, as of this, what would be the revenue growth in the houseware category in this June quarter versus previous June quarter?
I think if I exclude the steel wear category, we will still give modest growth in our consumer wear category. Still a low digit, but overall, yes, if we had grown in that category, it would have been a decent growth in the overall category. I think a modest 4%-5% growth would be there without excluding the steel category.
Sir, what I was asking, excluding steel, excluding opal wear and glassware, what would be the revenue growth in the houseware category in this June quarter?
I think we do not give those numbers out separately. I think that I cannot be answering that on this call.
Okay. And sir, despite we have taken a good amount of price hike, our consumer wear gross margin has contracted by 120 basis points on a year-over-year basis in this June quarter. Just wanted to understand what is the reason for the change, and do you expect the gross margin to remain stable at around 55% level, which we have clocked in this June quarter going forward? Or it can differ sharply because of the change in the product mix in the coming quarters?
I think if you look, you should actually look at it from quarter -to -quarter. Quarter -on- quarter it has actually improved. Having said that, it has declined over year -on -year due to, of course, one is the steel segment, which has not given us enough margins because it is in our manufacturing now, and it is not completely ramped up. Same increase in glassware will also not give very good margins because currently that revenue is not fetching enough profitability. As you rightly said, the product mix, as it changes, we see a little difference of one, two percentage points, but it is always going to be in that one, two percentage points. It is never going to be like 4%, 5%. We are never going to see that.
Okay. You are saying that the gross margin we should expect in the band of around, say, 54%-55% in the coming quarters then. Will that be the right understanding?
You should see that constantly. It should be improving, rather, I would say.
Okay. And sir, lastly, you have mentioned that we have taken 7%-20% price hike across the product category. Can you just specify what would be the average price hike we have taken in the houseware, opalware, and glassware, and when this price hike has become effective?
I think it became effective at different times. Again, houseware can be from 10% to 20%, depends on amount of polymer used, the different materials used. It's not a standard average that I can give you. Opalware, glassware has been about 12%-14% hike. I think it's different for different product lines. I don't have an average for you here. But yeah, overall it's been about. If you want an overall average, it would be about 12%-13% overall company level or the consumer side level.
Okay. And so, sir-
Sorry to interrupt, Mr. Nopany. May we request you to come to question queue for a follow-up?
Just a follow-up on this one, sir. The reason why I wanted to understand is that the benefit of price hike, whether that full impact would be visible in the September quarter or that impact was visible in the June quarter number.
No, I think it has been mostly it's there in the June quarter. There were, of course, delays on some of the product lines which did not see a rise in April, which saw a rise in May, for example. Or there were some channels that saw a rise in May. So I think it could be partially in both quarters. I wouldn't say it's the full effect, but it's 90% there, I would say.
Okay. Thanks a lot, sir.
Bye.
Thank you. The next question is from the line of Suman Kumar from Motilal Oswal. Please go ahead.
My question is for Cello Pens. How is the business ramping up?
I think Cello Pens is ramping up well. We are not seeing the full revenue impact as of today, and there is a reason for that, because when we took over the brand, there were a lot of product lines that were making losses for the company. We rationalized those products. We have started introducing newer product lines. Overall, it is a good ramp-up. It is a profitable ramp-up. I think, though we might not see the full numbers that our previous company was doing, but we will see a decent revenue growth this year and a good margin.
Mr. Kumar, do you have a follow-up question? As there is no response, moving on to the next question. The next question is from the line of Rajakumar Vaidyanathan from RK Invest. Please go ahead.
Yeah. Good morning. Can you hear me?
Yes, I can.
Yeah. Thanks for the opportunity. Sir, just two questions. The first question is, you mentioned that there is no much CapEx planned in the medium term. I just want to know, what is the plan you have for the cash on the balance sheet? Are you looking at any inorganic opportunities, or are you looking at doing any buybacks?
I think we've always said that we would look at inorganic opportunities, and we continue to do so. Currently, of course, there is nothing on the table that we've got, but we keep looking out for opportunities. If we get something, I think we preserve that cash for only that reason. That we want to grow. We don't want to have ineffective use of this cash, buying back or We rather deploy it in a newer business, and which we will do so when we get the right opportunity.
Okay. Got it. The second question is, do you use PVC as a raw material?
Sorry.
PVC.
Can you repeat the question?
Do you use the plastic resins as a raw material? I just want to know what is the current inflation impact of that.
Yeah, of course, we use polymers in our plastic product lines. That has had an impact of 12%-20% across different products. So there is PP, PVC. There are of course different polymers and have had different inflationary impacts.
Okay. Is it coming down or you do not see it abating?
It had come down transitionally. There were, but there has been another rise because of the continuing conflict at this point of time. As crude goes up, it impacts us directly. It all depends on crude prices.
Okay. Got it, sir. Thank you so much.
Thank you. The next question is from the line of Nilesh Doshi from Prospero Tree AMC. Please go ahead.
Thanks for the opportunity. Good morning, sir. Am I audible, sir?
Yes. You are.
