Eveready Industries India Limited (EVEREADY) Q1 2027 Earnings Call Transcript

Ladies and gentlemen, good day, and welcome to the Ever-Ready Industries India Limited Q1FY27 earnings conference call. 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 touch-tone phone. Please note that this call is being recorded. I now hand the conference over to Mr. Pat Chauhan, from AdFactor PR. Thank you, and over to you, sir.

Good evening, everyone. Thank you, and welcome to Ever Ready Industry India Limited Q1F527 earnings conference call. We have with us Mr. Anirban Banerjee, Chief Executive Officer, Mr. Vivek Agarwala, Executive Director and Chief Financial Officer, and Mr. Anirban Ghosh, GM Finance and Head of Investor Relations. Before we proceed with the call, I would like to mention that some of the statements made in this call may be forward-looking in nature and may involve risks and uncertainties that are difficult to predict. The company undertakes no obligation to update any forward-looking statement to reflect developments that occur after the statement is made. Documents related to the company's financial performance, including the investor presentation, have been uploaded on the stock exchanges and company's website. I now hand over the conference call to Mr. Anirban Banerjee for the opening remarks. Thank you and over to you, sir.

Thank you. Good evening, everyone, and thank you for joining us for Everett Industries earnings call for the first quarter of the financial year, 2027. We have already circulated a detailed presentation on the company's performance during the quarter, and I hope you found the information useful. I will highlight only the key points. First, I would like to quickly touch upon the operating environment that we experienced during the period under review. The water was characterized by a dynamic operating environment. While consumer demand remained resilient across our key categories, global businesses continued to navigate persistent geopolitical uncertainty, supply chain disruptions, and inflationary pressures. Commodity markets remained volatile, with currency fluctuations adding further uncertainty to input costs. Despite these macroeconomic advancements, our focus remained on disciplined execution, prudent price actions, and delivering sustainable, profitable growth. Zinc prices continued to remain elevated at around $3,500 per tonne compared to levels of below $3,000 per tonne during a major part of last year. In addition, several key raw materials, including electrolytic manganese dioxide, electrodes, acetylene black. Lighting products and components also witnessed inflationary trends. While these factors exerted pressure on our cost structure, our calibrated pricing actions and continued focus on operational efficiencies enabled us to protect our margins and maintain profitability. During Q1 FY27, Everity delivered another quarter of resilient financial performance, marking its seventh consecutive quarter of year-on-year revenue growth. Revenue for the quarter stood at 407.7 crores, registering a growth of 9% year-on-year. EBITDA came in at 61.5 crores while maintaining an EBITDA margin of 15.1%. Profit after that stood at 37 crores, representing a growth of 22.3% over the corresponding quarter last year. These results reflect the strength of our business model and our continued focus on profitable growth. Coming to the battery business, the segment delivered another strong quarter, recording a 11.9% revenue growth, supported by healthy performance across both alkaline and carbon-linked batteries. Our alkaline battery portfolio continued to be the key growth driver, delivering close to 48% volume growth during the quarter. But we also... Strengthened our position in the premium battery segment with our market share expanding to 18% within the alkaline sector, reflecting results of our premiumization strategy. The category remains a significant long-term opportunity for Everdee, and we remain committed to strengthening our leadership position through investments in manufacturing facilities, innovation, and distribution channels. Our carbon-zinc battery business also delivered a stable performance, delivering volume growth commensurate to the industry. Through calibrated pricing actions and continued focus on scale efficiencies, we were able to protect profitability while reducing manufacturing costs across our legacy portfolio. An important milestone during the quarter was the commencement of commercial production at our Jammu facility on the 29th of May. The plant strengthens our manufacturing capacity, improves operating leverage, and supports expansion of our alkaline battery business. The facility provided us with scale, flexibility, and supply chain resilience required to support the next phase of growth. The Jammu facility also opens new opportunities in white labeling and export markets, strengthening our ambition to emerge as a globally competitive manufacturer in the alkaline battery segment. During the quarter, we also witnessed strong growth across our digital channels, particularly through Q-commerce, quick commerce, and e-commerce, showcasing changing consumer buying preferences and the strength of our omni-channel distribution strategy. Moving to our flashlights, the overall demand remained soft due to delayed onset of monsoon, which Deferred seasonal demand and resulted in lower volumes of conventional battery-operated flashlights. Overall, the segment revenue declined by 6.7%. Our rechargeable flashlight portfolio remained the key growth driver, delivering over 20% revenue growth during the quarter. Growth was supported by continued product innovation, premium product offerings, and increasing consumer adoption of rechargeable solutions. As consumer preferences evolve, rechargeable flashlights continue to offset the structural slowdown in the traditional battery-operated segment. We are also actively working toward expanding the usage of flashlights beyond their traditional rural and seasonal applications by developing products suited for urban consumers and newer everyday use cases, thereby broadening the addressable market for the category. We also introduced our hybrid flashlight, Everity's first patent-applied flashlight product, which combines the convenience of rechargeable technology with the reliability of conventional batteries. Our lighting business delivered an encouraging quarter, registering healthy 13.7% growth. The business benefited from strong demand across key product categories, while the pricing environment showed signs of stabilization after a prolonged period of price erosion, improving revenue visibility and supporting margin resilience. We also witnessed healthy volume growth in our higher margin categories, particularly emergency LED bulbs and electrical accessories. Reflecting the strength of our product portfolio and market execution. As the lighting industry continues to evolve with increasing adoption of energy-efficient LED solutions, we remain focused on strengthening our portfolio through premium offerings and innovative products. We also continued to expand our presence in adjacent electrical categories with our electrical accessories portfolio gaining momentum, led by the encouraging performance of insulation tapes and the introduction of products. such as wires and MCBs. Innovation continues to remain central to Everdee's long-term growth strategy. During the quarter, we launched India's first portable liquid mosquito vaporizer, an innovative mosquito repellent solution. Featuring a rechargeable battery-powered portable design that enables consumers to carry the liquid vaporizer while traveling or within the rooms and indoor, etc. This represents amenities first. Patent-applied innovation in the anti-mosquito liquid vaporizer category and has been launched across select markets. The quarter also saw the launch of a rechargeable flashlight, better known as shore, with the feature of an animal alarm for farm protection. The torch is designed to help farmers protect crops from animal intrusion through a powerful combination of light and sound, having a 100-dB alarm combined with a red UV strobe light. Within our emergency portfolio, the company launched the extra bright emergency LED bulb. Offering double the illumination provided by an emergency bulb during a power cut for a superior lighting experience. We also continue to reinforce our leadership as a market leader in the organized mosquito racket category. Looking ahead, we remain optimistic about sustaining our growth momentum through the remainder of the year. Our premiumization strategy continues to gain traction. Investments in manufacturing and innovation are beginning to yield results. And our distribution network continues to expand across both traditional and emerging channels. While commodity prices and currency movements We remain key watch areas. We remain committed to taking timely actions to protect profitability while delivering sustainable long-term value creation.

Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on their touchstone telephone. If you wish to withdraw yourself from the question queue, you may press star and 2. Participants are requested to use answers 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 Shivam Jain from CounterCycler. You may proceed.

Hello. Hello.

Yeah, you are audible. Carry on, please.

So, my questions are on two fronts. Firstly, on the dry tail part, our presentation is mentioned that we have currently 58% market share.

Here it must be 50%.

Thank you. Who's expense are we getting this market share and what progress are we getting back in?

Sivam, your voice is completely breaking and it is not audible to us.

Hello, am I audible now?

Bit better.

My questions are on two brands. Firstly, on the market side. Our market share in the drive-thru segment has grown from 50ish levels to 58 currently as per the PPT. So, I just wanted to understand on whose cost are we earning this? Second would be that Amazon basic has launched their product SKUs around battery. So, some opinion on that front. Are we facing any competition on that? How large is our e-commerce and that part of portfolio? Second would be on the regulatory side, if you could help us or do an update on the BIS prompt and meeting India, any competition from the Chinese front and the extended producer responsibility side of any cause that we are going to incur or incurring currently.

I think the question is three parts. You have a question on market shares. You have a question on BIS. You would also like to know more about the compliance, etc. So I'll address from a market share point of view, our growth in market shares typically are coming from the alkaline sector. So when we mentioned during the call that our alkaline market shares now are hovering around 18% and moving upwards, while that being said, our larger market shares are held by the carbon zinc, which are mainly broadly about plattish in nature. And as a result, the more the alkaline continues to grow, and the more the salience of the alkaline within our mix also starts increasing, you know, we will, the overall market shares will also tend to move up in the given future. As far as, you know, the BIS is concerned, the BIS on flashlight took the entire of last year to be implemented. So, as of today, the on-paper implementation is complete. What needs to be seen currently is the absorption and the adoption of the BIS with many of the non-branded organizations within India, and that is a compliance that will need to be driven further, and we are yet to see. That being played out in the market, that being said, our, you know, our flashlights are completely compliant with the BIS norms, and all our production facilities are now producing geared up and producing only BIS-available flashlights.

Shivam, and I think what you have referred to, one point, we just add what Anirvan is talking. So, you have seen in investor presentation, this 58% market share has been given on the carbon zinc sector, okay. So, it is especially for the carbon things. Now, coming to the two points of BIS, what Anirvan has said. So, we are fully compliant, and we are looking forward that very rigorous implementation of the same. It is just January this year only started. So, it may be a two to three quarter. It may take time, as we see. With respect to the EPR compliance, there are some operational and with the pricing mechanism, there are some challenges for which we are working with the Ministry of Environment and Climate Change and also the Pollution Control Board.

Thank you. The next question is from the Ryan of Saloni, from Molecule Ventures. Please proceed.

Hi, good afternoon. Good evening. So, my first question is regarding the Jammu plant. In the past, we have mentioned that since we used to earlier import and now we will be manufacturing from our own plant, we can expect a higher operating margin. So, can you give us a guidance on what kind of OPM were we earning from the alkaline sales earlier versus what we can expect to earn at 100 crore level, let's say in first year, and at the peak capacity level at 400 crore level?

