Ladies and gentlemen, good day and welcome to the Cello World Q4 FY 2024 earnings conference call hosted by ICICI Securities. This conference call may contain forward-looking statements about the company which are based on the beliefs, opinions, and expectation of the company as on date of this call. These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict. As a reminder, all participants' lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Manoj Menon from ICICI Securities. Thank you, and over to you, Mr. Menon.
Hi, everyone. On behalf of ICICI Securities, it's our absolute pleasure and privilege as always to host the management of Cello World for the results conference call. Today, the management is represented by Mr. Pradeep Rathod, Chairman and Managing Director, Mr. Gaurav Rathod, Joint Managing Director, and Mr. Atul Parolia, CFO. Now over to management for the opening remarks, post which we will open the floor for Q&A. Thank you, and over to you, sir.
Yeah. 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 results and presentations are available on the stock exchange and our website. I hope you had a chance to review them. This past year has been exceptional, characterized by our successful IPO through strong performance across all segments. Despite very sluggish demand in the consumer segment, we achieved 11% offline growth and accelerated profitability. In Q4, we saw 5% year-on-year rise in revenue and a remarkable 20% year-on-year growth in EBITDA, driven by the promising demand in hydration, back to school, and furniture segments. The establishment of our new Rajasthan facility will further strengthen the glassware business, setting the stage for robust growth over the next two years.
Looking forward to FY 2025, we anticipate a growth of around 15%-17% fueled by all segments and a new plant. We expect EBITDA margins to remain steady at 24%-26%. As Cello, our focus remains on surpassing industry growth and enhancing our position in consumer market. We are confident in the growth potential of our diverse portfolio, which aligns well with the-
Hello? Hello? [audio distorrtion].
Yes, sir. Please continue.
Yes, sorry. Which aligns well with the trend of premiumization of the product portfolio. Now I will hand over to the CFO, Mr. Atul Parolia, for the financial highlights. Thank you very much.
Thank you, Pradeep Rathod, and good morning to everyone. In Q4 FY 2024, we achieved a revenue of INR 512 crore and EBITDA of INR 140 crore with a healthy EBITDA margin of 27.3%. Looking at our full year financial performance, we generated a total revenue of INR 2,000 crore with over 66% coming from consumer wear, 17% from writing instruments, and the remaining 17% from the wall decor furniture and allied products. We witnessed a 2.5% improvement in overall margins compared to FY 2023, driven by volume growth and product mix optimization, despite a decline in product pricing due to raw material cost. In terms of our channel mix, direct trade contributed 77% of our sales, while export and online sales contributed approximately 10% and 8% respectively, with modern retail contributing the remaining 5%. Our gross profit stood at INR 1,052 crore with a margin of 52.6%.
Consumer wear gross profit margin was 53.5%, writing instrument margin was 58.8%, and wall decor furniture margin was 42.7%. EBITDA reached INR 535 crore with a margin of 26.7%, reflecting healthy performance across all verticals. Profit after tax grew by 24%, to INR 333 crore with a margin of 16.6%. We maintain a healthy operating cash flow of INR 231 crore. With this, we are open 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 their touchtone 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 Ankur from HDFC Life. Please go ahead.
Yeah. Hi. Good morning, sir. Thanks for your time, as always. I have a couple of questions. One, if you could just talk about some of your key categories. So bottles, lunchboxes, writing instruments. Just trying to understand even opalware, how have they done in FY 2024? How are you seeing trends right now? How is overall demand? So one was, of course, how has 2024 been, and more importantly, how are you seeing demand right now in 2025 as well? Yeah.
Opalware, we did a sale of around INR 342 crore, which includes a little bit of glass. The margins were pretty robust, increased by almost 2% over the FY 2023.
Writing instruments, again, has grown at a very healthy pace. Writing instruments, we are always giving you a separate stationery. The sales was around INR 333 crore, and if you see the EBITDA margins
Yeah.
EBITDA margin stationery is at around 29.3%, which earlier was 25.8%.
Okay.
All the verticals, including furniture, the margins have gone up because the raw material was quite favorable last year. It is still not at the top, so we still expect the margins to stay at this level. Demand had picked up very well in March around, March and April early, but I think because of the ongoing elections, a little muted for some time. I think there should be a robust demand because we are expecting a very good monsoon, what we have seen this time, and the rural demand has started picking up.
Okay.
Urban demand is still not at the top level what we expect, but I think the 15%-17% revenue growth what we have predicted in most of the segments. Like furniture definitely would depend upon the price. If you see last year also, out of the 11% growth, furniture was the least in contributing in sales. Because the raw material was at a favorable price, so we were almost touching 12%-14% to the market. That's why the volume was a little higher, but value did not reflect to that level.
