Grasim Industries Limited (GRASIM) Q1 2027 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to the Q1 FY27 Earnings Call hosted by Grassham Industries. As a reminder, all five spin 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 this conference call, please signal an operator by pressing star, then zero on your touch-tone phone. I now hand over the conference call to Mr. Ankit Panchmatia, Head Investor Relations of Grasim Industry. Thank you, and over to you, Mr. Ankit.

Yeah, hi. Thanks, Ikra. Good evening, and thank you for joining Grasim's first quarter financial year 2027 earnings call. The financial statements, press release, and presentation are already uploaded on the websites of Stock Exchanges and our website for your reference. Korsay Farber kindly referred to the questionary statement highlighted in the last slide of our presentation. Our management team is present here on this call to discuss our results and business performance. We have with us Mr. Himanshu Kampanya, Managing Director, Grassham Industries, and Business Head, Pirla Opa-Spainz. Mr. Himansh Kudil, Chief Financial Officer of Grassham Industries. We also have with us Mr. Jayan Doble, Business Head of Chemicals. Celulosic fashion yarn and insulator business. Mr. Vali Raj Kulkarni, Business Head of Celulosic Fibers Business. Mr. Sachin Sahai, CEO, Birla Opus Paints. And Mr. Sandeep Kumraveli, CEO, Birla Pivot, which is our B2B e-commerce business. Let me now hand over the call to Hemantju, sir, for his opening remarks. Over to you, sir.

Thank you. Good evening, good afternoon, or good morning, as applicable to each one of you, and thank you for joining the GradSim quarter one financial for 2027. Let me begin with the headline. Financial year 26 was a landmark year for GradSim, and we continued the same momentum entering financial year 27. In quarter 1 FY27, we achieved highest-ever revenues of Rs. 48,716 crores, with a year-over-year growth of 21%. I remember not too far away, two years ago, exactly, the quarterly run rate of revenues used to be around 32,000 to 33,000 crores. And today, we are already reaching about a quarterly run rate of nearly Rs. 50,000 crores, a woofing 1.5 times growth in quarterly revenues, which is a two-year CAGR of 25%. I want to draw your attention to the consistency behind these quarterly numbers, because a single strong quarter grows very little. This is now our... Thank you very much. Thank you. Underpin. Not merely participate in the industry. Second largest decorative paints company, and more importantly, One of the largest players by installing This is the world's largest decorative paints brand by revenue. Market share gain of further 30 basis points. Thank you very much. Optimizing a quarter. Normalize advertising at its intensity. Having said that, Thank you. As far our estimates, this is now the largest organized paint retail network in India, a significant strategic advantage for a brand that is still in the early phase of its growth journey. Our institutional talent is also scaling with momentum growing 85% year-on-year and 11% quarter-on-quarter, with nearly 11,000 project sites built during the quarter. Thank you. We have a similar number under different stages of approval, with a robust pipeline of 47,000 sites. This is an important validation. This portfolio is evolving towards premiumization and sharper market relevance. During quarter 1 FY27, Villa Opus launched 10 new products. Participation in high-potential segments and expand our ability to serve customers. 145 STUs giving will of us the depth and flexibility required to compete at national scheme. 65% of the call. of our premiumization journey and improving the quality of our revenue mix. We did not buy shares at the bottom of the market. We won it at the top where brand preference is the hardest to earn and margins are most durable. Fourth, brand salience continues to rise at a remarkable speed. We continue to build on our already number two position. 90 plus. This has been enabled by sustained, insight-led, and innovative campaigns that are making the brand more visible. Hard-hitting advertising films, focusing on how. So, let's take a look at the consumer values in this inflationary paint environment. Thank you. This combination of national brand building and local market activation is And let's see what you do. Thank you. for one quarter. Categories. It's a margin liver. Transaction counts, sustained new buyer additions, and robust repeat purchasing from existing buyers. The repeat purchase is the metric we watch most closely. The buyers cannot be persuaded into. They come back because the platform works, and the new buyers are well justified. We are not concentrated on any single end market. Have service on their own. This platform is compounding. Every satisfied buyer brings sellers. Every good seller brings buyers. Underneath the marketplace, we build a robust digital financing ecosystem, expanding working capital and credit solutions for both buyers and sellers through strategic partnerships with leading financial institutions. This is the piece. The transaction, we make ourselves difficult to do. We are not chasing break-even by shrinking, we are reaching it by scaling into a cost-based Thank you. I hand over the call to our CFO, Mr. Heyman, for his remarks on company's financial performance and remaining businesses. Over to you, Heyman.