So, you know, just as Anirvan mentioned the call, just the end of May we have done the commercial production of this plant. And as we said that in a very sustainable capacity utilization, at least we are looking for 10% margin increment from our Jammu plant. So this is the year of beginning, this is the first year, like, so we will be stabilizing. And, but when after a year and so when fully stabilized, we expect definitely a 10% margin up there.

So, when you say 10% margin increment, you mean 20% operating margins from that plant, right?

No, no. So, let's say a gross margin. When you go for any SK, in particular SK size, you know, what is the margin health of the particular product is the gross margin of the product. So, I am talking about that gross margin of the product will be a 10% up.

Okay. And any idea on the operating margin, sir? As in when it scales up and you must have an idea of optimum utilization, some kind of a margin fee would be expected to own.

Today, if you see alkaline is around 6-7% of the total portfolio increase, total portfolio of the company, right? So, gradually, as we intend to see more than 50% growth is coming in this category. So, you can just calculate that, you know, if it is 6-7% of the total portfolio and then 10% on that increase, what bottom line impact will be there. Thank you.

Sir, the next question is regarding the cannibalization effect that is happening. So, at the end of the day, the customers that we will be targeting for the alkaline product is the same as the carbon zinc product. It's just that the value addition is happening because of the price point being high in the alkaline category, which would, you know, lead to some increments in the… So, the sales growth as such is not shifting significantly due to this cannibalization effect. Is the understanding correct?

I'm not sure about the cannibalization effect. That is not something that we are monitoring immediately at the moment. The way the consumers are trading up are to do with devices, and batteries come into play when you have devices at home. So what's probably going to happen over the decade is that there will be a lot of trade-up in the kind of devices that you are using. So what used to be at one point in time, a lot of television remotes and clocks or torches at home is giving way to many other devices, including smart remotes. Lots of toys, blood pressure machines, and, you know, optical mouses, etc. Many of these devices consume much more power than what a typical zinc battery might, you know, might throw up. And as a result, while the number of people... With consuming, the batteries might remain similar. The consumption of power per household is likely to go up by the adoption and the increased penetration of many of these high-drain devices, and it is in that juncture is where the alkaline chemistry comes in helpful, where they will cater to some of these increased demands, and as a result, Our understanding of immediate cannibalization may not be correct because only at the saturation of some of these high-drain device demands is where there might be a cannibalistic impact. Hope that makes it clear.

Sir, a follow-up on this, just wanted some clarification. So, if you see, we already have a 55-58% market share in the investing portfolio, and it has not grown much because we've captured most of the market. And this alkaline product addition, as you said, up to a point will not be a tantalization effect.

Due to no response, we move on to the next participant. The next question is from the line of Sakit Kapoor from Kapooran Company. Please proceed.

Namaskar, sir. I hope I'm audible. Thank you for the opportunity. Firstly, with respect to the Jammu facility, if you could, congratulations to the team for commercialization and their... If you could just give us our key priority for the coming two, two years or three years on a holistic way, how are we going to thread this asset, realign the portfolio, and as you have mentioned in the opening remarks on INIBANDA about the wide-level activities that also we are contemplating. So just some more color on the thing or in terms of settings at home for the Jammu facility.

Interesting question. So, the Jammu facility is, you are right, it is connected to the alkaline chemistry. The alkaline chemistry is in turn connected to stronger devices appearing in India. And thus, if I were to take a view over the next one decade, as I was mentioning in my earlier answer, The consumers in India will soon or are continuing to trade up many devices. The number of devices per household is slowly going to increase. These devices will consume more energy and power than the earlier devices, which was much more simpler. A simple remote or a simple clock compared to a medical device or a computer gadget or a remote-controlled toy or an optical mouse, etc. Some of these will consume much more power. And as a result, our... The estimate is that over the decade, the growth of the alkaline chemistry in batteries is going to be significant already over the last two to three years. The tagger of the growth of alkaline is more than 20% by value terms and volume. And thus, It is at that time, with a view to the future, that we have moved ahead with the Jammu plant, more from localization and setting up for the future the capacity needed to cater to increased devices' penetrations in India over the next couple of years. Right? Of course, As there is capacity, it will lead to a growing local demand, which will be eventually connected to a growing penetration of battery-operated devices in India, seeking much more power. It will also be an opportunity to scout and solve for battery white labels across many other countries in the world. We might be seeking to buy it and source it from Asia, etc. So India, with a plant in Jammu, would be a good alternate to scout for many of, probably, it could be retailers, it could be large institutions, wanting alkaline in their own white labels, and that is something that we will also reach out for over a period of time. So between the domestic demand and potential for exporting in white label, the facility is of significance given that it's the only one alkaline facility in India at the moment.

Hello? Hello, I'm there online?

Yes, sir, you're my professor.

Yeah, yeah, yeah. Correct, sir. So, enter again in terms of, firstly, also a conversation to the team for the EBITDA margin of 15%. And as per your opening remarks, we are confident that these numbers are workable and can be exhibited during the year also. I think so, the commodity inflation, the other veggies have now become a part and parcel. So, have we aligned our working in a sense that these margins should be on a, we can exhibit on a certain basis going ahead also?