Okay.
Even that furniture and given the price, in fact, the volume growth in last year also in most of the segments would be around 15%. So we are projecting 15%-17%. The glassware unit we are waiting, once it starts now in five days, that could give us maybe an additional growth of around 3% this year. So our target is 15%-17%, but we could try and achieve around 20% growth.
Okay. If you could also touch upon lunch boxes and bottles, the consumer wear category, how have they done in 2024?
Yeah. Consumer wear, back to school has now just started, and that's doing very well.
Okay.
The second segment, all the bottles, because the heat is also very high and bottle category is really doing very well. Even in glass, also the bottle categories are doing much better because of the individual bottle system which has started in the last four years pre-COVID. From the fourth time, category has done very well.
Right. Just one last one on this is, this whole BIS which has come up on steel bottles, which essentially means that players, including yourself, would have to make these bottles in India versus imports. What are plans for us in terms of-
BIS is now extended till 4th of June, and I think it will get further extended on the import. Even on local, you have to take the BIS by September.
Yeah.
The manufacturing of this, these are particularly vacuum bottles. All insulated bottles we are making 100% in our own factory.
Okay.
But vacuum bottles are 90% imported, not only for Cello but everybody.
Yes. Mm-hmm.
I think there will be a window for a little larger period-
Okay
for people to set up their units and all.
We have already taken BIS standard for our insulated bottles, what we manufacture for [inaudible] and all. We have already got the certificate for our three company.
Okay.
All the other products like lunch carriers where we use steel and plastic together insulated, we have already taken the BIS certificate for that. We have been given out by, I think, Cello is the first company to get this BIS certificate on this.
Okay. Are we looking to incur additional CapEx also to start manufacturing the vacuum bottle? Is that also there in the plan?
Yeah. It would not because the CapEx is not very high, is a little labor-oriented too. Because if we take 5- 10 lines also, the CapEx is around INR 30 crore, INR 30 crore- INR 35 crore.
Oh.
That's why in our yearly CapEx, what we have drawn would be on the line of that. It's not a major CapEx. That's why we have not highlighted it. Because we were planning from last year itself to go in for some manufacturing. We did not want to manufacture fully because the price, what we get from there, the quality and the SKUs, number of SKUs, what we get from China, because they are manufacturing for the world.
Yeah.
They have a lot of SKUs. They have a whole city or a whole district who manufactures this vacuum flask.
Right.
There is a little hiccup, yes and no. How it will go with the trend over the next one year, there could be a little hiccup for some time, but I think so this should happen. That we are very secure because last time also they extended by a year. Now because of the election, nothing is happening.
Right.
Of course, the results, I think so we are approved and we have already written to the government. The whole of the industry has written.
Right.
We expect that there would be an increase. In fact, if at all the approval also on the companies, because BIS doesn't stop any import. BIS lays the standards. The company from where you're getting the materials has to be registered in the BIS, and they have to follow the norms and the quality specifications.
Sure.
It has not happened, but it cannot be denied forever. It can be delayed.
Right.
Within all the categories like iron and whenever they put the mixers and BIS certificate, they always give the certification to the company which is manufacturing out of India and even in India.
Mm-hmm. Okay, fair. Just one last one, if I may squeeze in on this proposal to raise money via QIP. Just trying to understand, if you can just give us more color, what is the purpose of this QIP? Where will you be using this money for? Thanks.
See, one, there is a debt as loan which is there from when we converted our companies into private limited. Other thing that the biggest effect what we see an opportunity in glass. We are just waiting to finalize this first.
Yeah.
Because the trend of glass is picking up very fast. That is the deficit-oriented business. We want to be ready for any opportunity on that. There wouldn't be too much of money which will be added because they have INR 300 crore. I think so there are opportunities. We should still come in when we had come with the issue also. We have an opportunity of buying one of the consumer company, which is very good in our segment itself.
Okay.
It will add a lot of value on consumer product line. These opportunities we want to raise and which are getting converted very fast. You will see over the next one or two quarters.
Fair. Got that. Okay, sir. Good. Thank you so much, and all the best.
Thank you. The next question is from the line of Sumant Kumar from Motilal Oswal. Please go ahead.
Yeah, hi, sir. Good morning. Can you talk about the export contribution of writing instrument business and how the export is growing currently in FY 2024 and going ahead?
Export in writing instruments has grown very well. Even in other categories, if you see the combination of export which was in 2023, was 8% to our revenue, is now 10%. Writing instruments being the biggest segment in our export. Even opalware, we are doing good. Consumer wear also, non-glass also is increased in this year. I think the export potential will definitely be. Export actually primarily grew more if you see in terms of INR also because the local market was more muted than the export. In that also, the general trade was a little lower. The export has grown at a level what we always thought but has not grown up. Though you might see it has outperformed in the overall growth, but it is at the same level what we expected.
