Ladies and gentlemen, good day and welcome to the Cello World Q1 FY 2026 earnings conference call hosted by ICICI Securities. 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. Before we move on to the conference, I would like to give a small disclaimer. This conference call may contain forward-looking statements about the company, which are based on beliefs, opinions, and expectations of the company as on the date of this call. These statements are not the guarantees of future performance and involves risks and uncertainties that are difficult to predict.
I now hand the conference over to Mr. Aniruddha Joshi from ICICI Securities. Please go ahead, sir.
Yeah, thanks, Manav. On behalf of ICICI Securities, we welcome you all to Q1 FY 2026 results conference call of Cello World Limited. We have with us today senior management represented by Mr. Gaurav Rathod, Joint Managing Director, and Mr. Atul Parolia, CFO. Now I hand over the call to Mr. Gaurav for his initial comments on the quarterly performance. Thanks, and over to you, Gaurav, sir.
Thank you, Aniruddha. Good morning, everyone, and a very warm welcome to our company's earnings call. Joining me is our CFO, Mr. Atul Parolia, and our investor relations advisor, SGA. The relations presentations are available on the stock exchange and on our website. I hope you had a chance to look at it. We had a decent start for the year with a year-on-year revenue growth of 6%, reaching at INR 529 crores. The growth was primarily driven by our consumerware segment, which grew by 12% year-on-year. Having said that, we are yet to experience a full consumer demand recovery across categories. The growth has also been hit by a slightly earlier onset of rains, particularly in May, and which affected the hydration category, which saw a dip in sales in that particular month.
For the quarter, we have achieved the highest ever gross profit margin at 54%, reflecting our manufacturing excellence, strong positioning as a premium brand in the market, and enduring relationships with our distributors and channel partners. Our partnerships with quick commerce platforms are also gaining traction, and sales from these channels are on the rise. Nevertheless, general trade remains our leading contributor, both in terms of volume and profitability. Looking ahead, our strategy is to strengthen our omni-channel presence across general trade, online channels, modern trade, e-commerce, and quick commerce to broaden our product reach across India and outpace the industry's slower consumer demand trends. Coming to category-wise performance, our consumer wear category delivered a year-on-year growth of 12%. Within the consumer wear category, the glassware business delivered a solid growth of 50%, driving the overall growth of this segment. As I mentioned, the hydration category was a dip.
Though it grew year-on-year, but could have been better, and due to the onset of overall early rains, it got affected. Other consumer wear categories also delivered a decent growth of around 10%. Writing instruments continue to face challenges in terms of export demand slowdown, which got further impacted by a slowdown in our domestic sales. Hence, the segment revenue stood at INR 74 crore against INR 83 crore in quarter one last year. We are working on strengthening our writing instrument brand, Unomax, and to grow this segment in a more sustainable manner. Having said that, Unomax remains the highest margin product line in quarter one of financial year 2026. To overcome slower demand in this segment, we have already introduced a few products and continue to introduce newer product lines, like mechanical pencil, which was introduced in quarter one of financial year 2026.
Coming to the furniture business, the performance remains subdued with revenue of about INR 90 crore. The performance is in line with the industry trend, and as previously mentioned, we are working towards premiumization of product range here and expect slightly better growth trends in the coming quarters. We anticipate strong demand surge in the upcoming quarter, driven by the festive season, and good traction in the last month, resulting in a better Q2 compared to quarter one of financial year 2026. Cello is well-positioned to capitalize on this uplift with its premium and innovative product portfolio and deliver faster growth with healthy profitability and return ratios. I will now hand over to our CFO, Mr. Atul Parolia, for the financial highlight. Thank you.
Thank you, Gaurav, and good morning to everyone. I will be sharing the financial details for the quarter that has gone by. In Q1 FY 2026, our revenue grew by 6% year-on-year to INR 529 crore compared to INR 501 crore in Q1 FY 2025. Gross profit for the quarter stood at INR 286 crore and gross profit margin at 54%. During the quarter, employee costs and other expenses increased primarily due to the new glassware facility in Falna. EBITDA margin for the quarter was at 24%. Tax for the quarter came in INR 73 crore with a margin of 14%. Our revenue mix for the quarter comprised 69% from the consumer wear segment, 14% of the writing instrument and balance 17% from the modular furniture and other light product.