We are in line for trying to carry on what we have delivered, and, you know, that is what the aspiration is, and that is what the plans and the discipline is there in order to ensure that we move ahead with a similar time. Now, that being said, I think, you know, the... The extrigencies that are happening in the world outside cannot be contained, and thus we will monitor it on a very short-term basis to keep seeing what modifications need to be done to ensure that we broadly hit the numbers that we have looking to achieve.

My point was, sir, are there any one-offs for us to factor in going ahead, or these are purely operational set of numbers that we have exhibited because of the efficiencies and the good work that we have just alluded to?

So, you may take it because there is no such one-off or any extra gain is there. So, this is purely an operational efficiency because a lot of calibrated price actions have been considered during the quarter. Considering what the price increase, as Anivan mentioned, our key company zinc, which was hovering less than 3,000 during the last whole year, now started exhibiting upwards of 3,500. So that is why one has to get prepared for them along with the very sustainable and profitable growth. And that is the way the team has taken a decision and hence the result is here.

I will join the queue, ma'am.

Yes, ma'am. I will join the queue.

Thank you. Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants in the conference, please limit your questions to two for participants. The next question is from the line of Mitun from Kiva Advisors. Please proceed. Mr. Mithun, you may proceed with your question.

Hello. Yeah, hi. There was some news report of one of your Japanese competitors potentially having to close their plants in India. I just wanted to understand any update on that, and could that also help you gain market share? That was the first question. The second one was, in terms of your expansion into other areas like wires and cables, just wanted your thoughts on any specific targets you have in that space and any market share that you think you can download.

So, on your first point on the competitor, I think it is speculative in nature for me to comment on it. You know, but in any market, at any point in time, should any brand wear to vacate, typically, you know, the other brands would play in to occupy the space. And that is all where I would put it at, given that we have absolutely no idea about what the competitive nature would be. Whatever stands out in the market will get automatically played by the brands in the market. As far as the wires and MCBs are concerned, we've had an initial start. We are trying to double from where we were there at the close of the last financial year. Will that be a significant amount of market share? Maybe not. But that is something that we are kind of contemplating to see that, you know, whether we can try and clock more than double in this current financial year to see that, you know, whether we can start making rounds of the market share by about 1% or 2%. But it would be preliminary given that we have just started about six months back.

And what sort of capacity do you have in that space? To what level can we actually go with the current capacity?

The wires are sourced. We don't manufacture them. If you look at many players in the market, there are a few of them who make it themselves, and there are more than a few who source it from the other players. And thus, our entry is dependent on our sourcing. Our sourcing capacities look good enough for 2 to 3x amount of growth than what we are currently doing. So at the moment, it looks okay.

Thanks, sir. Thank you.

Thank you. Thank you. The next question is from the line of Sakash Vastok from RBC. Please proceed.

Yeah, thank you. Wanted to know an update on the GST and for all investors in terms of approvals, the con term and the taxability as in when the GST. Subsidy comes. That was my first question. My second question was that are we now in a position to give a three-year EBITDA or a turnover CAGR forecast? My third question was on You know, one of our directors were paid a consulting fees, I believe, a concerned person and now a whole-time director in another Burman company. Are we still paying him that 2 crores of consultancy fees, or has that stopped now? Those were my first three questions.

Thank you, Vikas. So with respect to the Jammu incentives, the status remains the same. There is not much movement. So there is no movement has happened on our approval at this point of time, but we are in a very advanced stage of the discussion with the industry department. And so they are keep saying that, you know, things are moving progressively, but as of now, we have not got any formal approval. That is a first with respect to that. Second, in my last call also I have spoken about that now this is the time has come up for which we have to give little bit of long-term things, and I have requested about two to three quarters time, because you have seen this is a very sustainable seven quarter growth we have given, and you know this is one of the highest revenue and operating margin generated quarters, so now the team's confidence is on the up, because we want to give you something which is very calculated, planned way so that the execution is also parallel importance. Just we'll request you to bear with us for another one or two quarters before you give you further long-term things. With respect to one of the full-time director remuneration, our NRC and the board has approved and has seen the commitment of the directors very much to the company. He could adequately devote the time, can give our decision-making guidance, and he's a very strategic, pivotal person. So he is doing his good contribution to us, and that is why the NRC and board has approved his compensation.

On the GST, you know, you mentioned I wanted to know what exactly is our entitlement. What is the quantum? How is it paid? And how is it taxable? You know, just a little bit of flavor. What can we expect when it is approved? That was question number one. And B, are we, are we ready brand? Is there any plan to, you know, any M&A or something to now that we've spent so much time on the brand? And it's such a strong bond. Why are we not exploiting it in a much larger manner?

Okay. So first, it's like, you know, you want to understand what is the scheme, right? I think I have explained last time also and let me tell you again. So the scheme of the Jammu investment is that whatever the capital investment you do, you get 3x refund in the terms of the GST revenue calculation. This is the incentive scheme. Okay. It is on the plant and machinery. So, government has in 2021 has come up with some NCSS scheme there in Jammu, and on that Jammu is that if the company is getting registered in the NCSS, then they are eligible for not on the total investment, on the plant and machinery investment, which is equivalent to 3x of the plant machinery, eligible plant and machinery, in the form of GST, whatever we pay in the state, over a period of 10 years. And with respect to the M&A and what is the company, as I told you, this is in our, this will be a part of our. Whether we should go on any acquisition or we will focus on building and investment on our existing code, that we are internally deliberating. And when we come up to you in the next two to three quarters, our long-term firm plan, in that it will be incorporated.