Thank you, Mr. Imansu, and good evening, everyone on the call. Let me turn now to Solvesic Fibers, and I want to start with why this business matters There's more today than it have ever. Cotton is running into hard limits. Land is finite, water is scarce, and yields are plateaued. That constraint has opened up what we call the cellulosic gap. A structural shortfall, the world has to fill with something, and cellulosic fiber is the natural answer. It is biodegradable, it is environmentally friendly, and it is one of the most sustainable fiber in the basket. On the demand side, Our Leva brand is pulling the entire textile value chain towards cellulosic. On the supply side, our liosyl expansion is progressing as per plans. The earlier announced Rs.1350 crore phase 1 project of 55,000 per ton per annum is completing its detailed engineering and civil work is progressing as per plan. The recently approved Rs 3,094 crore phase 2 project of 110,000 TPA is moving through environmental clearance. Now the operating environment. China remains the swing factor for this industry. And the signals there are constructive. Operating rates and inventory states tell us that the supply-side state discipline through the quarter. Talking about financial performance, CSF sales volumes were down 4% year-on-year. Two reasons for volume degrowth, planned maintenance and reduced production, and subdued dumps in beyond. Speciality fiber moved from 21% of the sales mix to 27% led by exports. Revenue grew 12% year-on-year to Rs. 4,530 crore despite lower volumes driven by strong global prices, rupee depreciation, and favorable product mix. EBITDA roughly doubled. Some of that is a low base, but a meaningful part is the specialty share doing its work. Let me move to chemicals. The first thing to understand about this business is that it is not one business. It is three and they are reinforced each other. Caustic soda prices in Southeast Asia existed the quarter at $483 a ton up from $468 we saw a year ago. Our eco-realization followed the same path. Up 6% year-on-year to Rs. 37,955 per ton. Volumes were softer and that is largely due to plant maintenance effect. Chemical segment revenue of Rs. 2,640 crore grew by 10% year-on-year driven by improved realization in caustic, chlorine derivatives and specialty chemicals. With revenue mix. Within revenue mix, caustic soda came down to 49% while specialty chemical rose to 30%. Higher share of specialty chemical was aided by price increase that was pass-through due to higher input costs. EBITDA of Rs. 491 crore, up 16%, growing faster than revenue, driven by all-round performance across businesses. So the story here is straightforward. A leadership position in the base business funding a deliberate march downstream. As CPVC got recently commissioned and ECH commissioning happening in quarter 2 of FY27, chlorine integration is expected to reach 68% by exit of the current financial year. Let me turn to building materials. When paints and B2B are already covered by Mr. Imanshu, let me cover cement, starting with capacity, because in this business, scale is strategy. We added 8.7 million tons of grey cement capacity in the quarter, taking total grey cement capacity across India and overseas to 205.5 million tons. Consolidated sales volume grew 12% year on year to 41.31 million tons. Double-digit volume growth at this scale is not small thing. The result flows through cleanly to consolidated EBITDA, which is also up 12% to Rs 5,146 crore, driven by volume growth and by lower logistics and power cost. On energy, green power mix has risen to 45.6%, up 23% year-on-year, with total renewable power capacity now 1.4 GigaWatts. On the retail front, Ultratech building solutions outlets continue to grow, with total number of outlets now at 5,802, up nearly 1,000 stores compared to last year. Ultratech gives healthy cash flow to us in the form of dividends. Ajitibidla Capital delivered a strong start to FY27. The performance reflects the strength of its diversified financial services platform, with lending, insurance, and asset management businesses all contributing to growth. The overall lending portfolio grew by 32% to nearly 2,20,000 crores, while housing finance crossed the 50,000 crore milestone. Growing 50% year-on-year. On the insurance side, the business continues to build skills across both life and health, while the asset management business benefited from strong AUM growth and improving market share. Importantly, the company also strengthened Its growth platform by raising Rs.4,000 crore of equity capital, including participation from International Finance Corporation, positioning the business well to accelerate growth while maintaining a strong balance sheet and robust asset quality. Grassim invested Rs.2,880 crore at Rs.356 per share, maintaining its stake in Azitibirla Capital on a fully diluted basis. Our smaller businesses are contributing more than their size suggests. Renewable business revenues grew 59% year-on-year, textile business grew 26%, and insulator business continues to serve the power sector in expansion. These businesses sit directly on the same structural themes as the rest of our portfolio. The energy transition, aspirational consumption, and infrastructure build-out. Coming to capital expenditure, the standalone plan for F527 is expected at Rs. 3157 crore. Nearly 45% of this capex is dedicated to growth capex. The total spend in quarter one stood at Rs. 375 crore, which is nearly 12% of the budget. On balance sheet, as profitability improved, consolidated net debt to TTM EBITDA declined to 1.45 times as on 30th June 2026 compared to 1.62 times in the same period last year. On standalone level, net debt increased to Rs. 9,899 crore. This is largely due to timing difference between recent investment made in June 26th in Aditya Birla Capital and dividend to be received from Alta Tech in August 26th. Now we open the floor for Q&A. Thank you. I request operator to please connect for Q&A.