Among these, writing instruments delivered the highest growth profit margin at 59%, followed by consumerware at 56% and modern furniture and related products at 41%. General trade stays the largest revenue contributor at 75.8%, followed by a growing share from the online segment at 10.4%. Modern trade and export contributed 5.4% and 8.4% respectively. With this, I would like to open the session for question and answers.
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 touchtone telephone. If you wish to withdraw 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. We have our first question from the line of Jay Doshi from Kotak Securities. Please go ahead.
Hi. Good morning. Thanks for the opportunity. My first question is, could you call out the revenue contribution of glassware business, and more importantly, what is the drag on profitability in this quarter, which will help us appreciate the margins of rest of the business better?
Jay, can you hear me?
Yes, I can. Hi, Gaurav.
Hi, sir. Jay, basically, in the glassware segment, it is still in the negative. There is a loss in the quarter for that particular segment, which has dragged the profitability a little bit, but which was expected. As I had mentioned that this year we are building capacities, and we are at about 65% efficiencies at this point of time, which ideally we would want it to be about at 85%, which will happen over the course of the year. That will definitely reduce our cost of production. Having said that, basically, the drop has been primarily in this segment and the revenue growth has been there. I think this will continue for this couple of quarters before which we break even for the year.
The idea is that we have to be breaking even by the end of the year in this particular segment, which we anticipate we will be able to do given reducing cost and rising revenue trends in this particular segment. But overall, yes, it will be a drag on profitability by a percentage point or so for this entire year.
Sure. Gaurav, what we are not able to sort of understand is that 100 basis point-150 basis point YoY decline in profitability was expected from glassware. But this quarter it has dropped 525 basis point at EBITDA margin level. Is there additional pressure over and above the drag from glassware in the core business that we should be aware about?
Right. So I think there has been a lot of margin pressures as well due to the demand pressures and the sales revenue pressures. So overall, demand has been slow and that is why sales promotion activity has increased in terms of schemes and some discounts. I think from that perspective, we've not been able to raise prices. Our energy costs, if you see, have gone up for the year because there was a rate change in Daman specifically, where the energy rate went up. The wages have gone up as well. But we are not able to increase prices from last year because of the environment. I think that has also contributed to that margin decline. Also coupled with, because there is a de-growth in the writing instrument segment, the cost has still remained the same.
Though revenue has gone down, the fixed costs have eaten up some bit of profitability there as well. I think overall, as the revenue comes back on track, which should be growing a little faster than what we anticipated this quarter, this should mitigate. Right. Of course, festive season sees our biggest jump in because the product mix kind of changes a little bit. So we have better or higher or premium now gifting segment products that sell, which sell with better profit margins. I think that has been the reason for the drop. It increased costs and we've not been able to pass that in the market. That is our major reason for this quarter.
Sure. Thank you. Last one is on writing instruments.
Yeah.
After a weak FY 2020, we thought it will be back to growth this year, but it has again started with a 10%+ decline in 1Q. Could you give us some outlook for what should we expect for rest of the year? Basically-
Sure.
Is this pressuring domestic business or exports or both? Again, some color on the outlook for exports as well as domestic for that segment.
Sure.
That is it from my side. Thank you.
Yes, thank you. I think in the writing instrument segment, yes, it has been disappointing. We would like to be ideally growing this segment at about 10% year-on-year. But it has been challenging from the export side of things. We have had more of a challenge coupled with domestic demand also not growing much. If the industry also overall, if you look at only the pen segment, which we are majorly in, though we are introducing our products, but they still have not gained that much traction. I think from the pen front, it has been lackluster. Having said that, end of June, some parts of July has seen a decent traction. We are still hopeful, though, for the rest of the year, we will see how it goes in terms of export demand specifically.
We are also trying to gain more market share in the domestic side of things. It has not been easy. We have started spending some money on advertisement here also because being slightly newer brand, at a certain level it grew, but now we will have to put in a lot more effort to grow this further. We are committed to do, and hopefully we grow at least this year by a little bit.
Thank you.
Thank you.
Thank you. We have our next question from the line of Praveen Sahay from Prabhudas Lilladher Capital. Please go ahead.
Yeah, thank you for the opportunity. My first question is related to your guidance the last quarter, what you had given related to the growth of consumer wear business, which is quite higher, like 17%-18%. So where it holds right now?
I think, see, this quarter, again, as I said, a few things did not work. For example, the hydration season, as I said, was not very good. Plus, on the steel flask business, which we are going to start producing from November, December. We saw some stock outs in those kind of product lines, which also did not help. I think overall, yes, from a company perspective, we still guide for about 12%-15% overall, given that the glassware business is growing pretty well. Also, the consumer side of things, we still see a decent traction. It has been dragged down by writing instruments and the furniture business. But the consumer business still remains healthy, and it remains on the growth path.