Thank you very much. I think the capital amount on plant and machinery is about 50 to 75 crores, is my understanding, right?

Of course, sir. In Jammu, it will be around 90 to 95 crores will be our plant and machinery.

We'll be entitled to a 300 crore GST subsidy over 10 years as and when it comes.

Sorry to interrupt, Mr. Vikas.

Thank you. Thank you. Thank you very much.

The next question is from the line of Tanish Mistri. Please go ahead with the question.

Yes, hi. Good evening, and thank you very much for taking my question, and congratulations on a good set of numbers in these trying times. And I just had two questions. The first is that on the Jammu plant, which is there, are we kind of capitalizing some of the startup expenses, or is it just already expensed out in the P&L? That's number one, especially as the plant ramps up. You said that you started only on May 29th. The second question is more in terms of the lighting division. You know, after a long time, we've seen price stability in lighting. I just want to know, you know, where does it go from here? What are you seeing on the ground? And have we continued to break even in this segment? Thank you.

So I think two parts of your question. One is then preoperative expenses and another is the lighting. So I take the first one. So with respect to the preoperative expenses, these are all capitalized. As per accounting standard also, any expenses till the time of capitalization, it is all capitalized. After 29th of May, expenses are being charged to P&L. Anirban, if you would like to name on the lighting first.

So, on the pre-operative, are we going to, how will we treat it, sir? It has been added to the assets. Okay, okay, you're deputy. Got it, got it, got it. Understood, sir. Got it, sir. Yes, sir. And on the lighting bit, sir.

So, on your question on the lighting, I think what's interesting and what's good about the lighting part is that after almost, I think, about 18 to 20 months, There has been a little bit of a softening of the value erosion that was occurring, and the value erosion occurred across the sub-segments, and while that occurred, I think, with all the macroeconomic in play, the cost push was also extremely high in the first quarter. Some of it looks to be softening a little bit, but not yet in the same lines as it was last year. So, given that there is seemingly the move towards growth in quarter 2 and in quarter T is my sense of it, but how much would the growth be and how much of the cost will soften is something that we will have to have a hawk-eye view in the current quarter. Will accessories and lighting accessories grow for us? Should. Do we see a lot of traction for us in the emergency bulb LED segments? We do. Will there be growth in wires from our portfolio? It should. That being said, will the regular GLS bulb continue to grow? Maybe not. So there are certain sub-segments that will definitely do much better than the other one. In terms of cost pressures and margins, it's something that one needs to be watchful of and calibrate to pricing decisions in the coming quarter.

Hope that is... Just a follow-up, sir. Just a follow-up. In the lighting segment, sir, this time, have we broken even in quarter one?

Yeah, in quarter one, we are broken even. Let's watch for it throughout the year. My sense is most things it should hold.

Got it, sir. Thank you very much, sir, and wish you the very best of luck. Thank you, sir. Thank you.

Thank you. The next question is on the line of Barga from Amber Investments. Please proceed.

Yeah, good afternoon, team, and thank you for the opportunity. My first question is on alkaline market share. So, we are at close to about 18% market share. Now that the factory has got commissioned, is it fair to assume that market share gains should only accelerate from year on? And if yes, then what could be the target over the next two years?

So the market share gain has been almost from about 3% to about 18% over the last 30 months, right? That market share gain was a play of the brand and the consumer acceptance of it, even while the product was made to our specifications and was being imported into the country. As the manufacturing plant settles down and operational efficiencies improve, the quality remains the same. So the same brand continues to play its market share journey as we go ahead. Will it accelerate? It will continue on the similar kind of a momentum. Some of the margins with the operational efficiencies will look to be healthier compared to when we were importing it. And on your question on where do we see two years from now, my sense would be that we should be looking at anywhere between exit share of 25 to 30 percent at the end of two years from now.

Understood. Secondly, in terms of the balance sheet, is it possible to give some update that, obviously, we have been expecting some proceeds from your line sale, plus healthy operating actual generation starting this year, given a margin expansion led by price Ix. So, when can we become debt-free as far as the balance sheet metrics?

So, if you see, as of now, our date proceedings are hovering around 165 crore rupees. And if you see from the lens that we have already invested 200 crore plus in Jammu plant, and that is an investment which has yet to yield a result. So, on that forefront, if you see that we are anyway negative borrowing, right? But if you ask me, We see shorter in the next couple of, maybe in the four to five quarters, the company should be having a positive and should be like-to-like debt-free.

And just a clarification on that OPEX prime. So now that this facility has got commission, do we expect an increase in employees? The cost will be similar to the first quarter and rate on employees.

So, your question was not clearly audible, but if we can make it out that once our alkaline plant will be operational, do we expect the employee cost to go up, right? That is your question.

Yes.

So, of course, there will be some increase in the total of employee cost, but earlier we were importing every finished goods, which is inclusive anyway, the material cost, people cost, everything. So, it will be bifurcated in various isolation, people cost may not be. But overall gross margin level will be better off. And on the other side, if you see that, you know, last year we have closed the Noida plant.

