Ladies and gentlemen, good morning and welcome to the Q4 FY 2025 conference call of Grasim Industries. 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 touchstone phone. I now hand the conference over to Mr. Ankit Panchmatia, Head of Investor Relations. Please go ahead.
Yeah, thank you, Rahil. A very good morning to everyone, and on behalf of Grasim Industries, I would like to welcome all of you to our fourth quarter financial year 2025 results and business performance discussion. Hope you have got a chance to refer to our results, presentation, and press release uploaded on our website and exchanges. Before we begin, I would just want to draw your attention to the disclaimer statement which is covered in the last slide of our presentation. Let me now introduce you to our management team present here with us on the call. We have with us Mr. Himanshu Kapania, Managing Director of Grasim Industries, and Business Head Devalavakar, RPH Business, and Mr. Pavan Jain, Chief Financial Officer, Grasim Industries. We also have with us Mr. Dhayant Dhobley, Business Head, Chemicals, Viscose, and Insulator Business, Mr. Vadiraj Kulkarni, Business Head, Cellulosic Fibers Business, Mr.
Rakshit Hargave, CEO, Birla Opus Division, and Mr. Sandeep Kumaraveli, CEO, Birla Pivot, our B2B e-commerce business. Without taking much time, let me now hand over the call to Mr. Himanshu Kapania for his opening remarks. Over to you, sir.
Good morning or good evening to all the participants who have joined this call from different geographies. I welcome you to Grasim Industries' quarter four FY 2025 investor call. It's an honor to be chosen as the Managing Director of Grasim Industries. Originally a textile company, Grasim Industries has charted an extraordinary path of growth, innovation, and diversification over the last 78 years to become India's premier conglomerate with strong presence in textiles, chemicals, building materials, and other industries. I joined the Aditya Birla Group in the telecom business in 1997. At that stage, the group was $2 billion in revenue, and dollar conversion was INR 36, with presence in textile, aluminum, and start of cement, telecom, fashion, financial services, and other businesses. In the last 28 years, under the leadership of Mr.
Kumar Mangalam Birla, the group revenue has risen to $66 billion, and the dollar conversion is high, thereby growing by 33x at constant currency. This superlative growth has been driven by, A, believing in India and global growth story, B, combination of building scale in existing business, and successfully diversifying to newer sectors. Similarly, the story of Grasim's transformation, which has delivered consistent 15% CAGR over a long period of 15 years, is akin to India's growth story. The company has incorporated multiple startups and seen through its journey until the unit becomes a fourth in itself. India is witnessing an unprecedented economic boom. India's rise has captivated the world's imagination. Very few in the world today have a multi-decadal runway of high growth, or Amrit Kal, as our prime minister called it.
Our economy is truly well poised to hit the $10 trillion mark in the next decade or so. The scale of our mission is now being matched by the scope of the infrastructure evolution set to unfold. I would argue we are not in just infrastructure development phase, but in nation building. And Grasim's diversified businesses are all set to play a pivotal role at the heart of this monumental nation-building endeavor. Our cement from UltraTech fortifies expanding highways. Our cellulosic brands like Liva and our renewable power fuel the passion for the new confident India. Our chemicals business supports varied applications across metal, construction, textiles, pharmaceuticals, and energy. Our renewables are making India more sustainable, and our financial services from Aditya Birla Capital give wings to aspirational consumers.
In the last 18 months, with the launch of B2B e-commerce business Birla Pivot and the recent launch of our paint business Birla Opus, Grasim embodies the spirit of an aspirational India. This India, teeming with dynamism, audacity, and penchant for disruption, finds reflection in both our paint and B2B business. In fact, these ventures mirror India's zest for innovation and its refusal to settle for status quo. In 2020, at the peak of COVID, when our group chairman asked me to lead Grasim foray into paints, I wondered, why paints? With a gleam in both our eyes, we found the answer lay in the bedrock of India's booming infrastructure, the construction sector. This sector alone is poised to command 9% of GDP, translating to $900 billion in around 10 years.
Grasim's deep insights into building material ecosystems honed over the years through brands like UltraTech and Birla White offered us a unique vantage point. Our journey into paint industry, therefore I discovered, was a strategic extension connecting the dots from the foundation to the facade across Indian homes. I also discovered that despite century-old decorative paint industry, India's per capita consumption stands at a mere 3.5 kg. This contrasts sharply with the global average of 10 kg per capita and drops against 25 kg per capita of 12 nations. For a country at the forefront of economic acceleration, India ranks at bottom 10% of the paint consumption. This reminds me of my telecom stint when India liberalized telecom services in 1990, but till the mid of 2010, and even after 25 years, India was amongst the bottom 10% of urban services adoption.
However, when large-scale investments came in to build huge capacities ahead of demand and industry focused on affordability, quality, technology, and coverage, India rose to a numero uno, the highest broadband usage in the world and the second largest in terms of number of mobile subscribers in the globe, helping India in an inclusive all-purposes digital journey. Therefore, in the context of paints, this represents a galactic opportunity. With rising per capita income, a young population, a booming real estate sector, a shorter repainting cycle, the potential for growth in paint consumption is immense. With all these factors, Grasim, both in 2021, made a long-term commitment to decorative paint business with a vision to redefine the industry with consumer-centric programs and practices.
They empowered us with repeat INR 10,000 crore investment to prepare for tomorrow with a single-minded purpose to revolutionize the decorative paint business and pass on the fruits of competition to the consumers. The paint sector is at the cusp of a similar transformative impact which will turn India's facades into a beautiful place loved by one and all. When I look back at the last four years' work, especially the last six months, I can say with pride on behalf of Birla Opus team that no paint company globally has ever launched in one shot factory operation, products, and services at the scale that Birla Opus has undertaken. It is a matter of pride to share that in less than six months of pan-India operations, as per internal estimates, Birla Opus by itself has become India's number three decorative paint brand.