How much you said the contribution of export in writing instrument?
The export contribution in the wholesale of our INR 2,000 crore is 10%. Last year it was 8%.
About the Kleeno, how Kleeno has grown and are we expanding this category also further?
Yes, we are expanding in Kleeno, but Kleeno grew as all the consumer products were not robust here for even Kleeno. We grew at around 14% if you see in the category particularly, 14%-15%.
Okay. In FY 2024, we have 11.3% growth. What is the total overall volume growth in FY 2024?
These are measured, but whatever discounts we have passed on because of the raw material which was lower. On segment to segment if I see, if furniture it was around 12%-14%. It has grown at 3%, so the volume growth will be around 15% on furniture. On other consumer wear, where we have grown 12% plus 6%-7%, so around 18% is the growth level on that segment. Writing instruments, the price point was not too much of difference, 1% or 2%. We have grown around 17% in writing instruments, so it means around 19%-20%.
Can we assume a 15%-17% growth guidance you have given, there is a higher possibility some couple of percentage, 3%-4% kind of value growth will be there, so we can surpass 20% kind of growth if 15%-17% we can achieve volume growth this year, FY 2025?
That is what I said in the earlier question also, that we are targeting 15%-17%. But if the glass, once it starts and it adds metal sales immediately, you see glass has to establish. Our main purpose is the glass always has to get established. Glass is not a business we start today and you can use. Because the quality of glass establishes. Sometimes it can be a month more or a less. So if as per targets what we are assuming, then we could grow at another 3% more. If the raw material prices go up and if we again correct our prices upward, then maybe this value growth also could go up. But we are assuming 15%-17% of today's value of sales and today's pricing.
And sir, on the margin front, if it is more than 25%, 25.2%, can we assume with the glass plant opening and ramping up, we have a further margin expansion in FY 2025?
Yeah. Glass basically is a higher margin product. That is what we had earlier also said. If the pool of our glass business, as it grows further, the percentage of margin could go up over the years. The first year it might not because at middle level, yes, definitely it will be good. But from PBT level, it might not affect too much in percentage, a higher percentage. But over the next two years, it will really enhance the profitability in percentage terms.
So any other business is going to drive margin in FY 2025?
Sorry, could you repeat that please?
Any other business or any vertical is going to have a margin expansion on overall company level?
Margin expansion, I think we have a very good margin level. We are slowly trying to premiumize some of our product line in our consumer business. Like this year, we have launched special categories for back-to-school children and water bottles. The margins are approximately on a normal volume than what we have margin is around 7%-8% more. We are slowly trying to premiumize in that category. Even if you see in further our lunch carriers, casseroles, over the next six to eight months, the range will be completely different. It will be a little more premium product.
Okay.
Though we will not stop too much of a general product, but premiumization in this category is what we are looking for in the next one year. This will make us completely different from the too many players which are there already in this field.
Okay. Thank you so much, sir.
Thank you. The next question is from the line of Percy from IIFL. Please go ahead.
Hi, sir. Just wanted to understand your ramp-up of the glassware. I understand the CapEx you have done and the asset turnover, which is around 1.1x-1.2x. I think the potential sales from that CapEx is around INR 250 crore. Do we get that immediately in FY 2025 or does it take time? If it is the latter, if it is going to take time, how does it work? Because the plant has to work 24/7 continuously from day one. Does it mean that some of the production goes waste, or how does that happen? Can you just explain that part, please?
Yeah. No, it doesn't go waste. Any glass plant in the world is like that. It's not that it's the first time. As I said, we see in COVID, in the cold time also, we could run it and we could sell the product. We were exhausted, so we put the second furnace. Whenever you add a furnace, you cannot exhaust in one year. That's why, because of the high CapEx, the margins are higher. If you see the internal investment on glassware business or plasticware, plastic general consumer product, the turnover ratio is completely different. The margins are less over here, but the turnover CapEx to revenue cycles are much higher. We get around 6x-7x the revenue.
Right. So when do we-
We have this storing facility and at times the spurt is very high. It will take one and a half years for us to achieve the capacity of the furnace. It cannot be in the next six months that whatever I produce in day one, I will be able to sell it.
Understood. Therefore, the glassware-
Which means we would have projected at least 25% growth.
Got it, sir. The glassware and opalware division, which you have done approximately INR 350 crore of sales this year, including a partial ramp-up of the new plant, plus some increase in opalware, would around an INR 500 crore number be a good estimate for FY 2025?