Yes.

And that is why you could see the gain in the, our P&L in terms of the employee cost.

Great, sir. Thank you very much and all the very best.

Thank you. The next question is from the line of Stallone from Aldecut Ventures. Please proceed.

So, I have three sets of questions. So, first, regarding the Noida plant that we sold off, any more asset transferizations in development as well? Or was it one asset sale that we were waiting for post the real-tech finance settlement? And second, before the settlement, we used to mention that we would happily inject capital once this issue gets resolved. So are we planning for any potential fund inclusion and purpose for the claim? My third question is regarding the opportunity size again. I would like to revisit. So as you mentioned that obviously the basket size will increase because the alkaline value proposition will be high. So currently if I assume a 20 to 100 crore market size, what is the market size in the next three to five years that will potentially increase from this value proposition and how much basically are we looking to tap into it? Will this single growth rate company finally, you know, get to double-digit growth rate due to this, or will there be another driver driving the next leg of growth for the company, is another type of question.

Thank you, Saloni. Good questions. I think I was expecting this. So, NOIDA sale is not yet completed. As you see, there are two plots. One, we have executed, and second, we are expecting to close us shortly. That's the one. And as you said, last year, we have started doing the rationalization of our manufacturing footprint, and now part of that, the NOIDA came up as one of the prominent assets, and without taking any delay to reduce the fixed cost and improvement, we have executed. In future, if you get any opportunity, we will keep you posted as a first. With respect to the funding fusion, as of now, there is no such need of the extra fund. If you see the company is doing very well, we are paying ahead of time our debts. So there is no such, but as a part of our long-term strategy, if we need something, then definitely this may be considered in the due course of time. So, I need something on the market share of.

So, Serhat, on your sizing of the market, the market is about 3,200, but as of currently, the market size overs for batteries at about close to 4,100 CR in MRP terms across all channels and consumers put together. Out of that, roughly about 550-odd crores would be alkaline, and that is the part that is growing at about roughly 20 caga. That being said, your zinc carbon remains broadly plattish. Now, assuming that if you were to do the math, the trajectory of the alkaline continues to grow, and that is what's going to fuel the growth in the country. Over the last, say, if I were to look at about seven or eight quarters, if the concern was on terms of cannibalization, it has still not appeared because even on volume terms, if we were to sell more than two and a half billion batteries in the country, the zinc volumes have either been flattished at between a minus one to a plus one kind of a range. Whereas the alkaline volumes have been at a plus 19 to plus 23 in terms of volume growth. So your question is right that eventually there might come a time where, you know, the cannibalism would start appearing. And it's happened in many other countries across the world, especially in the Europe and the U.S. But by value, the battery market will continue to grow, given that it is the more premium batteries that are now moving inroads into the consumer houses. That is connected, as I said, to penetration of high-drain devices and multiple of them. So number of devices increasing in the house and the penetration of each of these devices increasing amongst the consumer households in India. So, my sense that over the next one year or maybe a year and a half, you may not see too much of cannibalistic instincts as yet, but as the alkaline segment starts becoming much bigger and crosses maybe the 20% saliency of the overall battery market, there might be some movement, but we will take it at that point in time.

Okay, sir. So, just one last question on the PCI matter. So, any update on that and the potential 150 crore cash outgo that can possibly come if it isn't in our favor?

So, there is next hearing date in the, around the last week of September. But the... I can't comment on the possibility what you are saying, because as of now, what we are holding at this point of time, that management cannot estimate rightly. So, let us see. In the end of September, last week of September, there is a CCI hearing, and any update, we will keep you posted.

All right. Wish you all the best, sir.

Thank you so much.

Thank you.

Thank you. The next question is a follow-up question from the line of Saakit Kapoor from Kapoor & Company. Please proceed.

Yes, sir. Just to sum it up, firstly, if you could just give us an understanding what steps are we taking to manage the zinc infrastructure trend, which I think is now trending upward and you have alluded to. So, how are we hedged or any price hike or how are we going to maintain our margin with zinc moving, spending higher? And secondly, sir, I think so, just to, just a small understanding, we have mentioned about this, the Kisan torch with animal alarms, so if they are about the agriculture field protecting this, so can we as, can look out at outlets of, tie up with the agri-players? Wherein, at the time of purchases of herbicides and pesticides, the farmers would be alluded to the fact of also keeping pest animals away with this alarm call. So that suggestion goes well to the marketing team. So that was my understanding.