Thank you very much, sir. Ladies and gentlemen, we will now begin with the question and answer session. Anyone who wishes to ask the question may press star and 1 on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking the question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Naveen Sahadev from ICICI Security. Please go ahead.

Yeah, good evening and congratulations on good set of numbers. I'll start with two questions. One, in paint, of course, splendid journey so far. But sequential growth, because year on year I will not compare given we are in the ramp-up phase. Sequential growth of 17% is appearing broadly at par, I would say, to most of the pain companies that have reported performance. Of course, there is a reduction in losses too. So my question was, how should we look at the journey incrementally? Because this quarter, like I said, is broadly at par on a QOQ basis. So is it fair to assume that growth is more matured and we'll focus on breaking even earlier? Or if required, we'll continue to keep the push and first achieve the revenue target? How should one look at it?

Thank you so much, Naveen. So you're absolutely right. The sequential growth compared to listed companies is at a similar level at the listed companies. But you have to see what is special about quarter one, which is not a normal quarter. This quarter, most trained companies have increased their prices by double digit. So it gave opportunity to the channel partners to stock up. The revenues this quarter reported, high revenues reported by the industry has a component of consumer sales and a component of extra channel stocking, which will even out over a period of time. Being a new operator, we don't have the power to be able to get extra stock in the channel, which the old operator, based on their past trends, are capable to get more stocking done. This is the only factor which has dramatically changed in this quarter. So it's better to see revenues on a longer-term basis rather than on a specific quarter basis. So nothing changes. Our commentary has been very explicit. We continue to, with our resolve, to be able to deliver the 10,000 crore revenue.

Thank you.

My second question then was about the AB renewals business because we tend to talk a little less about it. You did mention Pivot is the underappreciated business so far, but I think also maybe AB renewals needs some more slides in the presentation because of the recent transaction that we did. So broader question here is like, you know, if you can get a complete outlook of this particular segment in the sense if the entire 9.3 gigawatt of the capacity target will be up and running or available for the full year 29, if everything is booked under, you know, PPAs, what would be the potential debt levels, what is the infusion Grasim may require to keep it a subsidiary at 51% or more. If you could just help us understand the A-B renewal perspective, I think it will really benefit everybody. Thank you.

So, we would like to organize a separate session for all the analysts who are interested in AB renewals. We have a separate management team of AB renewals, and it is best that they will give you the complete guidance while it sits grasping a major investor.

Thank you. Next question is from the line of Prateek Kumar from Jefferies. Please go ahead.

Yeah, thank you. Thank you, sir. Congrats for fantastic results, and thank you for sharing the segment-level information on new businesses. With in pain, particularly the EBITDA losses also nearly halving versus past few quarters, did you also like revisit like timeline targets on profitability, whether there has been any change in the expectation of turning profitable on a full year basis in F528?

Both. Our consistent stand has been that once we reach 10,000 crores, we will become profitable. At this point in time, we are not changing their stand.

Sure, and also again on the renewable

business, while you talked about you will do a separate meeting there, how including the equity contribution towards decent acquisition and how do you see capital employed expected to evolve in 27-28 versus 1200 crores of 526, because this number is beneath the modeling purpose also in terms of cash flow.

So, coming to capital employed, capital

allocation of Grasim, we are already working, in the current quarter, we have invested in our financial services business. We are right now undertaking expansion projects of our CSF business, and cash outflow for the current financial year on account of capex is 3157 crore.