Okay. Second question related again to the margin front, sir. Whether this employee expense increase or the other expenses, it is all because of the glass business where you ventured out, right?
Employee is majorly due to the glass business because we have started manufacturing, so we employed new people. I think that is just because of that reason. Other expenses, as I said, sales promotion expenses for the quarter have increased due to sales pressures because it has been a tough quarter overall. A lot more discounts, a lot more schemes have been passed on. And ideally, every year we kind of raise prices in April. But unfortunately, we were unable to do that this year, given that there was very aggressive pricing by a lot of competition for this quarter to try to gain traction in sales. I think from that perspective is where we see a slightly dip in margins which a little bit we would of course cover over the period of the year.
Okay. Next question is related to the furniture business. Last two quarters, we have seen the gross margin contraction is continuing. Where you will see this gross margin of a furniture business will settle?
I think the gross margin has been because of the product mix. It keeps changing a little bit throughout the year. It depends on what product sells during the year. I think it remains flat. There will be no expansion in the margin. But overall, as the product mix changes throughout the year, this will stabilize at a flat margin of last year. I think going forth in the furniture category, as we have always mentioned that we are in the premiumization path. Once those synergies also kick in, though it grows slowly, it doesn't grow by 10%, 15%, the premium segment, it grows by a percentage point every year or a couple of percentage points. That keeps adding to the gross margins as well. I think it should be stable as per last year as well.
Okay. Do you see that your writing export business to improve in the next nine months?
Yes, it is because I think July for us was decent, and we hope it should continue, that the overall growth trend should continue. We have a good pipeline of orders, and now things seem a little better also after the Middle East war is almost over. The trade routes are now pretty open. There are no shipping delays. I think that should definitely help the business.
Where is This majorly coming from geographically?
Majorly, it's still Middle East, Russia, Latvia, and a little bit is from the U.S. We will not be much hit by the tariff, though, because the orders are still in place and our exposure is limited.
Okay, lastly, sir, CapEx for this financial year. What's the CapEx?
CapEx for this financial year is majorly going to be the steel flask, which is in the tune about INR 40 crores-INR 50 crores, which is the new CapEx, which is going to happen. Otherwise it's just maintenance CapEx. So it'll be around INR 50 crore-INR 60 crore . So about INR 100 crore for the year.
Thank you, sir, and all the best.
Thank you.
Thank you. We have our next question from line of Lakshminarayanan from Tunga Investments. Please go ahead.
Yeah. Thank you. Sir, do you actually give the breakup of the consumer wear into glassware, open wear, and the hydration?
No, we actually report only consumer wear figures. We do not do a breakup.
Got it. In terms of your distribution, do you actually give the distribution mix for consumer wear? I mean, how much is modern trade, how much is general trade?
Yes, we can definitely share those numbers with you. Currently, in front of me, I am only having the numbers for the entire company. Just to give you an idea, online in the consumer segment is the highest because the stationery and the furniture business is almost very limited. I guess, if you look at the numbers, it will be like about a couple of percentage points here and there. Exports majorly comes from our stationery business. For a detailed breakup, of course, we can share that with you anytime.
How seasonal is your consumer wear business? Is it high on Q2 and then low on Q4? Can you just give some thoughts on that?
Yes. Consumer wear business typically picks up in Q2. Festive season for consumer wear business is slightly larger. It is about 1.2x or 1.3x of a normal month sale. It definitely is slightly on the higher side, which is Q2 majorly.
Got it. How has been your distribution expansion in consumerware?
I think distribution-wise, we have, of course, been present all over India. We do have a pan-India presence. Overall, it is more deeper penetration is what we are looking at. Deeper penetration comes from opening new retail outlets or are people visiting more outlets, which unfortunately in India is not rising at this point of time. The number of outlets for us is still remaining the same. But what we are seeing is more shelf space on those same outlets, is what we are gaining. Of course, the other channels of sale, which is online, quick commerce, has seen good traction for us. I think going forth, general trade will be, of course, a slow growth overall compared to the other channels of growth, which is online and quick commerce kind of channels.
Got it. How are you handling the channel conflict with respect to online in the consumerware?