Thank you, sir. My first question is regarding the Writing Instrument segment. What particularly attributes to the 52% revenue growth for the Writing Instrument segment? I think the GP margin for this segment has come down by 3%-4%, but GP has increased by 39%. Overall, at the company level, this segment might have increased the contribution at EBITDA level and the profitability level. Is it my correct understanding? Do we succeed to increase the finished product price because there was a sharp increase in the crude oil-based raw material price. Sir, that's all.
Right. I think the Writing Instrument, as I mentioned, the Cello brand contributed this year. That is why you see a growth which was not present in the first quarter of last year. I think that is the rise that we have seen. The contraction in GP is because it is transitionally, we are introducing newer products in Cello. As I mentioned, there were products that were not profitable for us, so we have rationalized those products.
As we ramp up revenue, we should see GPs increasing in this particular product line. Yes, while having said that, the newer wear GPs have gone up, so I think it has compensated for that particular decline. Raw material prices you mentioned, of course, as the crude oil prices have gone up, the raw material prices have gone up, so have our prices gone up. I think that is why you see the GPs have not contracted. Instead, has become slightly better for the ramp quarter.
Thank you.
Thank you. The next question is from the line of Deepesh Sancheti from Manya Finance .
Hi, am I audible?
Yes.
My first question was regarding the merger with Wim Plast. Has the process been completed because the shares seem to have not credited into the investors' account?
Yeah. We have not completed the allotment of the shares because of some technical glitches we are facing. Maybe in a few weeks' time we will complete that process.
My next question was regarding the inventory gains. Since the oil price, we saw that last quarter there was a huge oil price increase. I am sure the company had a lot of low inventory. If you can quantify how much of the inventory gains, especially polymers at EDC, and also if there is any effect on any other products on other consumer goods.
I think, while we had some gain of the inventory in terms of when the polymer prices increased. But a lot of the prices in channels like modern retail, e-commerce did not increase. The prices had not increased almost till mid-May. A lot of that was already passed on. Rather than me holding it with ourselves, we couldn't do it. The idea is that, while the gains have happened, the gains were nullified by still lower prices in some of the channels. I think that helped in this quarter.
If in future also since we are seeing a huge volatility in crude oil prices, will any price increase will also be transferred to the customer?
Sorry to interrupt.
All through. But of course, there has been a very volatile situation right now because we are seeing falls and rises in prices pretty much every day. Even gas prices, for example, in the glass side of things, have been very volatile. We are about 60%, almost 80% today, the price is up from where it was in March. I think there is huge volatility at this point in time.
Right. All the very best. Thank you so much.
Thank you. Before we take the next question, we would like to remind participants that you may press Star and One to ask a question. The next question is from the line of Karan Gupta from Asit C Mehta Investment . Please go ahead.
My question on the marketing spend, how much the percentage of revenue that you have done in Q1 FY 2027 and going forward for the consumer wear segment. Mostly the brand name, Cello, is for the plastics segment, not in the kitchenware and kitchen appliances. If we can just see it in the malls or maybe in their stores. So for the kitchenware and overall consumer wear, how do you position your brand in terms of marketing?
I think we have always maintained about 2.5%-3% as advertisement marketing costs.
And that continues to be the case even in this quarter. Our spends are about 3% of overall revenues.
Okay. Do you think you should be a little bit aggressive in that brand building side in terms of kitchenware?
I think-
Because you have multiple brands also.
I think in our category, most brands are more than above the line marketing. We focus more on in-shop, we focus more on the ground level, and that is a little cheaper than above the line marketing. I think that works out better for us because above the line marketing, we have seen is more of a waste, wasted marketing efforts rather than having any direct impact. Recently we have also upped our game when it comes to digital marketing. It is a good medium and it is a much cheaper medium to operate in, and it is very effective. I think we should see effectiveness of marketing and advertisement rather than pure spends. That is how we are looking at it.
In terms of distribution channel, do you see the growth in the modern trade or online side rather than the general trade that you have a major portion, 75% something.
E-commerce has, of course, I wouldn't say modern trade, but on the e-commerce side, it is picking up a lot more than GT. While GT is growing modestly, e-commerce is growing more aggressively. I think that is across for everyone, I think that is the case. There is a little shift in buying patterns. I think we are present in every channel, whichever grows is good for the company.
What the percentage of online sales distribution channel for the quarter one FY 2027?
Online sales, as we mentioned, is about 16% of our total revenues and 70% remains with GT.
Oh, significant pickup from FY 2026.
Right.
Yeah. Thank you.
Thank you. The next question is from the line of Anu Parakh from Anand Rathi. Please go ahead.
Sir, one more question. You mentioned that we have seen volume decline in the houseware category due to the impact of price hikes and weak consumer demand. Do you expect the similar trend to continue in the coming quarter?
I think the coming quarter should actually improve, basically because the channel inventory is lower than what it used to be. Because of the price increases, our channel partners bought less material because they were liquidating their older material at lower prices. I think since that has happened to a significant level, I think now we should see better momentum.
Thank you. Ms. Parakh, your line has been unmuted. Please proceed with the question.
Yeah, that's it. Thank you.
Thank you. As there are no further questions from the participants, I would now like to hand the conference over to the management for closing comments.
Right. Thank you so much for the call, and hopefully we will have fantastic quarters coming up. Thank you so much.
Thank you. On behalf of ICICI Securities, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.