I think our internal target was around INR 460- INR 475.
Okay. Got you, sir. Second question is that, if I look at your consumer houseware excluding the opalware and glassware division, what is the kind of growth that you are targeting for that in FY 2025?
Around 15%.
Okay. Yeah, that's it from me, sir. Thanks and all the best.
Thank you. The next question is from the line of Jai Doshi from Kotak. Please go ahead.
Yeah. Hi, thanks for the opportunity. I have only one question, and that is on receivables. If you look at FY 2024 versus FY 2023, incremental sales were about INR 200 crore, and increase in receivables was about INR 145 crore. I think there is an increase of about 17 days. Could you give us some color on what is the channel inventory level and whether this receivable increase is largely pertaining to the expansion of opalware capacity? Or even in your other businesses, you are seeing higher channel level inventory and receivables. How should we think about it going forward?
Our inventory levels have increased by about two days, about 87 days has come to 85 days. Receivables definitely has gone up. The general trade last whole year was not very good. We have given a little 10-15 days extra credit line to most of the customers, to push in more to the retail. Whereby their receivables also got delayed. Going forward, and second was we have done some government tenders with these monies coming in four-five months, I do not know. That is one, and that is around in the range of probably INR 20 million-INR 24 million.
You mentioned government tenders. Does it mean CSD channel, army canteens channel, or is it something other way?
It's not too late. No, other than that. Back to school, there are many channels in Assam and Maharashtra and Andhra Pradesh we did, in Wim Plast also, for their things. Brihanmumbai Municipal Corporation.
Understood. Okay.
That is taking it down by two or three days.
Understood.
Another 10 to 15 days we have given extra to the channel. If you see our channel shift also from last year, 81%, which was general trade, has come down to 77%.
Right.
General trade this year was really well tied, though I think so with our product mix and everything, we could achieve higher growth sales than last year at a very good margin. That is still right now about there, and because of that, we did not want to be suffer on this. We could partner around 15 days more credit. I think by September this year, we should be in line with what we were in 2023.
Understood. Does it mean that there is, at the channel level, at distributor and retailer level, inventory level is higher than usual? And if that inventory level goes back to normalized levels by September, then there is a possibility that your primary sales could be a tad weaker than the retail of takes or tertiary and consumer-level sales.
Not 100%, because when I give, he pushes my sales. Only the retailer wants to pay at his time, because there are products where he has higher inventory, there are some imported products and all, what the retailers keep. So there they get higher margins. He wants to utilize your money sometimes. Our stock might have gone up at the retail end everywhere, not 100% sure. Yes, little bit could have gone up because retailer has limited space only. So you have store role.
Correct. He uses your credit.
It increases by 5%- 10%, not more than that. It may increase.
He uses your credit facility or limits perhaps to ease the pressure that he may be facing for some of our other products.
There are higher margin products where they get it from importers and where they want to pay early because they get a higher discount of 3%-5% on cash discounts and all. We thought this is an opportunity, fine, we put in more, so our products sell more. If they are getting or selling our 20 bottles, if I could sell five and six, because he is not paying in time, I sell four. We took a view that, no, it is better we put, we can give 10 to 15 days extra credit, and over the next two quarters we will get it down.
Understood. One or two quick bookkeeping questions. With this fundraise, you will fully repay the promoter debt?
Yeah, about, we could be able.
About INR 350 crore, right? It is about INR 350 crore.
About INR 330. INR 330 crore.
Understood. Over and above that, whatever you intend to raise will be potential requirement for organic or inorganic growth.
Yes.
Lastly, any updates
Opportunities which I get, which I will not be able to disclose but good level.
But I am assuming this will be small ticket size, right? I mean
Ticket size is really doesn't matter because it clearly governs that business is possible and which is aligning with our portfolio.
Correct. Sure. Thank you so much. Lastly, any updates on consolidation or sort of Wim Plast or merger of Wim Plast with Cello?
It is on the card and it will be very soon. Very, very soon.
Understood. Okay. Thank you so much, sir, and good luck for FY 2025.
Thank you. The next question is from the line of Achal Lohade from JM Financial. Please go ahead.
Yeah. Good morning, team. Thank you for the opportunity. Sir, if you could, like you gave numbers for FY 2024 in terms of volume growth and the value growth. Can you help us with the same thing for fourth quarter?
Fourth quarter of 2024 or 2025?
Fourth quarter of 2024, sir. You said about the FY 2024 volume growth will be so much for each of the segments. Similarly, if you can give for fourth quarter.
Fourth quarter, the volume growth, if we see in our consumer wear, will be around 7%-8%.
Okay.