Yes, interesting questions. On the zinc part, it is like any other, you know, FMCG product where there is a commodity linkage, correct, are the battery and the zinc batteries are linked in our case, you know, very highly to the prices of the zinc. Over the last, you know, quarter of the last financial year, and, you know, sometime in April... Between these four months, we've taken adequate price increases, which is what, if you see, has been reflecting in our quarter one results as well. As far as the zinc prices are concerned, yes, it looks quite heavy and high at the moment, and we monitor it on a weekly basis. Now, should there, at any point in time, be a scenario that it is overwhelming and margins are under inflection, we will have no choice but to pass on, you know, prices and to the end consumer. All right. And will it be, is it a good thing to do it? In a very short-term interval, no. But this year is a bit of an exceptional year across various kinds of FMCG products, including batteries. And that, you know, I will not be very surprised if to manage the commodity inflation, we may have to do another round of price or margin corrections. So that answers your first point. I think it's an extremely good idea when you said that should some of these flashlights with an animal alarm be taken and encouraged through agri-outlets, etc., I think the team's trying to tie up not only pushing it through our channels, which are deep into the rural and face farmers, but they're also trying to... to tie up with other agricultural product suppliers whether it is tractors or insurance or even agricultural information portals and at the same time trying to participate in a lot of the, you know, melas and mandis across some of the key semi-urban rural farming belts in India. Including using a lot of rural farmers as influencers in the New Age to spread the message that in India there is for once a torch which can, you know, drive away some of the animals which potentially harm the crops without having to run after it, without having to hit it with a stick. And you can do all of it from a distance. Usually, it is done in the middle of the night. And hopefully, using all these channels, we will be able to propagate this torch amongst the agricultural community in India.

And lastly, point on conclusion on the Jammu facility. Currently, sir, what is our monthly fixed expenses that we are incurring? That will flow now through the quarterly results, I think so, the second quarter.

So, Sakai ji, you know, the isolation, we can't see the expenses, right? We are manufacturing batteries and that costs are getting uploaded in the battery cost. So, earlier what we are getting a finished cost of finished batteries. Now, raw material, manufacturing cost and overheads are a part of the integral part of the cost. So, these are getting loaded into the, it is not directly flowing to P&L, and as we will keep selling this, this will be coming at a cost of goods sold.

Viveki, you mentioned about this employee cost rationalization at some point in your earlier remarks to any participant, one of the participants. Can you explain to us what benefits were you alluding to? I think part of the story was about the, I think we have paid the extra amount that will flow terminal payback overhead. Other than that, I think employee benefit expenses were flat on a quarterly basis. So, that was the point, or just if you could explain how will this number behave for the year as a percentage of sales or the rationalization activity which you were just explaining?

So, that's exactly the point. That last year, quarter one, we have a full-fledged NOIDA, right? And this year, we did not have the NOIDA. That is why you see it is almost a flat 2 to 3% increase. While at a regular course, as a part of our HR practices, we keep doing employee optimization exercise. So it is a part of our current DNA process that it is normal process. But what you see, there is no much movement because of the one-time disposal of Noita.

And last point is on the investment in APR and the renewable energy. How are we taking these two line items in the total sphere? And for Jammu facility also, power costs, what kind of investment have we gone through in the renewable space, sir?

So this is the first, right now, since it is only two months of this production, we have taken a grid connection and we have also put up some solar panels there. So, because we are committed to the maximum solar power or renewable power energy, that you have put it there. And what exactly are the questions of it? I just missed it.

Sir, my point was about the extended producer responsibility ETR and the total investment in the renewable energy space. What is our thought process and how are we progressing for everybody as an entity?

So, as I have spoken, Jammu has spoken, all the plants are now renewable energy and our focus is more on go on a leasing model or rental model because we want to play very asset-like model because the capital cost of this assets are changing very rapidly. So, all the plants, all large plants are having the solar power. What is the maximum possible? And with respect to EPR, as I have explained to one of the earlier things that... In a very advanced level dialogue, we are quite sometime engaged with the Ministry of Pollution and Environment and Climate Change and Pollution Control Board as well. So there are some operational framework on a pricing mechanism and other things are in the discussion. So once we get the clarity, we'll keep you updated. But however, today we are taking all sort of initiative whether to promote the collection of used batteries, awareness sessions. So we are doing from our side best possible things.

Just to conclude, sorry for the extended part. In the lightning, only to add, ma'am, I would be the last participant, I hope so. Just a point, and then I'll join and wait for the next quarter. So in the lightning portfolio part, although you mentioned that the price erosion exercise is over, particularly pertaining to the cost, especially employee cost in the northern part of the country, the minimum wages part. Actually, what is the lighting portfolio? What is our differentiation? And why are we pursuing this with go-ahead, with break-even also? We are only eyeing break-even going ahead. So other than the branding exercise, what is our thought process going ahead with this portfolio? This is a very crowded space and designing and all changes with a blink of eye. Your fashion is a lot of change. If you could just give a closing remark, and thank you for all elaborate answers.