Well done, team Birla Opus, ably led by CEO Rakshit Hargave, a strong, committed, and agile force of over 4,700 employees and lakhs of partners in the paint ecosystem. The driving factors for this early success include, number one, fastest capacity ramp-up in the world with five out of six plants commercialized till March 2025, adding 1,096 million liters per annum, in short, MLPA capacity in FY 2025, representing 21% share of the organized decorative paint capacity. All these plants are fully backward integrated with our own emulsion and resin polymer, key to delivering innovative products, consistent quality, and cost competitiveness. The company's paint plants meet stringent sustainability norms and are climate finance compliant as per IFP funding norms. Our final plant at Kharagpur is scheduled to be commercially launched in H1 FY 2026, taking our overall capacity to 1,332 MLPA.
Post-Kharagpur plant launch, Birla Opus capacity share of 24% in the sector will provide us the pathway to travel from existing high single-digit revenue market share to penultimate level of capacity share. Further, at the existing plants, Birla Opus has the ability to add 400-500 MLPA incremental capacity with minimum cost whenever the need for the same arises. The industry is also undergoing a structural shift with consolidation of players through merger and acquisition, and same expected to reshape the competitive landscape. Number two, fastest availability of near-complete portfolio of 176 products and 1,250 plus SKUs. Birla Opus is now competing across all six business categories in decorative paints, including interior and exterior water-based paints, including distemper, enamel paints, wood finishes, waterproofing solutions, and wallpaper and designer finish in the economy, premium, and luxury price segments, and institutional business.
We are delighted with the response received on our quality of products from retail and institutional customers and ecosystem partners, including architects, designers, contractors, painters, and dealers. Our luxury and premium products are now contributing more than 65% to the company's revenue, a testimony to Birla Opus quality of products. Our unique polymer synthesis process and hybrid composite polymer design has helped to create paints with outstanding dirt resistance, crack visibility, film integrity, excellent durability, high scrub, highest whiteness, and tough touch, addition to name a few. Number three, wide and deep distribution reaching every corner of the country across 6,600 towns in India. A network of 137 depots delivers across 33 states and union territories, supporting just-in-time delivery for the dealer network.
Also, Birla Opus is upgrading the consumer experience and is transforming decorative paint retailing by building front-office shine company experience stores known as Birla Opus Paint Studio in the metro and franchise midsize stores across 300 plus towns known as Birla Opus Paint Gallery. Our compact printing machines have healthy adoption across all dealers. Fourth, all-round positive feedback from all key users of our quality and acknowledgment of our exceptional paint performance features such as paint resistance, impeccable spotless finishes, spatter resistance, superior scuff resistance, extra washability, and enhanced coverage and opacity. Lakhs of painters and contractors encouraged with product quality, innovation features, and better economics have joined our exclusive painter and contractor app and are recommending Birla Opus products.
There is a quantum jump on the number of architects and interior designers' recommendation for Birla Opus products after they carry out rigorous tests on matrices such as textile peel, adhesion, aesthetics, finish, and longevity. Equally strong response from institutional clients with a number of sites executed has crossed five-digit marks just in six months across cooperative houses, large and mid-size builders, factories, and industrial units, government projects, including tourist attractions and religious places. Finally, the new age Birla Opus brand is seen as a challenger and fast establishing itself as an embodiment of India's rich heritage but modern, vibrant, and technological innovator. Birla Opus incorporates trust from the house of their loves, 20 essentially Indians with a beauty personified from Opus.
Our meaningful and memorable advertising campaign, heavily supported with a 360-degree media strategy, has helped in an exponential jump of all brand salience matrices, especially unaided recall, top-of-mind awareness, etc. In summary, Grasim's paint ventures represent the induct of the notable spirit of a startup which can be epitomized through five C's: creativity, courage, contemporary, choice, and collaborative. With these guiding philosophies, Birla Opus team dreams to revolutionize every facet of the decorative paint industry and pass on the benefits to all stakeholders. Moving on, as you're well aware, UltraTech sells white cement-based putty under Birla White brand. All decorative paint players include putty sales in their overall decorative paint revenue and volume reporting. Birla Opus does not sell white cement-based putty.
Therefore, on a like-to-like basis, Grasim's organized decorative paints present exit quarter four FY 2025 has crossed 10% revenue market share mark as per our internal estimates when revenues of Birla Opus and Birla White putty are combined. We'll continue to track these metrics. Separately, Birla White is aggressively expanding its putty manufacturing capacity with a recent announcement of acquisition by UltraTech of Wonder Wall Care Private Limited. With this acquisition, Birla White putty and wrap capacity at the four plants in FY 2026 will rise to 23 lakh metric tons besides 16 lakh metric tons of. Excellent shape from the 2010 prior announcements of various indicators. Government of India keeping those estimates. For white cement clinker manufacturing. Moving on to our digital venture, B2B e-commerce.
Launched in line with government's vision of creating digital India and empowering SME businesses, Birla Pivot has created a new age high-growth B2B e-commerce platform that helps them with procurement of raw materials across various sectors and catalyzes their growth by streamlining financing and supply chain gaps. Birla Pivot has made significant progress in FY 2025 across all fronts such as technology, revenue scale-up, category diversification, digitization, and working capital management. Birla Pivot has crossed annual run rate ARR of INR 5,000 crore based on exit quarter four FY 2025 in less than two years of inflection and achieved a 3.3x revenue growth over FY 2024. Hearty congratulations to Birla Pivot team earlier led by CEO Mr. Sanjeev Kumaraveli. The Birla Pivot platform now holds a catalog of more than 40,000 SKUs across 300 plus brands and audience in 35 product categories with private label portfolio of bathware, tiles, and plywood.