In our writing instruments, around 11%.
Okay.
Furniture was around 18%.
Understood. Essentially what you are saying is that while it is 7%-8% in the fourth quarter, the quarter was sluggish, in terms of specifically GT. And that is seeing a pickup now in March, early April. Have I understood it right, sir?
Right. January, February was very bad.
Okay. Understood.
March, middle, it started picking up, but it got a little down for the January period, I think so, because of the elections.
Understood. The order what you said for the consumer business, it is for consumer wear business, the money which should come in five-six months. Have I understood right? That has contributed about two-three days of extra receivables in terms of impact.
No. The government supplies were there. That is two-threee days it has taken up because it's five-six months. Overall, 10-12 days we have extended credit extra to some of the suppliers, just to be there, which I explained in the last question. These are the two things that's why the receivables are high. The market was sluggish. We extended a little more extra credit because we could penetrate more into retail. Thereby, it is not 100% that whatever we penetrated is still lying with them. It could have got sold, but because of the payment leeway, he wants to pay at times which is zero-three days extra, so they would not like to pay earlier, where they could invest in something else to make money or if there's some payment what they have to pay at the retail end.
Understood. Just one last question, if I may, sir. With respect to gross margins, which is gross profit divided by the sales for these three segments, we see a sharp swing in both direction for the individual segments. Is it possible to give us specific number for fourth quarter? What is the gross margin and compare that with third quarter and explain what has driven the swing, if there is any.
Gross margin for consumer is around 55.9% in this quarter. For writing instruments, 59.2%, and molded furniture is around 37.7%. For the year, consumer wear is around 53.5%, writing instruments 58.8%, and molded furniture is 42.6%.
Right. For the fourth quarter, what is the swing from third quarter, sir? From third quarter to fourth quarter, is there a large swing? Because I think third quarter, we had consumer wear at around 52%, while it seems to have gone up to 55.9%.
Molded furniture was 42.8%.
Yeah.
Molded furniture, it has gone a little down. The reason being, because of the little raw material which has gone up, because raw material was at a very lowest level in that quarter. Writing instruments is at the same level almost, it is only a half a percent difference. Consumer wear, because of the bottled season, hydration, where the gross margins are much higher. That is why it always goes up last quarter. Over the last three, four years also, you see March quarter, January, February, March, the profit margins are always higher.
Understood. That is about it from my end, sir. Thank you so much.
Thank you. The next question is from the line of Vaidik from Monarch Networth Capital Limited. Please go ahead.
Hi, sir. Congratulations on good set of numbers. My first question is towards the opalware division. Firstly, I would like to know the capacity utilization levels. Going ahead, do we see any possible CapEx for the opalware division as well?
Last year, we consumed around 65%, 60%- 65%, and this year we will be at around 80%.
80% in FY 2024?
FY 2024. No, FY 2024 has.
Okay.
Because that is October, September performance, second performance. Whereby we increased our capacity by 40% more. If you are making around 12,000 tons, now we are at 20,000 tons.
Okay.
Under 20,000 tons, last year we utilized, if you see, the capacity of 20,000 tons, we utilized around 65%. This year, it will utilize around 80%-82%.
Okay. Sir, what about margins in this division?
Margins are in line and a little better than last year because of the new projects getting added. If you see, the sales grew by around 24% in this segment. Margins, EBITDA is around 28%.
Okay.
It is around 28%, we want to maintain. It will be a percentage higher.
28%.
Last year the PBT was around 28%. This year it is around 32%.
Okay. And sir, do we see any CapEx for this division going forward?
CapEx for?
For opalware, when we reach 80%.
For opalware, we are not expecting any further CapEx for next one and a half years because we still have capacity whereby we utilize it.
Okay, sir. That's it from my side.
Thank you. The next question is from the line of Keyur Pandya from ICICI. Please go ahead.
Hello?
Hello.
Yes, Keyur.
Hello. First question is on the import. From the overall sales, what percentage of raw material or traded goods is imported, and it pertains to which subcategories?
There is only one category which is major, is stainless steel vacuum flask, which contributes, I think, of our total import to around 80% what we import and sell.
That category is around what percentage of overall sales, broadly?
It should be around 12% on the consolidated level.
Okay. Understood. Second, on the glassware, so there is no import on the glassware side from our side?
Yeah. For that being before we start new units for that. So that's why we build up to an extent, and the similar category now we will start manufacturing in India. So that import will get converted into manufacturing locally.
Okay. So in that context, what kind of growth do you expect for the glassware in specific? Why I am asking is that, we have added the capacity that is from the supply side. So it will be more of substitution of domestic manufacturing from import, or there will be actual growth of sales, and to what extent the growth is expected?