We typically try to differentiate the products on each platform. Because of the wide array of product lines that we have, to about almost 17,000 SKUs. We are able to play around with a little bit of product mix is different for different channels. Also the end product is slightly differentiated, as much as possible. Of course, not 100%, but about 60%, 70% of our portfolio is a differentiated product itself. Now we have a strategy to kind of make for e-commerce. I think now that has completely changed. In the past, we used to make for general trade and sell on e-commerce, but now it is made specifically for e-commerce. I think that from a mindset change has also happened within the company.
Got it. I will get back in queue, sir.
Sure. Thank you.
Thank you. We have our next question from line of Percy Panthaki from IIFL Securities. Please go ahead.
Hi, sir. Last year, you had given some data about the new plant that INR 20 crore of sale has come from the new plant, out of which INR 10 crore was import substitution. Can you give the similar figures for this quarter, please?
We are around INR 15 crores-INR 16 crores came again from our sales, from our factory, and the rest was still traded items, which will further go down. About 60% now is the factory product line and about 40% is the import product line, the ratio will be changing. It will keep going down.
Understood. The new plant, what was the sales from the new plant this quarter? INR 15 crore-INR 16 crore?
Yes. About INR 5.5 crore average sale.
Why is it lower than Q4? Q4, you had done INR 20 crore of sales from the new plant.
Yeah. But normally the first quarter is always slightly weaker. It is always going to start from the second, third quarter is stronger demand times. So the first quarter will always be a little subdued for the glassware category.
I understand that would be the case normally, but, like, we are starting from almost scratch, so that should not be affected by seasonality, the ramp-up, because we are significantly below the capacity of the plant, right?
No. What happens is basically what kind of product line sell is also important. So say there was a surge in, say, bottle demand. So bottles do much better, which is a traded. It is not a manufactured item. So those kind of items you pick up. So the overall sales still grows. But some of the sales that, the product mix that we are making has not grown in this quarter, which is the next few quarters that we are growing.
Understood.
Because we had started also, you have to realize that we had started the last quarter, so it was a launch. So the product had just gone into the market. So now it is repeat demands also.
Understood. How do we think about the total top line from this new plant for the full year basis?
For the full year basis, we are anticipating about INR 110 crore -INR 120 crore of sale, and which is at the current capacity levels that we are producing, we will have sold out about 65%-70% of our capacity. Because, of course, our capacity expansion will happen over a period of time, or the efficiency gains will happen over a period of time. By next year.
Yes.
We will produce a lot more. But currently what we are producing, we sell about 70% of it.
Understood. The sale for this new plant at full capacity, that works out to how much? About INR 200 crore roughly?
INR 200 crore-INR 250 crore. It depends again on the product mix, but it anyway starts from about INR 200 crore-INR 250 crore. So when I say INR 250 crore, it is because of value additions.
Understood.
We are wheel printing on it. We do some colored glasses and all of that. So that will add more in terms of the revenue.
Do we reach that INR 200 crore level FY 2027 or it might be one more year for that?
I think 2027. I think 2027 we should definitely reach that.
Got it. My second question is on the total company EBITDA margin. Earlier you had said that they might dip by about 150 basis points year-over-year on account of the glassware plant. But now you mentioned that there are some other costs also which are inflating. How do we look at the company level EBITDA margin for this year?
I think for this year, you should look at an EBITDA margin of around 23% odd for the entire year. Could be better, but I think, given the environment and given that there is too much aggression by a lot of players in the market, we are hoping to end this year at about 23% EBITDA margins.
Okay. Overall basis, 12%-15% top line and 23% EBITDA margin.
Correct.
Got it. Thank you. That's all from me.
Thank you.
Thank you. We have our next question from the line of Achal Lohade from Nuvama Institutional Equities. Please go ahead.
Yeah, good morning. Thank you for the opportunity. First question I have is if you could give some sense about what is the revenue and the EBITDA level loss for the new plant.
EBITDA level loss, we don't put it here. If you need that information, we'll share it to you a little later.
Right. Revenue, you said it is INR 15-16 crores from the new factory.
Correct. From the new facility.
Right. The second question I had, if you look at the gross margins for the housewares, for the consumer ware, it was 55% in 1Q 2025 and it is 56.2%. So ideally, with the in-house manufacturing of the glassware, the margins should have expanded. If you could give some better sense about how do we see this gross margin for the consumer ware?