Birla Pivot customer base spans top-tier EPC companies, civil contractors, real estate developers, OEMs, fabricators, dealers, and retailers, etc. With successful deliveries in over 375 cities across 26 states and union territories, Birla Pivot has established a robust network of suppliers and logistics providers to facilitate a very seamless fulfillment experience. Moving on to, we have separately shared existing business performance including cellulosic fiber and yarn, chemicals, caustic and specialty, textiles, insulators, and others in the quarter four FY 2025 investor deck. Existing investors and analysts have already been tracking performance of these evolved businesses for a long time and are familiar with its journey and way forward. In summation, we are pleased to report that Grasim's standalone revenue has risen to its highest level at INR 8,929 crore in quarter four FY 2025, an impressive Y-on-Y growth of 32%.
This reflects the initial success of new businesses and sustained strength of our existing businesses. Further to the on the ESG front, we are happy to share that Grasim got listed for the second time in a row in the S&P Global Sustainability Yearbook 2024. Grasim also won the Master of Risk Conglomerate Award in the last CAP category at the India Risk Management Awards 2025. In conclusion, as new to this role, I see Grasim at the cusp of transformation with increasing share from consumer-oriented businesses. We'll be driven by the vast major opportunities in the Indian economy and the values and purpose of the Aditya Birla Group. Grasim now uniquely combines dynamism, frugality, and energy of a new age startup businesses like paints and B2B e-commerce along with muscle reliability and brand strength of well-established businesses in the textile, chemicals, and energy spaces.
We will not just grow but also nurture the ecosystem, enrich, live, and contribute to the foundational elements of New India. I take this opportunity to thank Mr. Pavan Jain, who is superannuating on 15th August 2025, for his stellar role played in shaping Grasim's transformative journey. I would also like to welcome Mr. Hemant Kedar, a Grasim veteran and a colleague of Pavan, who will take over from him as Grasim CFO from 16th August 2025. I now hand over to Pavan to give details on financial performance.
Thank you, Himanshu, for giving a detailed business review on the new businesses in the year gone by. I would like to add that our established core businesses, namely cement, cellulosic fibers, and chemicals, continue to deliver strong performance.
With market leadership across businesses delivering quality products to meet customer requirements and healthy cash flows, the core businesses provide both stability and strategic leverage. Some achievements in the year gone by in respect to our core businesses are: number one, cellulosic fiber has achieved highest ever revenue, annual revenue of INR 15,987 crore, growth of 6% YOY, primarily led by volume growth of 4%. However, the profitability of this business during the year was lower by 12% on YOY basis due to higher key raw material prices absorbed by the company partially. In Q4 and entering Q1, slight moderation in China capability utilization and higher inventory days have resulted in correction in global prices of cellulosic fibers, and at the same time, pulp prices have also started to soften.
As approved by the board, the work on the first phase of Lifecell fiber project of 55,000 tons per annum out of a total planned capacity of 110,000 tons at Harihar, Karnataka, the work has commenced. The new plant is expected to be commissioned by mid-2027. In chemical business, while available capacity increased by 300 TCD expansion at Vilayat plant in Q3 FY 2025, caustic cell volumes were lower by 3% YOY due to plant shutdowns at Karwar and Bibikuram for a few days during the quarter. Moreover, higher negative chlorine realizations due to continued oversupply and lower demand from end-user industries have moderated ECU growth. However, chlorine derivatives business performance is improving significantly with focused business development activities across product portfolio. We enter FY 2026 with full available capacity of caustic and specialty chemicals.
The projects of ECH and CPVC plants at Vilayat are expected to be commissioned around Q2 FY 2026. One highlight over the past three years, both cellulosic fiber and chemicals business combinedly have consistently delivered top line of over INR 20,000 crore with EBITDA of over INR 2,500 crore across cycles, reflecting the strength of these businesses. Cement business under UltraTech has been growing with total capacity expected to reach 215 million tons with estimated EBITDA per ton saving of about INR 250-INR300 by 2027. In financial services business with AUM now over INR 5 lakh crore, growth of 17% YOY, and total lending portfolio of over INR 150,000 crore, growth of 27% YOY, Aditya Birla Capital is one of the fastest growing NBFCs in India with consistently growing revenue and profits.
Happy to announce that the board has approved a final dividend of INR 10 per share, reinforcing our legacy of consistent shareholder value creation. This marks the 62nd consecutive year of uninterrupted dividend payments, a testament to our financial strength, resilience, and commitment to reward the shareholders through all business cycles. With this remark, I will now open the floor for Q&A.
Thank you. Ladies and gentlemen, we will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchstone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use their handsets while asking a question. One moment, please, while we poll for questions. The first question comes from the line of Amit Purohit from Elara Capital. Please go ahead.
Yes, that's right.
Congratulations for the excellent performance and hitting the targeted market share that you indicated in the last call. Two things I wanted to understand. One, on the dealer counts, if you could highlight what would be at the exit of March 2025, and how do you see that over the next, say, three years, reaching dealer counts? That's my first question.
Okay, so Amit, like you said, our objective was to hit 6,000 plus tons and try and track close to 50,000 dealers at the end of the first year. We are fairly close to where we had targeted. In terms of how do we look at it in the next couple of years, there is scope for more numerical dealer addition, which we believe, and, you know, there are dealers who want to join us.
There are also territories which we have not covered, but also along with that, we will consolidate on the dealer base that we have created and extract more counter share from them.