Because what we are doing is only INR 40 crore, INR 45 crore, INR 50 crore, which the furnace capacity and the manufacturing capacity will be INR 250 crore. This will get converted immediately, plus the incremental sales what we get in this year. And by next year, one and a half years, we will be able to grow that up to INR 200 crore of sales.
Okay, understood. Noted. Thanks a lot, and all the very best.
Thank you. The next question is from the line of Grishma Shah from Envision Capital. Please go ahead.
Yeah. Good morning, sir, and thank you for my question. I want to understand writing instruments, what kind of distribution expansion plans do we have for next year?
We have expanded already some distribution every year ongoing, like last year also we had said. On a yearly basis, if you see our writing instruments, the number of distributors have gone up by around 350.
Okay.
Over the last year.
Correct. This retail network was at around 65,000 outlets, if I am not wrong, and this is at around 65,000 at the end of the year. Is the idea more to penetrate deeper into these outlets, or you would see the numbers increasing?
No, numbers will definitely increase. See, the numbers, once it gets converted, there are numbers which are not service covered. There are numbers which are service covered. Only the service covered numbers we get it.
Correct.
Which are not serviced and which is supplied through wholesale, because there are more places which the service is not possible.
Okay.
So that covers are there, but penetration is one, and increase in distribution and increase in retail will definitely have to go hand to hand. It is not just that we will increase sales only in this thousand. There are a lot of thousands. As I said, for a writing instrument to be really there fully, you have to reach at least 12 to 15,000 thousands.
Okay. The other question is on the raw material price trends you have already highlighted, but is it fair to understand that now we do not have any lower price raw material inventory in our system?
Lower price inventory?
Yeah. Of raw materials.
No. Raw material, we are normally keeping only a month. Normally, it is in line because raw material, it can go down very fast, so we do not want to play too much on raw material unless and until we have a very good chance where we see a difference of around more than 10%. We always scale up our inventory. Otherwise, it is maximum a month. So it cannot be that we have a lot of raw material which is at lower price.
Okay. With this QIP that we are planning, one is obviously the debt comes off, and some amount of CapEx that we need. Apart from that, are there any other new product categories that we intend to penetrate?
We are thinking there are some opportunities where we can acquire a couple of companies. That is why we think it is not very big, it will be on a medium note or smaller note of purchase. I think that is why also we want to be ready, because the opportunities are there and it is coming very fast in two of our segments. We want to be ready to utilize this fast over there.
Okay. Is there any deadline that you set for the QIP?
I think they deserve.
Is there a deadline that you are working with the QIP?
Yeah, we are working almost next month.
Okay. Fine. Thank you and good luck.
Thank you. The next question is from the line of Akhil Parekh from B&K Securities. Please go ahead.
Thanks for the opportunity. My first question is on the sales guidance. If you look at Q3 of FY 2024, we had maintained that we will do a 20%+ kind of a sales growth in FY 2025. It believes now we are saying 15%-17%, so slightly lowering of sales guidance vis-a-vis what we mentioned in last quarter. Is it to do mainly because of election-led disruptions, or has it anything to do with the higher level of inventory in the channel? That's my first question.
No. I will still tell you that the price point has not really had the comparison from FY 2021, FY 2022, when the raw material was at its peak. 2023 onwards, it came down. Last year it was at a very good level. As I said, 5%-6% sales looks muted because of when it's compared year-on-year. Still we have not gone up to the price what we were. The raw material still sits at around middle of around the peak and the lowest. Still the price point is around 3%-4% less. That is what it is. 15%-17% is value growth.
Okay.
Volume growth around 2%, 3% higher. Even as I said, the gas prices in opalware has come down from INR 120 in starting of last year 2023, 2024 to around INR 65 now. It's a very big difference, around INR 8 per kilogram on our conversion.
Sir, can you please repeat the last piece on the opalware material?
Even in opalware, the raw material is not a very big cost. The opalware raw material is around INR 15, the basic raw material. The silica and borosilicate, all the products what we make in, but our major is energy. If we see the energy cost is two times more than the raw material.
Okay.
Energy cost has reduced drastically, which has given around INR 8 per kilogram lower costing.
Got it. Okay.
Definitely we cannot raise the level in terms of PF fast. Also, the value growth over there also looks muted.
Sure.
If this trend is there, then I think our sales price which was INR 100 is now at INR 95.
Okay.
Because of the vast diversification, we are only releasing most of, for your guidance that our raw material is not one. Our raw materials are different because we are into three different segments. The writing instruments, the plastic would not impact us too much, neither on both the sides, putting up the price or lowering the price. In opalware, the energy cost will definitely make a big impact on lowering the price or increasing the price.