But I think your question was pertaining to renewals. Grassim contribution will be a small number and will not have a material impact as far as Grassim is concerned from its own cash flow. That is what we can reconfigure. So you don't need to show cash flow requirement from Grassim or the ABFR on the renewal business. Exact number we will share with you outside.

Sure, that's thanks for clarification. Lastly, could you also discuss the royalty payable to Villa Holdings, particularly in context of similar arrangement being based by peers such as Indarko?

What is the question?

So, royalty payable, so the peer entity is talked about 0.25% of sales. Is this similar applicable from FI, 2010 and onward for Grasim also?

That's right. Yeah, it is applicable for Grasim also. So, it will be 0.25% of standalone revenue, starting from June.

I want to take a minute to be able to give you the logic why this is important from an overall perspective. As the Aditya Bhalla Group, the parent brand to us is the most valuable asset and a source of competitive advantage. It is an intangible platform that systematically builds trust. And reduces friction and enhances long-term growth potential of our group companies. So, because of this, I think the current model where we were earlier, we are transitioning from purely family-driven stewardship to structured governance model, which is consistent with global best practices for founder and family branch of comparable scale. We were very happy that for a long period of time, the family was not charging us for this brand, and it is an appropriate time that this is getting charged. And it is at a very reasonable level of 0.25% of revenue with an upper cap that has been built in. And this becomes applicable now from 1st of June.

The support cap is 225 crores for yourself and Altatech also because it's your subsidiary.

No, no. Graxium will be paying on a standalone revenues. So if you take standalone revenues, impact will be around 100 crores.

Thank you.

I'll get back to the call.

All the subsidies, just to clarify, all our subsidies will pay as a brand value under their line of business. Whether it is AB renewals, whether it is Aditya Kuala Capital, whether it is Alta Tech, all will be paying on their own.

Grassi will pay for a standalone direct business. I hope you clarified. Sure. Thank you, sir. These are my questions.

Thank you. Next question is from the line of Praneeth from Cortex Securities. Please go ahead.

So, an easy airline is unmuted.

Raneet, can you hear us?

Hello, can you hear me?

Yes, we are audible.

Okay, I think there seems to be coming. This is Jai Doshi from Kodak. Hi, thanks for the opportunity. Just one question. With reference to, so as per my understanding, you know, some companies in paint industry have a very strong seasonally, strong March quarter, depending on how their schemes are in terms of absolute sales. Some companies tend to focus more on the June quarter, right? So when I look at salience of March quarter versus June quarter, it will vary from company to company. And so in context of that, you know, what is it for grassing? And because if I look at the last year, generally, you have a very solid March quarter, and then June quarter, absolute sales is not meaningfully higher, and then it scales up again in December and March quarter. So should QOQ metric be a relevant metric from March to June to compare market share for, you know, Grasso, Birla, Opus versus the rest of the industry? And that was one question. And second question is, you started on a worldwide basis. When I look, you know, you started with a very strong 64% growth. So, does this give you confidence that at a full year level, you should be able to, you know, at least do 50% or more on a YOY basis, full year FY27 over FY28. I understand your FY28, sorry, FY27 over FY26. I know your guidance is 10,000 crore, but to help if you could give us some, you know, broad indication of FY27 as well. And thank you for the additional disclosures.

Thank you, Jay. Yes. On one-by-basis, we are... Thank you.

Sure. Thank you so much.

Thank you. Next question is from the line of Rahul Gupta from Morgan Stanley. Please go ahead.

Yeah, hi. Thank you for taking my question. Two questions. Just when you say payments of 0.25% of revenues, is there a cap there like we see for Hindalko at 225 crores or there is no cap on that? That's my first question.

Yes, Rahul, there is a cap, but in our case, 0.25% will be a smaller amount, cap is 225 crore, but we will not add, as on today, we are quite far from that.

Yeah, so in that case, would it be lower or the higher amount of the…

Taking an estimated amount of 50,000 crore revenue for Grasim, 0.25 will work out to 125 crore, and the cap is 225 crore.

Got it, got it. That's helpful. My second question is on change. Now, when you talked about around 9% quarter-on-quarter price hikes reflected into first quarter, was there any benefit from change in discounting or incentives as well during the quarter, or volumes grew by around 8% quarter-on-quarter? And also, when you talk about pricing benefits flowing into second quarter, what kind of rollbacks have you seen in the quarter till date, and how are volumes trending at the same time? Thank you.