Sure. And sir, on the comment that 65% of the portfolio is on the premium and luxury side, could you just provide some insights into it? Because, I mean, what we would understand is that we have a complete range of products, but are we saying that in the emulsion segment as well, the premium side, or we are also thinking to include the waterproofing premium side or a wood finish premium? And, because that is significant, because what we understand is that the leader would also have a limited premium when we look at the emulsion side of the portfolio, because that market itself is small. Just clarification on that will be helpful. Yeah.
Okay, so you know the way we have structured our portfolio is that most of the products that we have are covered under three sub-brands: one, which is the luxury brand, Kalista with its premium, and Style, which is the so-called economy brand. Now, we have a branding philosophy where even our enamels are branded either a Kalista or a Style. So when we say this is not addressing only emulsion, but this is addressing the premium and the luxury segment in all the categories where we play, where we have these sub-brands leading them. That is the clarification. It is not only for emulsion.
Sure. Thanks a lot. And any targeted market share guidance you would like to highlight right now for March 2026?
No.
Like you said, we have achieved our first benchmark of high single digits, and for next year, the ambition is to, you know, be a double-digit player. I will lower for the—that's all we can add.
Okay. Thank you, sir. Thanks.
Thank you. Ladies and gentlemen, we request you to restrict to two questions per participant. The next question comes from the line of Rahul Gupta from Morgan Stanley. Please go ahead.
Hi, thank you for taking my question. I have a couple of questions on cellulose business. I remember there was some disruption in third quarter. However, fourth quarter volumes are still much lower versus Q2 levels. Can you please help us explain what's happening over there? That's my first question.
No, in terms of our volumes, the demand has been quite stable, except that in quarter four, we had seen some minor drop in the demand in the Indian market. We actually had to increase our exports. We have not lost any capacity. It is more about diverting some of this capacity to export markets. Plus, we also had increased certain specialty, kind of products because of which, you know, there is a certain change in the product table levels, changeovers, etc. There is no significant change in terms of our capacity utilization. Of course, there are certain machines that undertake maintenance on a periodic basis. On a quarter-to-quarter, you would see certain kind of variations in terms of volume.
Understood. My second question is that I see that your CapEx in the cellulose business in fiscal 2025 was much lower than what the management earlier targeted.
How should we look at this, for fiscal 2026? And, what kind of capacity can be unlocked by debottlenecking over the next couple of years? Thank you.
Yeah. One, year, we, you know, depending on how do we—at a Grasim level, how do we look at CapEx allocation? You know, various businesses get different kinds of CapEx allocation. So, in terms of certain non-critical CapExes, we have been take off this, I mean, in FY 2025. I think we have major projects ongoing now as far as FY 2026 is concerned in terms of cash flows. One, there is a Lyocell project, you know, setting up 55,000 tons per annum of capacity, you know, is being approved. So that project is started. In terms of—and also in terms of certain debottlenecking of pulp capacity in Harihar.
There is a couple of other projects which are happening in our Vilayat and Nagda plants for debottlenecking. They are on course. By end of H1, we would have a slight increase in the capacity of this first pilot. Our CapEx plants, all of them are now, they're going pretty well. While some of these capacities will get actualized later, the projects have progressed well, and we will have minor increase in the capacities in some of our existing lines by H1.
Thank you. The next question comes from the line of Percy Panthaki from IIFL Securities. Please go ahead.
Hi Rakshit. Congrats on reaching 10% market share, exit, first year. My question is, can you give some idea on what would be your targets for exit FY 2026 in terms of market share?
Also, can you tell me what is the total number of tinting machines that we have set up as of FY 2025 end?
Percy, you know, the 10% market share, you know, the double-digit market share that we have shared is actually the consolidation between Birla Opus and the Percy business of Birla White. Sure. Sure. All the paint companies also have Percy, but Opus by itself does not have. That is what we have given. Now, like I said, we are not giving a guidance or a target for next year, but Birla Opus by itself, by itself should be a double-digit share player is what our aspiration is. Whenever you add Percy onto it, it will obviously incrementally. Secondary, on the number of tinting machines, you know, we have a good tinting machine penetration.
Rather than giving an actual number, I can tell you that the tinting machine penetration that we have is close to 80%. Nearly 80% of the outlets we have open have the Birla Opus tinting machine.
Got it. Second question is if you can give some flavor, I'm not looking for any exact numbers, but some kind of flavor on what is the geographic mix and what is the product segment mix in terms of, are you strong in, of course, east, you've probably not yet had a plant, so it will be weak. Among the three regions, relatively which one is stronger, weaker, and in the product segment, that is, your premium, mid, and mass, where would you have relatively the best market share? Where would you relatively have the lowest market share?
Percy, I think, you know, even in the last two calls, I had mentioned that Birla Opus is truly a national player. We do not have too much of a variation between the best-performing regions and the so-called bottom-performing regions. We are doing well in most of the regions, but like I said, the spread is not anything different from 80-120. On what is selling well, you know, obviously our emulsion portfolio, and that was also, if you see over the last 12 months, we entered the market first with our emulsion portfolio, and then we introduced waterproofing, and the enamel portfolio came a bit late in the day because, you know, that was garment manufacturing and initially only two of our plants were making.
If you go by that sequence, our overall emulsion portfolio has got a very solid response, and that includes both, the luxury segment led by Birla Opus One and the economy segment led by Style. We have excellent uptake in both the exterior and interior segment. What I could say is that the quality differential, that we have been able to give in the products, which is easily discernible, is most easily discernible in the usage of emulsion. This is why the adoption of our emulsion range across style segments has been excellent.