Okay.
On our other plastic consumer, yes, definitely plastic is the major raw material, and the second raw material is silica. These are the two basic raw material in our other segments. It's a mix of it. I still feel we are at a 5% lower than of our pricing as where we had sold in around 2020 to 2023.
Got it. Sounds clear. Sir, two more questions. One is our channel checks were indicating that Milton is probably planning to enter into opalware category. If you can give any color on this.
I am not aware.
Okay, and lastly, on the government tender side, if you could quantify how much the sales was?
No, sales was this much only. 18% growth.
Okay. Sure. This is helpful. Thanks so much.
Thank you. The next question is from the line of Prathamesh Dahake from Motilal Oswal. Please go ahead.
Good morning, sir.
Good morning.
Good morning. Due to connectivity issues, I wasn't able to join the call. I had a couple of issues first related to your writing instrument. What was the contribution of exports in value terms in FY 2023 and 2024? Could you please let us know in writing instrument?
Only export you mean, is it?
Export in writing instrument.
Export would be around 40%-42%.
Sorry, sir, you were not audible. Could you please repeat?
No, export would be 40%-42% of the total.
40%-42%. Okay. And last year it was?
It was a little higher by around 45%, 40%. I am not sure exactly, but that should be the figure. A percentage plus or minus.
Okay. If you were to look at both the markets, domestic as well as exports, what was the revenue breakup in terms of value and volume for writing instrument in FY 2024?
The volume and value, we have never worked on writing instruments. The number of people is not possible.
I mean,
I do not have it ready now.
Okay. Sir, like it mentioned that RM prices cooling down has been one of the reasons for elevated margins. But I guess your EBITDA margin in writing instrument is much higher than compared to other players. Is it due to the product mix? What is the average price point that you are playing in the writing instruments? If you could let us know.
All price points are there. We are not selling only INR 5 category. We are from INR 10 and above. Otherwise, all the price points, we are also there.
Okay. So, main reason behind such high gross margins would be, apart from RM cooling down?
I think why it is lower at the other level that I really need to check that. It has been historically there when the manufacturing even in Cello, that is when also we were almost 1.5x to 2x the margin of the other players. So I do not know really.
Okay.
I think we still feel that we are not at the top level of penetration.
Okay, sir. How do you see the market shaping up domestically and in domestic as well as exports for writing instruments in the next three to four years?
It will grow at, for next two, three years, around 12%-15%.
Okay.
Basically, allied products with writing instruments like markers and all, are growing also at a healthy pace.
Okay.
Consolidation will definitely happen in Indian market. The smaller players and all will be a little difficult for them to survive over the next two, three years.
My next question was, how much did bottles contribute in FY 2024 in value terms? If you could help us understand.
I do not have the separate.
Sorry?
I do not have the separate as such with me.
Oh, okay, sir. Generally, what gross margins do we make in the bottle segment, steel as well as PET?
There are different, because we have higher margin ones also, we have the lowest margin also. In one of the bottles, we have only around 17%-1 8% gross now. We have it at that level. Some of them are at 30% also.
But if you were to see on a basket level, let's say PET versus steel, there has been so much talk about it. How are you looking at it in terms of, let's say, gross margin at a basket level or a consolidated product level?
See, consumer goods is a basket. Every segment, we really do not go and focus on this. Yes, we have to where the demand will grow. That is what we try to escalate in our total basket. When I project a sale, I have my projections here. Maybe my kettle category will grow by 8% this year. My bottle category will grow by 15%. But we do not allocate every product different margin there on every category because there are almost 24 categories of products. We have a pocket. We have mug, we have washing laundry baskets. Every segment has a behavior that's different. On this basis, we never have thought of getting, what is the margin there, what is our margin in kettles, what is our margin in lunch carriers. We don't have that separate segment-wise thing.
Okay, sir. That is all from my side. Thank you so much.
Even more, if at all in next quarter I try to give, it will be much more better for the competitors than for our use in any case.
Okay. Understood. That is all from my side, sir.
Thank you. The next follow-up question is from the line of Keyur Pandya from ICICI. Please go ahead.
Thank you for the opportunity again. Just two questions. First, regarding this BIS standard. Do we expect any interim disruption in the sales? That is first. Second, whenever industry would require BIS standards for their sales in case of Cello, we would continue to import with vendors getting registered, or we will have our own facility or some domestic vendors. How will we replace this?