Since it is the beginning of a facility, the costs are a little higher, and also the efficiencies are lower at this particular point in time. Glassware, as I said, because once we started the plant, it is a 10-year story. The idea is that we are, of course, ramping up production, ramping up new products as well. As and how we improve efficiencies, cut costs, and increase revenue, you will start seeing those numbers ticking in terms of profitability.
Right. Gaurav, you mentioning from an EBITDA perspective, at the gross margin, is there a case of heavy discounting because we are still penetrating in the channel with our brand, our product, and hence the margin improvement is less than what we were earlier expecting at the gross profit level, which is realization and the raw material cost. Okay.
Absolutely. Because I think there has been margin pressure definitely, for this quarter.
Got it. Another question I had, in terms of the demand scenario, you mentioned in a passing remark that things have improved in the month of July. Have I understood right?
Yes. We are seeing good traction in month of July for all categories. Basically, that is what I mentioned.
Across categories, right?
Across categories.
In terms of the channel inventories, how are these channel inventories as we speak? Because I presume earlier we had a challenge with respect to higher inventories in the channel.
Yeah
What is the situation now? Has it normalized or it still continues to remain high?
I think it's better than before. I wouldn't say it's the best because again, we saw great quarter last March for consumerware specifically. But again, having slowed down demand this quarter. In terms of the secondaries also, there would be a certain amount of inventory, but it's still much better than what it was last year. That's for sure. So it has been an improving trend and we see that in our collections also. So our collections have been better for the quarter.
Right. How do you see the competition? Because we see numerous brands actually also getting into our categories.
Yeah.
Does that mean that in terms of the margins, we have kind of peaked in terms of margins, and from here on, either you will have to sacrifice margins or growth?
I think for certain categories, we have peaked. We will now have to innovate, and probably expand into other channels of growth, because as I said, we are not seeing very great demand in the general trade channel. So our other channels will, of course, be the growth drivers for the next few maybe years. Right? Of course, as I said, we are now looking at consolidating our portfolio, which I had mentioned in the last call as well, in terms of the product, so that we control our inventory better. Second point is that, of course we are having a sharp eye on cost as well, and we would like to cut costs as well, so that we still maintain our margins. So from the cost perspective, also, we will see certain things that we're focusing on, which is probably employee cost is one of them.
Our promotional strategies is another one where we will try to save as much this year, so that we still end up at a good EBITDA level.
Understood. Last question with respect to the acquisition. Anything on that front, can we expect in next one, two quarters, or it is still some time away?
In terms of what acquisition, sorry?
I mean, looking at different companies from an acquisition perspective. Because if I remember right, in the last quarter, you had said earlier we were evaluating certain acquisition, and it is off the table now.
Yes. It was definitely off the table. There is nothing on the table at this point of time in terms of any acquisition. Last time, as I mentioned, we had done some due diligence of the target entity. We were not satisfied, and that is why it was off the table. But there is no new entity as such that we are looking at.
Got it. Just one more question, if I may, with respect to the electrical appliances. Any thoughts on the same? Like how soon can we expect, and what kind of spend you will require to get into that particular category?
We are present in that category, though our focus has never been to expand it in a very big way. Because though it is a good market in terms of revenue, the margins there have eroded a lot for all people. It is a very cluttered category. For us, that is a supplementary category. Because we are going into the same retail outlet. It just occupies more shelf space. For us, it is not a category driver. It is more going to be a supplementary product, and we sell it at our price. If we start selling at prices which other competitors are doing by cutting quality, we don't wish to do that. We wish to grow this at a 15%-20% year-on-year kind of CAGR, and slowly give out good products. I think our strategy in this category is very clear.
It's not about a lot of disruptive growth.
Right. Understood. Thank you and wish you all the best, Gaurav. Thank you.
Thank you.
Thank you. We have our next question from line of Bharat Gianani from Moneycontrol Pro. Please go ahead.
Yes, sir. Thanks for the opportunity. Sir, first question. You said the exposure, I just wanted to get a sense of overall exposure to the U.S. What would be that as a percentage of writing instruments? I presume that it's mostly exposure is on the writing instrument side. So just wanted to get a sense of what's the exposure to the U.S.
I think it's not a lot. It's about 5%-7% of our export sales is the U.S., so we don't have major reliance on them. Currently, we have not seen any cut in orders or any of that sort at this particular point in time. I don't think it really affects us much.