I think it's a little complex question that you are trying to address. Let's go back from the basics. The raw material cost has increased on a COGR basis anywhere between 20 to 25 percent, and as a percentage of revenue between 10 to 14 percent, depending on the month. But we were carrying older inventory and the older inventory has now been eased out and most of our is now at the newer inventory for the raw material. The price increase was not taken in a single shot. It was taken at multiple levels during the quarter, and some of it will flow into the next quarter. As I mentioned at the start of the question and answer, the quarter one had a combination of consumer sales and stocking up of dealers, Because they saw the benefit to take additional volume before the price decrease took place, which is for the industry. Quarter 2 is unlikely to have that because the dealers are bringing down their rentries.

I know this is very helpful. Just coming back to the first quarter, just trying to understand, given you had in the previous quarter highlighted that you were looking to remove your 10% higher volumes in some of the products like primers, I'm just trying to understand that when 70% revenue growth came in quarter and quarter, was that also on back of removing some of these incentives or outside of price hike, everything else was not?

10% removal of primer took place in the month of January and most of it was accounted for in the quarter 4 itself. So there is very little impact on in quarter 1.

I would say, I hope that's clear.

You got it. Thank you so much. I wish you all the best.

Thank you. Next question is from the line of Rashi from Citigroup. Thank you.

Just a couple of questions. On the renewable side, you had mentioned that the impact on cash flow because of contribution will not be significant. Possible to quantify or give a range?

Yes, then 1,000 crores.

Okay. That's one. Second, on the chemical side, the kind of resilience that we've seen in this quarter, how do we think about 2Q and going forward?

Sorry, your question is, is the result sustainable in the second quarter, right?

Yeah, I'm going forward.

So look, it's really difficult to predict the market these days. As you know, the Gulf War is creating all kinds of strange situations. For example, there are three refineries, large alumina refineries in the Gulf, which has substantially reduced the alumina demand. And you also know that feedstock prices for... Electrochemicals, which are, you know, raw materials, which are used by our customers, they are literally changing overnight, there are shipping shortages, there are container shortages. So we are following a very simple approach. And that is, you know, we have almost a daily pricing mechanism based on the commodity prices of the day. We try not to take a very large position on either raw material inventory or finished good inventory, so to keep over risk and control. We cater to what is genuine demand of the customers, and we ensure that our pricing hygiene remains consistent with the commodity price of it. To be honest, beyond that, it is really difficult to predict the market. Having said that, Second quarter, we will, of course, be selling material from stocks which you purchased in the first quarter, which were more expensive. So there will be pressure on our markets, but, you know, it's a volatile situation.

And just on VSS, you know, the sequential increase that we have seen in the EBITDA, so volumes have declined. You know, what has been the boom in the pricing domestically as well as cost and cost sequentially?

So one, in terms of costs, we have seen a surge in some of the input prices, say of sulfur and partially caustic. Volumes were down because of two reasons. One, we took a plant maintenance in one of our largest plants in India. There is a certain preventive maintenance schedule that is ongoing. Two, there is also a slight drop in the downstream demand in India. But thankfully, the demand in outside India was good. So we were able to export, increase exports, of course, at a margin, realization slightly lower than what we do domestically. So, the prices went up because of two reasons. One is international demand was good, international prices went up, especially in China, and cotton prices went up, polyester prices went up, largely because of the geopolitical environment and dollar getting stronger versus rupee. So, we were able to pass on significant increase in our input prices to the marketplace in terms of pricing. So, we are holding on to that position as of now, unless any external event dramatically changes the situation with respect to demand, dollar, euro, and rupee exchange price, and what happens in China.

So, sequentially, what was the domestic realisation increase?

A domestic realization increase has, I mean, we don't exactly share the prices, price or realization numbers, but I think if you see the earning presentation we have shared, the increase is similar to what you see internationally.

Thank you. Thank you. Next question is from the line of Neerav Jimudia from Envil Health. Please go ahead.

Yes, sir. Good evening, and thanks for the opportunity. Sir, two questions. So, one on the chemical side. Sir, if you can just help us understand, like, out of our total volumes of close to around 2, like, 84,000 tons. How much was the contribution from the Flake Cup? And if you can just help us understand, historically, what used to be the difference between the lie and the Flake prices? And because of all this geopolitical situation, whether they have expanded recently?