Yes, disruption will happen definitely. There is an opportunity also in this, and for some time, even our company could get affected. But overall, I think it will be an advantage over the long term with the BIS coming in. Manufacturing, we have already started thinking on it, and we have taken steps how far. But it will be always, if we manufacture also, we will only be able to manufacture around 20%-30% of the SKUs in India. 70% still will be on import side. Value might be 50%-30% over the next two, three years. But import definitely, you cannot make 100 SKUs with the size of sales you have. Because it will not be affordable. The cost will be much higher than what we are importing today. Till today, all the manufacturers in India are not being able to manufacture at the cost where we import from China.
The quality also is, till today, is much better from China than India. This will in future also remain an import and local both. It will get a combination. What today is 90% import, it might come to around 50% import, 50% local.
Understood. Noted. Sir, thanks a lot and all the best. Thank you.
Thank you. The next question is from the line of Ankush Agrawal from Surge Capital. Please go ahead.
Yeah. Hi, sir. Thank you for taking my question. Sir, firstly, on the fundraise, can you quantify what kind of amount we are looking at? Would it be like, say, INR 500 crore, INR 1,000 crore? Any broad range?
Can I say the number? No. The Board will decide, but I think so whether I do not know. I am really not sure whether I can speak on this.
Okay, got it. Secondly, on this thought process of fundraise, I mean, we had our IPO just a year back, and at that time, we did not raise any money. What has changed in this one year that we are now going for a fundraise?
See, six months back, we were not a listed company. We were running our own company, and now we really want to grow and outgrow. Wherever we were exploring opportunities when we were in the process of putting this glass plant, at that time, we thought of what is the capacity we are producing and what would be the market over the next two, three years. If I would have been an unlisted company, I think I would not have gone for the second plant for two, three years. We would have made a network, and then we will see. We are now into that. All the opportunities, even our plastic as I said earlier, I have some opportunities where we can look.
We are in the process, we are in talk with them, and which can happen and which can really add value to the company. These are the opportunities we try to explore only post-issue. If I were there as an unlisted company, I would not have tried to acquire any company because I would have tried to grow my own business at the pace what I wanted to grow. Now, if there are opportunities and you are in the listed space, you want to outperform, you want to grow much faster. That is why, instead of me, and as a compulsion in that, at a later date, I have to do an OFS to bring it down to 75%, because the promoter holding is at 78.06% today.
We thought it is better to take money in the company where we have a larger opportunity to grow, and if we have the money, I think the acceleration will be much faster.
Got it. That was helpful. Thank you.
Thank you. The next question is from the line of Karan Bhatelia from Asian Markets Securities. Please go ahead.
Thank you. Am I audible?
Yes, sir.
Yeah. Sir, this is with respect to capacity utilization across categories on FY 2024. How has our value-added portfolio done with respect to writing and stationery? Because we did mention of new product launches in stationery ware in FY 2024. How has been the value addition on the furniture side? These are the questions. Thank you.
Value addition?
Yeah, value-added portfolio in writing and stationery and value-added portfolio in furniture ware.
You can see by the numbers. Hello?
Yeah.
If you see, in furniture, sales growth is very less. 1.5% Of gross margins have gone a little down in furniture segment. Writing instrument has gone up by 5%.
That's right. What is the capacity utilization as on FY 2024 across categories?
Speaking in the glass ware, I can definitely say what is the capacity utilization in our consumer ware. Writing instrument, yes, to an extent, I can be sure or near about it. In plastic ware, normally, at least in injection molding, there is no capacity utilization. What is the product mix you are making? If I am making a bottle which is stainless steel inner, the price goes 3 times.
Right.
Right. If I am putting a plastic inner to plastic outer, the bottle sale is INR 70. If I put a stainless steel inner, it becomes INR 200. The machines are same, the people are same.
Right.
This utilization is in number of pieces I can take a modified projection to utilize. Mostly everything depends upon the scale of utilization over here. To increase the capacity, it doesn't take really too much of time. To reduce, you have to keep maybe one day off and that way. Unlike the furnace. Furnace, if 20,000 tons is full, it has to be full, and it is in tonnage. I cannot stop it to 18,000. I cannot scale it to 22,000. There is no other value addition in that thing, except for if you do gold line or something, every value, where you must say, "The tonnage can be only defined in any sector where it is tonnage-based." Value-based cannot give you a right answer of any capacity utilization. It's just a hypothetical figure.
True. Is it correct to assume that the CapEx outlay will not be more than INR 60 crore-INR 70 crore from your side?
Yeah. On general term, yes, definitely. That is the maximum what we are thinking.
Thank you, [inaudible] .
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. Over to you, sir.
I'd like to thank everyone for being part of this call. We hope we have answered your question. If you need more information, please be free to contact us or our SGA, our investor relation advisors. Thank you very much for being part of this call.
Thank you. On behalf of ICICI Securities, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.