To top that, Oil Dry, which is our waterproofing range, also has got excellent feedback, and Warren Roof 10, which is the plastic product, is, you know, it currently is also the waterproofing season, and I can tell you that it's extremely high demand, and the adoption from painters and contractors for waterproofing is also high. Our enamel entered the market, I would say, three to four months after the emulsion business, and also it took somewhat time because enamel comes in multiple sizes and small packs, so that took a bit more longer. Nonetheless, our enamels is also picking up, but yes, it could be trailing the emulsion business by a few months.
Apart from that, like you said, that we've launched the whole portfolio, we have designer finish, we have our hood finish, which is there, you know, so we have both the Italian range and the Indian range, and the market acceptance of all that is excellent. This year, we will only develop these categories even deeper, and we will also add more products to make these portfolios even more complete. That is how I would put it.
Thank you. We take the next question from the line of Navin Sahadeo from ICICI Securities. Please go ahead.
Yeah. Thank you. Thank you for the opportunity. My question first was in the paint segment related to premium segment and then the overall EBITDA losses.
Now, our understanding basically was that with the Mahad unit commissioning, the company will be able to offer a much larger bouquet or, in a sense, could emphasize more on the premium segment offering, so to say. In that context, I also had an observation that amongst the large competitors, premium segment actually contributes over 50% of EBITDA. First of all, is that a fair understanding that premium or those premium segments from Mahad plants will be the niche offering or the main offering, and hence overall portfolio will tilt or focus on that? In the same context, if that profitability in that segment is high for peers, will it be fair to say that Birla Opus EBITDA losses would see a significant reduction as part of this?
Naveen, I would like to correct each of your statements.
Directionally, you might be hinting at the right thing, but number one, Mahad is making the same product which is being made at all the other factories. Mahad is not adding anything new. My understanding is when you use the word premium, you basically mean in paint there is a luxury segment, there is a premium segment, and there is an economy segment. I assume that you mean both the premium luxury segment. Am I right? Yeah. If that is correct, Mahad has not added anything new. Mahad only gives us, you know, great geographical presence and allows us to equate our distribution more economically. It produces the whole range. It produces solvent also and emulsions also.
From a profitability or a loss-making point of view, I think the assumptions that you are making, yes, all the companies, you know, emulsions is the most profitable category, but our emulsions are manufactured in each of the five factories and also in Kharagpur will still go into pricing next year, next month. I do not think there is any business differential coming because of Mahad. Like you said, our emulsions are doing well across the three price segments, and they will deliver as well.
Only incrementally, I will add that the advantage of strategically located plants is in the freight and logistics cost. That is the benefit that will accrue to us as more plants coming up. With Mahad, you can see from our results also, there is improvement in our freight cost, and this will further go down with us, with Kharagpur.
Previously, there was somebody comment that our presence in east is not there. We'd like to correct that. We have a full presence in east as well. Those applied from northern, western, and southern parts of the plant. Once Kharagpur comes up, it will give us the logistics, cost reduction.
Kharagpur will reduce the per kilometer per liter traveled, by the average of us product.
Understood. That's clear and helpful. My second question was in the B2B e-commerce space, and glad to know we have crossed the annual run rate of INR 5,000 crore in the quarter. Here, I just wanted to understand if the target seems to be now, like, you know, very much in reach and much sooner, probably.
But from a profitability perspective, is not the run rate of INR 5,000 crore itself helping us to turn positive at the EBITDA level, or you think, no, it still will need more time to be profitable? If you could just give some directional guidance, it would be very helpful. Thank you.
Okay. Thanks, Naveen, for the question. This is Sandeep here. So a couple of pointers on what you were mentioning. Yes, on the scale-up part, we have been doing pretty well, and every quarter we have been seeing consistent growth because of our increase in the number of categories that we are present in and also the geographies that we cover, which has really helped us, you know, grow our customer base and also the overall revenue.
Also, a lot of the things that we are doing on the technology front, whether it is our logistics capability or providing end-to-end visibility for our buyers, we also have been, you know, a steep growth curve. As you rightly hinted, our earlier stated goal of hitting the INR 8,500 crore, which is a billion dollars, will probably get there faster if we continue on this growth rate. What we had earlier also stated is that at that particular scale is when we will probably break even at an EBITDA level. We are still a new business. We started around two years back, and we are probably one of the fastest growing B2B e-commerce platforms to have hit this scale in two years. We still remain in the investment phase. We are still building our, you know, overall teams, our technology capability.
A lot of what we build is built ground up given the complexity that is involved in how a B2B e-commerce platform needs to operate. We continue to invest in that, continue to build, continue to build capability around our logistics infrastructure, around, you know, how we build seamless fulfillment experience. Those investments will continue even into the next year. At the scale that I mentioned, we should be breaking even at an EBITDA level. That's our guidance right now.
Thank you. We take the next question from the line of Praful Kumar from Dymon Asia. Please go ahead.
Hi. Good morning, sir, and thanks for the opportunity. Sir, many congratulations on a great, you know, Birla Opus performance. Just one question, you know, when we launched the brand, we had a INR 10,000 crore top line in three years vision.
Given this, you know, macro slowdown that we are seeing and the seasonality in the S2, which, you know, if we analyze over time, how do we, you know, intend to reach that, you know, target in terms of top line? Because a lot of distribution and initial, you know, excitement about the brand is already that we are seeing in the quarterly run rate.
The INR 10,000 crore guidance, within three years of full-scale operations, obviously takes into account that here is a long period, and you will have periods of some slowdown and periods of growth. As far as we are concerned, we are absolutely positive that the medium-term outlook will definitely improve while the market has been slow. I think a couple of quarters here and there does not really worry us because the outlook for India is going to be bright.