Okay. Yes, sir, next question from my side is that in quarter 1, we have seen 6% growth, and that would be probably lower than what we would expect. For the full year, you're guiding 12%-15% growth. Probably, in your view, 9 months should see a very healthy double-digit kind of a growth. Just wanted to check on what factors you are banking on to have a strong double-digit growth for the 9-month period. Are you expecting the market to rebound in a much better manner, or is there any company-specific intervention that you expect will drive this kind of a growth? That would be my question.
I think one is, of course, the glassware category, which is going to add new revenue. That is definitely going to drive growth. Secondly, overall, of course, the next couple of quarters, because of the festive season as well, normally we have seen that things improve drastically, and we've already started seeing signs of that. I think, of course, the newer wear from that perspective will be the highest growth lever. Then we would, of course, by the end of the year, still going to grow a little bit in the stationery segment also, which kind of de-grew this quarter. I think having both of these perform at a decent level would definitely make us reach that 12%-15% kind of growth platform.
Okay, sir. Sir, last question from my side. You said in your earlier comment that in some of the categories, the margins have kind of peaked in the consumerware space. I understand this year, the margin pressure is there because the glassware facility we have just kind of started, and it would be loss-making until the end of quarter 4. There has been pressure on the writing instrument side, and furniture business has also not performed well. In FY 2027, probably should we kind of pencil in that the margin would come back to the trajectory it earlier used to be, like say FY 2024, FY 2025 levels, or is that a different take on that?
I think, of course, that will require a lot of intervention from our side. Hopefully, demand also surges, then everyone sells in a good market, right? When the market is slightly subdued, everyone tries to sell. Then there is margin pressure. Overall, that is to be seen. I do not want to project anything for the future because I really do not know. Of course, from our end, what we can do is we can change the product mix a little bit, start introducing more premium products, start introducing more margin, which can give us better margins, products like that, and which we have always been working on. Of course, as I said, that we are also having a sharp eye on cutting costs at different levels as well. So that will also kind of help in terms of helping with the margin to come back a little bit.
But overall, for the year also, I think it would not be this bad. It will somewhere stabilize at about 23%-23.5% of EBITDA margins. And which in the next year or so, of course, by interventions it can happen. But yes, of course, there is a lot of work to be done for that.
Okay. Great, sir. Thanks, and all the best.
Thank you.
Thank you. We have our next question from the line of Sumant Kumar from Motilal Oswal Financial Services. Please go ahead.
Yeah. In this quarter, in writing instrument, we have seen a 12% degrowth. Can you talk on how is the domestic market and as well as export? Is it because of the realization degrowth because of correction in raw material prices or volume degrowth also?
No, I think it is volume degrowth also and also a little bit of value degrowth. But the idea is that overall, yes, domestic kind of was still almost flattish, and major degrowth was still exports. I think domestic is also in line, because we are majorly in the pen segment. We are not into the arts, crafts, and other segments. Though we have introduced them, they are still not very in fashion. I think that is the reason why you see the degrowth in this segment.
In domestic market, I have seen all our competitor is doing good and shown good numbers. They have launched, and they are doing good in 5 rupees pen segment also. How is the competitive intensity, and what are the key steps we are taking to combat the challenges?
Of course, the competitive environment is intensifying in this category. There is no doubt about that. Having said that, the major growth for all these players has come from arts, crafts, and stationery product lines, which we have still not seen an uptake in. If you look at purely the pen segment for all these guys, it is very limited. The idea is that, of course, by more product introductions, covering more and more geography or more and more outlets. We have covered geography, but more and more outlets is the way to go in the market. For, as I said, slightly lesser-known brand still, and in an environment like this, it is more challenging for a lesser-known brand to grow faster. We are taking all measures to grow this as fast as possible. Also, as export comes back, we should still start seeing better numbers.
In export market, changing global scenario, how do you think about export business? Say Russia, we have exposure. We have also exposure in U.K. and the other European countries. In this scenario, how it is, and in the way forward, any changes? Also U.K. FTA, how it is going to benefit and anything else? Can you talk on that?
U.K., we really don't have too much exposure to. I think U.K., there will be not much of a benefit. Overall if you see, right now things are okay. All shipping routes or demand everywhere is all right. I don't see anything at this particular point in time. But yeah, it is a very crazy world out there. I don't know what is going to happen in the next few months. But right now it all looks okay. It looks good.
Okay. Thank you so much.
Thanks. Thank you.
Thank you. We have our next question from the line of Jay Doshi from Kotak Securities. Please go ahead.