No, you're right. You know, the lighting space is a very crowded space, right? Now, that being said that your company has been in the lighting space for a long time, but while remaining in the lighting space, it remained flat. Now, it is over the last, you know, one or two years that one has been seeing growth. So, in that aspect, is there a sufficient space for many people to play? Should be. It has a reasonable amount of size and scale across the country. Do I need to pay across the country, or should it be regional? That is something that we are looking into, and technically, if you were to ask me, some five or six states in India accounts for more than three-fourths of our business, and that is what we push through from an electric and a general trade point of view. At the same time, we have emerging channels like Modern Trade where we play. Now, I don't think one will be able to answer the full strategy in one or two lines, but I will try my best in terms of trying to tell you that are we going to play in all segments of lighting? No. We are there. We have channels. There is a need for a portfolio. Portfolios are mainly sourced. Some of the products that we think we will hero, we focus. For example, we focus on trying to expand and do a good job of our emergency bulbs, right? Emergency bulbs, by definition, are bulbs which have batteries inside them, and anything that has a battery inside them seems to resonate well with a company which originated from being selling batteries and continues to do that well, right? That being said, do we also... Looking to parts of the product portfolio, which can, you know, get a help from our synergistic approach. So a lot of lighting companies in India, as you rightly said, we are one of the laggards. But that being said, you know, many lighting companies in India do not have the kind of distribution that we do. So we are uniquely positioned in the general trade to have a distribution which is very commensurate with the FMCG business. At the same time, we have a separate channel which is evolving and growing, which is to do with the electrical channels. That's our ability to take parts of the portfolio into some of these channels which are not only electrical and not only GT is very unique compared to many of the other players in the market. So in this context, should I look at a focus part of the portfolio? Yes. Should it be a couple of states in India? Yes. Should we have the advantage of a dual channel from lighting products? Yes. Are we doing consistently well in the lighting business from a top-line point of view? Yes. My sense is we have the kind of fixed costs that are sunk to be able to deliver a top-line, which is probably another 1.5 to 2x on the base of the same fixed cost. Siddharth, I think it is a good traction to go ahead with at the moment, and we will continue to revisit should there be any change in the story.

Right, sir. My best wishes to the team, sir. Hope to connect again. Thank you, sir.

The next question is from the line of Shibam Jain from CounterCyclic. Please proceed.

Hello. Am I audible? Hello. Hello.

Yes, yes.

Yes, sir. Actually, my earlier question was around the market share of dry cell. You answered, I believe, on the alkaline cell. So, the market share that we have, I believe, it's 58%. If you put a risk for an understand on who's, I mean, who lost market share on that trend that we have gained, that is. One, and second would be that what sort of collection expense would you be incurring going forward on the EDR type of things?

Shubham, we could not get hold of the first question other than hearing market share. So, would you just, you know, make the question a bit sharper? I think there is a, you know, line may clarity is... So what was your question on market share again?

So the 58% market share on the PPT side of things, earlier it used to be on the 50-ish level, lower 50. Just wanted to understand which player in the Indian market is losing that share, if you have any idea.

Okay, so your question is related to movements in market share.

Right, right. So, if you could help us understand just the market share part of things that is happening in the industry and stuff like that.

Okay, so, so see, so Shubham, dry cell, both alkaline and zinc are dry cell. So, it is not that, you know, one is a dry cell, the other is a wet cell. Both are dry cell. Now, the way the market is composed, it is obviously India is composed of much more amount of zinc than he is composed of alkaline. As I mentioned a few times in the call, the alkaline is growing at about 22% dagger, both by volume and value. The zinc is a bit flattish, but obviously, in about a few years back, Zinc accounted for more than 95% of the mix, and alkaline about 5% of the mix. Today, maybe three years down the line, alkaline accounts for more than 15% to 20%, slightly about 15% of the mix, and zinc continues to dominate at 85%. Within that, you know, we hold, as I said, a large part of the zinc portfolio, which is what is mentioned as the 58th March, that has remained mostly flattish as far as our shares in zinc is concerned, right? Our growth has been more in the alkaline, where we had single digit. Shares as of three years back, and as I reflect today, three years later, we are sitting on 18% of the alkaline market. The alkaline market is 15%. It's about 13 to 15% of the Indian dry sale market, and the combination of both of them puts a certain advantage of still having an overall market share excess of 50% of the Indian dry sale market. Hope that clarifies for you.

Right, and how large would other players be, like Panasonic or Nippon in India?

Panasonic and Nippon are close followers. They are good. So if we are close to 57-58%, the balance of the market is mainly formed in the zinc business by Panasonic and Nippon. Right. Nippo being a bit ahead of Panasonic, is our understanding of the market? There are also many players. You know, one of our key competitors in Alkaline is Duracell, and they continue to hold the larger pie within the Alkaline shares.

Both Nipo and

Talisman are in the Alkaline segment, but they might be having shares in the single digit.

Right, and just lastly, what sort of collection expense would you be entering DPR side of things? Do we have a ballpark number? Any projection also?

And I have said, you know, this is a WIP and we are doing, there is no absolute now, because it is a part of our obligations, so we are doing the initiatives. initiatives which are being costing multiple, and so that is the way we are taking at this point of time, and since we are awaiting some pricing clarity and regulatory clarity on that, maybe we will be able in a better position to give a clarity on the next quarter of updates.

Sure, sir. Thank you for your name. Thank you. Thank you.

Thank you. That was the last question for today. I now hand the conference over to Mr. Anirvan Banerjee. Thank you and over to you, sir, for the closing comments.

Thank you, everyone, for taking time out to join us on this call today. I hope we have adequately answered all your questions. If you still have more queries, please do reach out to our investor relations team, and we'll be happy to address those. Looking forward to connecting with you again in the next quarter. Thank you.

Thank you. On behalf of Everary Industries India Limited, this concludes this conference. Thank you for joining us, and you may now disconnect your line.