We do not really have to, you know, we manage the things. We will navigate through that.
Fair enough. Fair. Sir, second question is on the pricing. Any, any, you know, given the leader is obviously you are taking market share. Any action on the pricing that we have seen lately in the market, and how is your brand positioning versus the leader in terms of pricing today?
You see, there are two aspects of pricing. What is really relevant for the consumer is what price is he paying to buy Birla Opus, which means what price dealers are charging the customers. There, the dealers are charging the same price as the market leaders. Birla Opus is able to charge the consumers at a very fair price.
In terms of other aspects, yes, we have seen that maybe in the economy segment, some of the competitors have tried to drop some prices, et cetera. Those are all factors in the plan. As we are concerned, we are giving great value to our customers. We are also having a unique proposition that on the 20-liter and 10-liter emulsions, anybody who buys us gets 10% free, which is actually going to the end user and not going to the dealer. That makes our value proposition very strong. From that point of view, we are well placed, and we anyway want to market wherever we need to make any corrective measures.
Sir, thank you, sir, and all the best, and congratulations again.
Thank you. The next question comes from the line of Nirav from Anvil Wealth. Please go ahead.
Yeah, thanks for the opportunity.
I have two questions on the chemical side. The first is like, when we see two bigger players putting up their caustic chlorine plant for captive chlorine requirement and existing players also putting up the downstream chlorine plants, is it a possibility that industry dynamics would change over a period of time in terms of chlorine pricing improving on the positive side? Your thoughts here. Also, XOF pipeline, what is our chlorine consumption internally, and how this ratio would look like once our CPVC and ECH plants are commissioned?
Yeah. I'm sitting a bit far away from the phone, so I was not sure. I hardly get any chemical questions, right, except you. Hey, so a couple of things. Look, India, as you know, is a country with a very strong domestic consumption growth, right?
You can do a calculation, roughly 700-1,000 TPV per year is the organic growth of the industry as far as cost is concerned, right? Domestic growth in India is going to grow strong. You know all the macroeconomic indicators. I think the first point I want to make is whatever excess capacity or new capacity comes into India will be absorbed by the Indian market through its natural growth, right? That is the first point. Second point, as you correctly mentioned, the capacity is coming in essentially our PVC capacity. Now, India, of course, is importing PVC. Correct. PVC ultimately is a zero-sum game, right? PVC demand is not going to increase just because, you know, there are two large plants in India.
Somewhere, the higher-cost plants, and my guess is those will not be in India, would have to reduce their operating rates, right, because cost is their buy first. From that perspective, and then there are certain players in the industry maybe who are less integrated, have a higher cash cost position, et cetera. From that perspective, while we may save one or two years of choppy waters, it is unlikely that there is going to be a longer-term structural impact on the industry, right? Again, you know, mainly because domestic demand is growing, you know, Indian capacity of PVC will substitute capacity of PVC somewhere else. Within the Indian industry itself, there will be some amount of optimization. I think the second point you asked is on integration.
We basically look at overall integration, you know, which is after completion of our existing project, going to go from 55% to 70%, and we are reasonably happy with that level of integration. I will also tell you why we are reasonably happy with that level of integration. Because the newer capacities which are coming in related to PVC will be fully chlorine integrated. Chlorine demand typically grows 3%-3% or so faster than caustic demand, right? Over time, you will see the result of the PVC capacity additions will mean that the net chlorine available to the Indian market is reduced. To that extent, the negative chlorine, you know, will also start becoming less negative, right?
Correct. The second question is on the epoxy side.
We have seen good sequential growth in the top line from the epoxy division. How do you see the volumes of epoxy ramping up in FY 2026 over the FY 2025 base? With this tariff scenario playing out, do we see opening up of newer businesses in the export markets in terms of newer applications like advanced composites, thermoplastics, et cetera? Thank you so much.
Yeah. I'll answer your second question first, right? Right now, what is happening is because of the entire tariff situation, the global flows are very uncertain. You know, everybody is in a kind of situation where they buy only what they need. This will take a little bit of time to settle down. Now, assuming there will be differential tariffs from different countries, in some cases, of course, India will have an advantage, right?
While our current export volume is small, we may get some upsides, and we may even get some ability to provide, you know, formulation products to countries outside of India. Having said that, the majority of our epoxy sales actually are catering to domestic industry. They're catering to domestic demand, which continues to be strong and robust. If the tariff situation creates any opportunities for it, you know, there will only be upsides. I have to also say that some of it may also be countered by a few downsides. As you know, there is a Korean FDA that the industry is unhappy about on imports and epoxy from Korea. It is a bit of a fluid situation, you know. I can paint scenarios, but I can't tell you which scenario will actually work out.
Again, most of our epoxy sales, by and large, are catering to domestic demand, which, over time, will continue to grow. We expect the epoxy business in India to have a solid growth rate, and we will continue to participate in that growth and continue to maintain and increase our market share.
Thank you. We take the next question from the line of Shreya Banthia from Oak Lane Capital Management. Please go ahead.
Hey, congratulations for the great set of numbers. My question is also regarding the chemical division. Am I audible? Yeah, yeah, yes. Audible. Yes. No worries. If you could just focus on the capacity utilization of the epoxy plant and what was the bifurcation into your liquid epoxy and the value-added product? That would be my first question.
I will not answer the second question.
You know, that is trade-sensitive for us. You know, I would be giving a, okay. I understand. If I disclose that number, neither will I actually disclose the exact utilization of my epoxy plant. I will continue to maintain that, you know, we have a high market share, we are an industry leader. We continue to maintain our share, and we continue to grow our share.