Yeah. Hi. Thanks for the opportunity again. Just a follow-up question and a clarification on your margin guidance. When we look at the presentation, EBITDA margin in the presentation is computed. EBITDA includes other income, and the denominator only includes operating revenues. So FY 2025 was 26%, whereas the street has a different way to look at. We looked at it in a different way. We look at operating EBITDA. Are you indicating or guiding for a 300 basis point YoY decline? So what was 26% for you in FY 2025, will be 23% or so in FY 2026. Is that right understanding?
That is right. So 23% would be what we are projecting. Given the intensifying competition in some of the categories, is what we would like to do better, 100% and hopefully we will. But given what the situation is right now, that is what we are guiding, yeah.
That is clear. Thank you so much. That is it from my side.
Thank you. We have our next question from the line of Karan Bhatelia from Asian Markets Securities. Please go ahead.
Hi, am I audible?
Yes.
Yeah. Hi, Gaurav. Just wanted to understand the capacity utilization on our opalware expanded capacities. Can you help me out with that?
Yeah. So opalware, we are at about 85% of utilization. We have about 15% capacities that are yet to fill. I think, yeah, that's pretty much where opalware stands at.
How do we understand the pricing scenario and the margins compared tio a YoY basis?
I think, again, opalware has also seen different margins as all other categories as well. Primarily because our energy costs have gone up, our wages and salaries have gone up. But again, we are not able to increase price. I think that is the reason why opalware has also seen a little dip. Opalware is one segment that in this year at least will have margin pressures because there's new people entering this segment as well. I guess the competition is going to be a little intensified.
Right. On the writing stationery part, we mentioned about expanding the other stationery ware in art category. While during the IPO days, we also mentioned a very strong addition to the channel partners on a pan-India basis, because there was a lot of headroom for growth. Where do we stand now and how do we see this portfolio two years down the line?
I think we have expanded in terms of geography, but we have not seen those kind of growth from this channel. That time also, the growth in the first two, three years was very good, as I said, because the environment was also very conducive. Currently, it doesn't look like that. Having said that, we are trying our best in terms of the other stationery products that we've introduced to kind of have an uptick there, because we've still not seen that coming. Though the products have been launched, a lot of them have been launched, and even this quarter we launched mechanical pencils, which was a new product for us. That also has still not seen the kind of volumes that we would like to see.
I think having said that, I think about, though we've always been guiding about 10% odd increase every year. We will have to see this next couple of quarters how things perform, though July seemed decent and had good traction for this category. We'll see how it goes in the next couple of quarters and then probably we'll have a better idea on things.
On the INR 50 crore of CapEx on flask, what would be the asset turns and the margin profile at peak? Is it better than the other consumer wear category or better than glass opal? How do we read through?
Yes, of course. I think steel flask as a category would be about five times asset turn is what we are looking at in this category. Glassware is very different. Glassware is 1:1, but all our other consumer wear categories, including our plastic houseware, is about almost seven times asset turn. These are five to seven times asset turn kind of product lines.
And just to continue on this, can we achieve peak utilization in the very first year given the fact that BIS is in place?
Yes. I think 100% we should be able to achieve full utilization, but of course, only one factor is how fast we produce good quality. Because it is not something that happens on day one. It takes still a few months to get a hang of it, because it is not a very easy product line to just start and start selling. But initially, of course, maybe our wastage and other things, because it is a steel product. Of course, we will achieve pretty good utilization in this new facility.
Right. And margin profile could be in line with other consumer category or could be in line to our opalware?
No, I think margin would be pretty as per the other consumer wear category. Not opalware, but other houseware and plastic categories.
All right. Thank you. That's it from my end.
Thank you.
Thank you. We have our next question from the line of Ashok Shah from Eklavya Invesco Family Office. Please go ahead.
Thanks for taking my questions and very best wishes for future. My questions relates to our another business, furniture business, which is in subsidiary and also listed. There, we have some very good results with other income, but other income is not elaborated in the notes. Can you explain? It's a 100% increase.
I am sorry, I did not get your question.
No, my question is regarding Wim Plast Limited, which is our other business in the 55% subsidiary, where our profit has increased and everything has increased. But this is due to the other income. But other income, there is no footnote is given. What is the other income which has been arrived?
Other income is invested income, which is basically investment in financial instruments. Other income is only derived from that.
Sorry.
That is it. There is no other reason for the other income.
It is a 100% increase. If the footnote is given, it will be much better from next quarter.
You will have the balance sheet next quarter anyway. You will be able to see that.