So, we normally don't disclose the ratio between our lie and Flake production. So, unfortunately, I will take a pass on that answer. What I can only say is that our approach is to maximize our electrochemical unit margins. And then based on that, we choose the right product mix that we want to go to the market, while making sure that all of our contract customers, and we have several contract customers whom we have given volume commitments to, those are always on. But other than that, we will margin maximize our product.

So, hypothetically, let's presume that because of the newer capacities of caustic which are coming up here in India, and let's say there could be some correction in the prices of caustic. So, what internally we are doing in order to reduce the impact of any fall in the prices of caustic. So, if you can just list one or two parameters in terms of potential benefit from the measures, that would be very helpful.

Yes, so there are two things, right? First of all, whatever new capacity is coming into India in caustic, which is PVC-link, is relatively small compared to the traded volume of caustic internationally. So our thesis has always been, and it continues to remain, that it will be international market prices that will drive domestic price parity. The second point, of course, is whatever capacity comes in for PVC. We'll substitute PVC imports, which means there will be pressure on operating rates of, you know, PVC players outside the country. So we don't see any net caustic capacity addition to the global markets because of the extra India PVC capacity, because the PVC operating rate will be driven by PVC. Now, what we mainly are doing is chlorine integration, right? That is the main source of value generation for us. And you have seen that we have already inaugurated our CPDC plant. In fact, we made our first commercial treatments. We made a stock exchange declaration also yesterday. We are in the process of commissioning our ECH plant. So we will continue with our effort on chlorine integration. We are not... We are unduly pessimistic about long-term prices. We continue to believe that the domestic market will trade at import parity.

Perfect. So second question on the epoxy side, like what we see is like we have close to 18 to 20% top-line growth both on a sequential and on a YOY basis. So if you can help us understand was this purely led through the realization passed through the cost price increases or there was a volume growth also this quarter which has driven these top-line numbers?

I think the... The price realization has been the bigger part of that. You've seen the raw material prices go up, which has forced us to increase prices. Of course, there has been some volume effect, but it is mostly a price reduction.

And how do you see the markets in terms of epoxy, predominantly from the export market, like Europe and second USA? And also because some of the players have recently announced the capacity for epoxy here also in India. So how do you see the market shaping up over the next two, three years in terms of we filling up the capacities which we have recently expanded on? Thank you so much.

We are already operating at decent utilization rates. I believe that our utilization rates are higher than the industry standard in India right now. So that is not something we are worried about. About the extra capacities that are announced or will be announced, ultimately what we are trying to be toxic business is two things. What is demand and what is your value proposition to the market? You know, just having capacity does not increase the size of the end market, right? We believe that we have the broadest epoxy portfolio in the business. We have the best customer service, we have the best IT, and we will continue to maintain our leadership share, and we will grow with the market. Now, as regards to exports, of course, there are all kinds of other... factors when it comes to exports, whether that is the uncertainty of the tariff situation in the US, whether it is about the demand slowdown in Europe, and nowadays more and more availability of shipping and logistics. But our primary growth market remains the domestic market. We believe we are the market leader. We believe we have the best portfolio to provide complete solutions to the industry. We provide great technical service. We have dedicated, you know, application development resources, and we believe that this market share depends upon your ability to provide solutions to customers and not driven by capacity.

Perfect, sir. Thank you so much and wish you all the best.

Thank you. Next question is from the line of Siddharth Mehrotra from Kotex Securities. Please go ahead.

Thanks for the opportunity, Sund. So, just wanted to check, given that there's a slight mismatch with respect to the Ultratech dividends coming in, so do we see this as the peak net debt for us, or do we see net debt going to higher levels for us?

We will be maintaining our net debt below 2.

Net debt to EBITDA below 2 for the entire year. Is that correct? Okay, sir. So, in that respect, could you just throw some light on perhaps how will we structure our equity contribution to the renewables transaction?

As renewable, we will be investing not more than 1,000 crore in the current financial year.

Okay, sir. And what will be our stake in the renewables venture, once this transaction is consummated, obviously?

Yeah, the transaction will get consummated somewhere in December, and GIP will be participating. The equity portion for this transaction will be contributed by Aditya Birla Group, Grasim, as well as GIP, and we will have a separate call on this. So where we can clarify more in detail and I think we should wait for some more time till the transaction is consummated. But from Grasim, contribution in the current financial year will be less than 1000 crore.

I understood, sir. That's clear. Secondly, sir, on the VFF margins, sir, given our commentary, especially on the operating rates, which are at fairly high levels, do we think these margins are sustainable, say, for example, over the next five, six quarters, or is it too early to sort of predict that given the volatile commodity situation?