Okay. Understood. What was the negative chem, chlorine, realization for the quarter and for the year?
Yeah. Chlorine realization last quarter was not so great, right? It's not the lowest it even touched, like, minus INR 9,000 or something. However, it is showing an improvement, improving trade since then.
For the full year, sir?
For the full year, negative chlorine realization was in the range of about, you know, INR 6,000-INR 7,000.
I won't quote an exact number, but in that range.
Thank you. We take the next question from the line of Sanjeev Kumar Singh from Motilal Oswal Financial Services. Please go ahead.
Thank you, sir. Thank you for the opportunity, sir. My first question is on the paint business. So we have given in the investor presentation that B2B e-commerce annualized revenue rendered was around INR 9.50 billion in this quarter. Does it mean that the revenue was closer to INR 12.5 billion-13 billion, and this was from the paid revenue? Also, if we exclude the putty business, then is our market share closer to 7.5%-8%? Would you like to set some interim targets for losses? We have said that we will be profitable when we reach the revenue of INR 10,000 crore.
Does it mean that we should look at a situation that we will be a bit abbreviated and only then we reach at INR 10,000 crore, or it could be prior to that?
I think you talked about the revenue of B2B e-commerce business, but, you know, the Birla Opus is separate, and our B2B business is separate. I'll focus on the Birla Opus part. On the Birla Opus part, we said that the market share of the putty business and the Birla Opus paint business put together is in double digits. Like we said, Birla Opus by itself is in high single digits. You can work backwards as you see live, but the number will come in the same ballpark range we're talking about.
As far as profitability is concerned, we said our ambition is to be INR 10,000 crore in full-scale three-year operation and be a bit of break-even. Now, whether I break-even at INR 10,000 crore or whether I can break-even at INR 9,000, 9 and a half, somewhere in the journey in that ballpark range, we will manage it as we move ahead. That is the, that is the guiding point. I think that's how you should read that number. And just to clarify again, the B2B business is a separate business, and they have, you know, declared annualized INR 5,000 crore, and Birla Opus is separate with the market share, the kind of market share that we're working on.
No, so what I meant is that our building material business segment, if we exclude UltraTech, is closer to INR 2,100 crore, and B2B business, if we go by the presentation number, is around INR 1,250-1,300 crore. So paint business comes out to be around INR 900 crore. That is what I meant when I quoted this number.
So yeah. I think we do not need to—you have right to calculate on that. We are not giving any further diagnosis or the numbers that we share. That is your working, and, you know, you, so we appreciate your working, but like, you know, we also, Pavan has declared on earlier calls also, that at a suitable time, we will share all the numbers. I think we should take that directly.
Okay. My second question is on VSF. So how is global demand supply now?
Because I am seeing that there has been a pressure on VSF prices. At the same time, pulp prices are also coming down. Does it mean that all the benefits are being passed on by global players also, because of the weak demand situation, or do we need something different into this?
The demand, actually, in terms of operable demand globally, is muted. It's not growing big time, but China has seen a dip. The demand has also decreased from mid-April onwards because of tariff uncertainty. There is some kind of wait-and-watch approach being taken by the value chain players, which is getting a little better now. I think the price corrections you see are on two counts. One is because China demand has slowed down.
and of course, China has a large capacity, so they determine how, you know, prices play out. Two, yes, pulp prices have significantly come down from, in the last two to three months. Yes, part of it is also, that is also helping, you know, contain in terms of margin. Obviously, when the pulp prices drop, there is also an effect on the prices in the market. Let's say you're right on both counts.
Thank you. The next question comes from the line of Prateek Kumar from Jefferies. Please go ahead.
Yeah. Nothing, sir. My first question is on both VSF and chemical. Firstly, on VSF. We have ended this quarter at, like, a seven, eight-quarter low, unit EBITDA per KV, for the segment, with the declining prices for both pricing, the top line and the cost, as you said.
You're looking at even weaker performance, like, in the first half of FY 2026, or this is the bottom of eight quarters which we have made, like, in Q4. In the chemical business, my question, we have now hit a 1.5 million capacity there. Do we expect to grow past, double the industry growth in FY 2026, or, like, in normal industry growth, at probably 5%-7%, because that has been the kind of growth in past few quarters for the segment?
On the VSF profitability, Ms. Vadiraj has already shared in the last question that there is a kind of uncertainty because of these tariff issues globally, different countries playing out that tariff issue. There is a demand slowdown in the China market. To that extent, yes, there is a weakness.
We don't give the guidance for FY 2026 kind of profit numbers. We have given you the macro kind of situation. As the, I mean, the tariff uncertainty situation has a better clarity about the, I mean, how the sale is going to pan out, I think we will have to, till then we will have to wait and watch kind of situation.
In chemical, yeah, I take the chemicals question Jayant here. Look, you have correctly pointed out our headline capacity number, but as we have declared in the last couple of calls, including this quarter's call, we have had a few technical issues in our plants where we have lost a, you know, few percentage points of utilization.
As we go into next year, we will be benefited by the improving reliability of our plants, and, you know, we are already starting to see that, plus the market growth. If you look specifically at next year, then we will be able to grow equal to and probably higher than the market because our plants will, you know, will perform back to their usual level of utilization. The last three to six months have been a little bit abnormal for us. If you look at the specialty chemical part of our portfolio, we have more than sufficient capacity in our chlorine derivatives to continue to grow with the higher growth rate of the chlorine derivative industry that usually grows, you know, 2-3 percentage points faster than the base cost.
It is a portfolio, so, you know, capacity calculations are complicated, but what I can indicate is that we have enough capacity to grow, equal to the market. In the same line for our epoxy portfolio, we have more than sufficient capacity both in base resins, formulations, and specialties to grow with the much higher growth rate of the epoxy industry. I think you can expect equal to or possibly above market growth for next year.