Okay. Secondly, are there any plan to merge it and what is your plan? Because there was some news that some merger is going to happen with our subsidiary in the parent company.
Yeah, it is already out there. We are merging it and we are almost through with it. Another couple of months and the merger will happen.
What would be the ratios? It is a complicated merger.
It is not a complicated merger. It is just, we needed some permissions from SEBI, and I think that is already come, and now we are in the phase of merging.
How many shares of the Cello World would be allotted?
I think already there is swap ratio.
They are already in the exchange. It is 0.86.
0.86 is the swap ratio.
It is said that in our market that it is not favorable to the small shareholder of the 40% of the Wim Plast Limited compared to the financials of the Cello World.
No, it will be beneficial to all actually.
Okay. Okay, sir. Thanks a lot, sir. Thank you. That is all from my side.
Thank you. We have our next question from the line of Sucrit Patil from Eyesight Fintrade. Please go ahead.
Yes, sir. Good morning to the Cello team. Just a follow-up on the previous quarter. In last quarter, you had spoken about expanding your product range and deepening your consumer network. As you look ahead, what is the boldest move that you are planning to grow Cello, especially if consumer habits or retail channels are changing fast? How are you preparing for things that may not go ahead as planned? I am talking in view with the previous campaign, Har Ghar Cello.
I think, basically, as we see channel changes and see different channels growing and some channels not growing so fast, we are launching products as per the channel. As I mentioned that in the e-commerce world, now things are looked at differently. On each platform, say an Amazon or a Flipkart, there are different kind of customers for each platform. So we look at it from that lens, and we launch products from that lens. And some of the products are basically just e-commerce first, and then they go offline. I think that entire bit has changed within the company, and that's how we have started approaching our product lines as well as per channel.
Okay. Also, just to close the loop, is Cello thinking of going for any smart partnerships in the coming years to boost business growth?
What do you mean by smart partnerships?
Would you be tying up with any other e-commerce platforms other than Amazon or Flipkart or going for any local brands?
I think we are already. The quick commerce also we have started, and I think whatever new comes in, we will of course partner with all of those platforms. We will not leave any stone unturned there. We will be on all platforms.
Okay, great. Thank you very much.
Thank you.
Thank you. We have our next question from the line of Ghanshyam Joshi from SKSM Retail. Please go ahead. Ghanshyam, are you there?
Hello, can you hear me?
Yes. Absolutely.
Yeah. Gaurav, first of all, congratulations to the whole team because all of us are aware about how the current market conditions are. I am here to ask you more from a long-term trajectory how I see Cello will be growing in India. How excited are you looking from a 5-10-year story? Because I understand glassware is definitely one of the areas where we have a big thing to achieve in the market. Is there any other segment which you are discovering based on the changes in the consumer habit, which you feel that could be a growth engine, and it could be a synergy for us also?
I think, of course, we are always very excited about all the categories we are in. Plus, we are always looking at synergetic categories. Four years back, we would have never thought about glassware. We thought about it because it had synergies. It made sense to make it in India because no one was doing it. I think, going forward, you should always look at Cello as a company that will keep getting into different things as well. Because there are a lot of things in India, a lot of things become very commoditized very soon. You have to get out of things, and you have to get into newer things. I think that perspective we have always carried. And of course, some of our core businesses will always remain where the brand is extremely strong.
But we keep venturing into newer horizontal categories as the years pass by and as the opportunities come. Currently, there is not much. I think there is a lot on our plate at this point of time, with the glassware plant, with newer channels of sales, which are becoming very disruptive. So I think there is a lot of stuff that we can still do with what we have. Eventually, yes, we will keep entering different segments. Because in India, after a certain point, every vertical becomes very saturated very quickly because either there are too many players or there is saturation in terms of consumer demand. So I think, as a company, we are always looking at growing into different verticals.
No, that is completely true, and I hope that brings value to the shareholder also because it has almost been one and two years, and I understand we are currently in expansion mode, and that's why we are feeling the heat and hoping and wish you all the best for the turnaround happening in the coming time.
Great. Thank you so much.
Thank you.
Thank you. Ladies and gentlemen, that will be the last question for today. I now hand the conference over to the management for closing comments.
Thank you very much, everyone. Great questions this time. Hopefully, we will have great quarters coming up. Thank you so much, and thanks for all the support that you guys have always extended. Thank you.
Thank you, sir. On behalf of ICICI Securities and Cello World, that concludes this conference. Thank you for joining us. You may now disconnect your lines.