I wish I had the answer. But nevertheless, you know that this industry has been cyclical, but we have a very, very strong position in India. Irrespective of the global operating rates, our operating rates are very, very high. You know, they're almost close to 100, except if we take maintenance shutdowns, which also have to be taken. So I think it will all depend on how the input prices play and how the demand grows. Quarter to quarter, there will be some kind of variation. But in India, we are positioned to hold a very, very strong position. Our customer connect, our business development, our Neva brand, all that put together, we have a very strong position. And as we discussed earlier, the cotton is limited availability, so that will be substituted by our current VSF or the new lifestyle fiber that we are increasing our capacity. So, it's good now, but of course, you know, as an analyst, you would have studied these trends for a very, very long period of time. We're getting bigger, we're getting stronger, but of course, there will be some headwinds in some quarters.

Understood, sir.

Thanks for this, sir. Thank you.

Thank you. Next question is from the line of Nabeen Sahadev from ICICI Securities. Please go ahead.

Yeah, thank you. Thank you for the opportunity. Two questions. One is, I was reading across that lensing, which is a global major in BASF, is phasing out some capacities of the specialty fiber and also, I think, exiting Indonesia market, which is feasible. I think either they're looking to sell or shut it down. So, if you have any idea of that and what could be possible potential impact of that, is it likely to be positive is my one question. I have one more but I would request answer for this.

Yeah, one, of course, we do know what is in the public domain with respect to what some of the international competition announces. There is a small, see, some of these capacities that our competition is shedding are very small, high cost capacities in our assessment and in high cost countries. So it's very difficult to make fiber at competitive prices costs in those countries. So that's a certain call that they have taken, but in our case, we want to strengthen our portfolio of specialty, you know, products, both for the domestic market and exports. As far as what's happening in Indonesia is concerned, yes, that affects the global supply demand for the conventional viscose fiber, and any capacity drops is, for the competitors, always a good news. So to that extent, you know, we would be able to, when the equation of supply-demand stabilizes globally, if we need to export out of grassland, then it would be useful because the prices would be at higher level. That's our current reading and assessment.

Thank you. My second question was about pivot. So, two parts to this question is, first, having reached a sizable scale, like almost 10,000 crore, when is the break-even? Because earlier guidance to this was, break-even guidance was on achieving a billion-dollar sort of revenue. So, is the break-even anytime soon is one part of the question. The second was how much of our sales are directed or from the UBA stores, which is a fairly large chain of our subsidiaries. Thank you.

Thank you, Navin, for the question. As mentioned in the opening comments, our current estimate is that we'll exit this year at EBITDA break-even. I know you mentioned we had earlier given the guidance that at $1 billion or 8,500 crores, we will be break-even, but that timeline got shifted slightly. We have front-loaded our investments. In people and technology, and all of that has obviously helped us in achieving a higher revenue run rate. If you look at it, you know, we've grown 75% year on year, and our estimate of when we'll actually hit the 10,000 crore run rate is also, you know, a fast track because of the investment that we made. And, you know, we are on a good path, and we are fairly confident that we'll exit this year at EBITDA BQM. So that's your first question. On the second question, you know, we look at three segments fundamentally for our business. One is, of course, our projects business where we have raw material procurement that is directly supplied to all the sites where the execution is happening. The second one is manufacturing entities where we supply raw materials to all of the smaller and medium-sized manufacturing companies, and the third is retail. Retail is also a very important portfolio in our overall channel mix, primarily because, you know, we do a lot of finished goods or finished goods categories within this channel, which are at a higher margins, and that helps us in our overall margin as well. UBS is a big part of our retail. Retail overall would be about 15 to 20 percent of our mix. In that, UBS is about 70 to 75% of our current revenue. So, you know, we are, and we supply a whole host of categories there, and, you know, a large part of our catalog there is also our private labels in Tiles, Fly, and Backware, which actually go into these UBS stores. It helps them diversify their mix beyond selling just cement, and that is inherently why they keep coming back to us, because it helps them retain their end customers also. So, that's the response on the second question. I hope that answers both of your questions.

Absolutely. Excellent. Thank you. Thank you so much.

Thank you. Ladies and gentlemen, due to time constraint, that was the last question for today. On behalf of Krasim Industries Limited, that concludes the conference call. Thank you all for joining us today, and you may now disconnect your lines.