Thank you. We take the next question from the line of Sheela Rathi from Morgan Stanley. Please go ahead.
Thanks for taking my question. My question is on the paint sector. Just want to understand as we, you know, are in F2026, given the current demand scenario, and also the competitive landscape, from your lens, how do you see F2026 panning out from a growth perspective?
Also, is there a need for us to, you know, embrace higher discounting this year versus what we have done last year? That's my question.
Okay. Sheela, if you look at it, from a UMHS run-by point of view, if you exclude Birla Opus, then the market has actually been negative. Right. It has been, the market has actually been negative. If you add Birla Opus, then the market has been positive in low single-digit numbers. What we see today is that the market is still slow, and while it will be difficult to predict how FY2026 would go, it could be that FY2026 remains a low single-digit growth year. Obviously, the basis for last year are also low, so, you know, that could be slightly different.
Now, whether you need to do price discount is a strategy which I think the other players also have to decide what to do because usually when you do a price discount, it leads to more price discounting by all the players in the market. What ultimately is needed is that the end consumer who's using should get the product at a lower cost, which is not usually guaranteed. We will have to watch in terms of how the price evolves in the market. As far as we are concerned, we are giving good value, and, you know, we will continue to do. Yes, the market seemingly at the moment seems to be on the same track as it was in the last quarter.
Understood. Just one follow-up.
You know, when you talked about luxury premium segment to be, you know, 65% of revenues, and I know you clarified in one of the earlier questions, just want to understand, is there any market flavor which you can add here as to which markets are kind of accepting these kind of products?
You know, luxury and premium products actually sell across India. While yes, there are certain markets which sell, for example, Kerala sells a very high proportion of exterior luxury. Gujarat sells a very high proportion of interior luxury. There are definitive markets, and, you know, up north, Punjab, they sell a lot of high-value wood finishes. The market behavior, for us, from a luxury premium, our products have some acceptance in all the luxury.
You know, because we've done a lot of work with contractors, and contractors are able to appreciate the quality of products. From our point of view, there are markets where these categories are already big, but as we are still a single-share player, we have found acceptance everywhere in all regions in all over .
Incrementally, I'll add that, in aspiration, consumers today want to upgrade their quality of paints. We are a bit surprised that the industry has been downgrading their products by offering the larger screens at the lower end, while the consumer aspiration is more at the medium and the upper end of it because more as they want to upgrade their quality of homes and their focus is to get better aesthetics.
Whether it is in wood, whether it is in waterproofing solution, there is more demand for a 10-year plus product. The same applies to emulsion products, both interior and exterior. Even in wood finish, clearly demand is more on the luxury and premium side of the product. There is an overall trend change. While Rakshit did mention there is a slowdown, I believe the slowdown was more led by over-focus of industry on the, by downgrading their products. As the price stabilization happens, the industry will come back to its natural double-digit demand. The volume was not the slowdown. The issue was primarily on the value drive. Once the overall industry focuses on the mid to higher-end of the product categories across all the business categories, you will find the industry should come back to double-digit growth.
We are very confident of that over a period of time.
To add, we had done a lot of research, you know, before we were launching, and it was very clear that even the so-called lower LSM or lower FCC consumer was of the opinion that if I'm going to paint my house once in five, six years, I actually want something which is good in quality. Hence, focusing on the higher value and quality products, if the industry works on that line, we'll actually benefit for it.
Thank you. Ladies and gentlemen, due to time constraint, we take the last question from the line of Rohit Nagraj from BNK Securities. Please go ahead.
Yeah, thanks for the opportunity. My question is on the chlorine alchemy business. In the earlier question, you alluded about the chlorine situation being on the long side.
Given that the chlorine will be captively consumed for CPVC by the group players, and there will be a long on the cost side, what's your perspective in terms of the ECUs, whether structurally the ECUs will be closer to, say, 30-plus prices, or there is a possibility that the current kind of ECUs and slightly improving trend, we will be able to see even those, even after those capacities come in? Thank you.
Yeah, your question is very similar to the question that Mira had asked. So I'll give a similar reply. Remember, the pricing of caustic in India is set by import parity. Similarly, pricing of CPVC in India is set by import parity. Now, when these large CPVC players come in, it's not going to change India's demand significantly, right? There will be a substitution potentially of imported PVC by Indian PVC.
Correspondingly, PVC operating rate outside of India will come under pressure. You know, if you study the markets in North Asia, you will realize which are the higher cost PVC producers. Correspondingly, supply of caustic in the international market will also come under pressure. Ultimately, as I mentioned earlier, you know, it's a big market. Caustic is a very big market. There are many moving parts than only, you know, the PVC capacity that is coming into India. We do not feel that structurally over the long term, it will have a negative impact on caustic prices. However, there will be certain quarters where there will be demand-supply mismatches, price dislocations will happen. There will be more volatility for sure, but it's not like, you know, there is going to be a structural issue in the industry.
At least that's not what our thesis is.
Sure. Got it. Thanks. Second question is on the ECH front. The ECH that is coming up, will it be completely replaced for captive consumption? If so, will there be additional requirement which will be taken from the market, that we are probably currently doing?
Sorry, I only answer one part of your question. Yes, the ECH project that we are doing is meant for captive needs. What my commercial strategy is on ECH, I would not like to disclose on this call.
Sure. That's all from my side. Thanks a lot and all the best.
Thank you. Ladies and gentlemen, with that, we conclude the question and answer session. On behalf of Grasim Industries, that concludes this conference. Thank you for joining us, and you may now disconnect your line.