Kajaria Ceramics Limited (KAJARIACER) Q4 2026 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to the Kajaria Ceramics Q4 FY26 Earnings Conference Call, hosted by Spark Institutional Equities Private Limited. As a reminder, all participants will be in the lesson-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 a touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Girish Chaudhary from Spark Institutional Equities Private Limited. Thank you, and over to you, sir.

Thanks, Yusuf. Good evening, everyone. Thanks for joining. We have with us the Senior Management Team of Kajaria Ceramics, including Mr. Ashok Kajaria, Chairman, Mr. Chetan Kajaria, Vice Chairman. Mr. Rishi Kajaria, Managing Director, Mr. Karthik Kajaria, VP and Head Addressiv Division, Mr. Sanjeev Agarwal, CFO, and Mr. Parveen Guptas, VP Finance. I would request Mr. Kajaria to start with the initial remarks, post which we will have a Q&A session. Over to you, Ashokji.

Thank you, Ganesh. Good evening, everyone. It gives me great pleasure to welcome you to the quarter four. And as I already said, joining me on this conference call is a senior management team of Kajari Askaramics. I am pleased to inform that this quarter we achieved a volume growth of 11%. This is the result of several efforts made towards unification of states. During the first nine months, this unification meant realignment of inventory across channels, manpower alignment, And as a result, resulted into flattish growth, after which we experienced good momentum and demand since January 26, which was a result of efforts made by us in the first nine months. The production has fallen by 7% during the quarter due to shutdown of our barley plants in March, which have since started from 16th of this month. In quarter 426, our consolidated Thank you. Compared to the corresponding quarter last year, EBITDA margin for quarter 4 stood at 19.19%. Margin improvement is a result of cost optimization and some improvement in sales realization over quarter 3, along with all-round efficiencies in production, sales, and supply chain management. I would also like to mention here that there has been a huge destruction at body players. In terms of costlier fuel, labor, and cash flow, as a result, Kajari and other players who have multi-location plans will have a great advantage as you go forward. And their volumes are up for the year 26-27. For us, the journey has just begun, and we remain optimistic about the current year's performance and beyond. Let me share with you some data for the quarter. Segment 5 is financial performance. Child's segment grew by 11% year-to-year at 1212 crores in quarter 4 up to 26 compared to Rs. 1088 crores in quarter 4 up to 25. Barclays segment registered a 6% growth in revenue, reaching 117 crores in quarter 4 compared to 111 crores in quarter 4 up to 25. Revenue from the adhesive grew to 24 crores in quarter 4 up to 26 as compared to Rs. 21 crores in quarter 4 up to 25. EBITDA improved in quarter 4, F26 to 19.19% as compared to 10.01% in quarter 4, F26. PBT. The profit before share of profit from JV exceptional items and tax for the quarter grew to Rs. 228 crores in quarter 426 as compared to Rs. 85 crores in quarter 425. Pat for the quarter grew by Rs. 136 crores in quarter 426 as compared to Rs. 43 crores in quarter 425 due to higher volumes and improved realization. As of 31st of March, 2026, The working capital cycle improved by 14 days to 51 days, as compared to 65 days on 31st of December, 25, mainly due to decrease in inventory and receivables. And we'll continue to focus on reduction of our working capital cycle as we move forward with Sanji.

Hello. Hello. Hi, this is Sanji Radharwal. Thank you. I would just like to say that in our presentation, in slide number 9, the inventory figure has been interchanged to debtors inadvertently. We have uploaded the revised presentation to the stock chain and to our website also. So please read inventory figure as debtors and debtors figure as an inventory.

With this, I take this opportunity of thanking you all for joining us today. Over to more data for Q&A, please. Thank you.

Thank you very much, sir. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touch room telephone. If you wish to withdraw yourself from the question queue, you may press star and two. Participants are requested to use handset while asking a question. Ladies and gentlemen, we'll wait for a moment while the question queue assembles. First question is from the line of Keshav Lahoti from HDFC Securities. Please go ahead.

Thank you for the opportunity. So, congratulations on strong set of numbers. So, I wanted to get a sense on Q4 growth. One is because of unification, and secondly, we believe because of this bid'am thing, the Morbi has taken a shutdown. Possible to bi-percate? How much positive risk could be coming because of the Morbi shutdown? And secondly, how are the things looking on Q1 side?

So, this volume growth is not because of only the Moorbi shutdown. In January and February, also, we had a volume growth. It was consistently throughout Korda 4, in Jan, 5 and March. And what was the second question, please?

On the things looking in Q1, Q1 should be stronger than Q4?

The momentum has started now, and we're looking at a good 26-27 going forward. So, we cannot break it on Korda 5, but the good momentum has started now, I would say.

In general, Q1 historically is low in the SPS and Kajaria. So Q4 cannot be compared with Q1. But the whole year is going to be much better.

No, no, I got it. I was asking more year-on-year, April-on-April, this is the momentum, whatever the double-digit volume growth, that might be continuing in April also. Possibly might be at an extended increase was my question. And my first question was that, I understand it's because of both unification and Morbi, so I was just trying to ask, is it possible to bifurcate this growth? Just let's say, for example, what has been your growth in let's say Jan and Perth, when we are not seeing the Morbi destruction?

Sir, has the White Chairman said that the growth is not just because of Morbi, because we have started getting the growth from the month of January itself?

No, no. Jan in February, volume growth was 8%, 8 to 9%, and then continued in March also.

Understood. Got it. That is helpful. So, what sort of prices you have taken in the market because of inflation in gas prices? And how are the gas prices now and in last quarter to quarter? So, my question is, what sort of price hike you have taken because of increasing gas prices? What were the gas prices region-wise in Q4 and currently?

So, we have taken the price increase of roughly 12 to 13% in our North plants, and Murthy has been slightly higher around 60 to 17% because the gas price is one of much higher. That's been the region-wise price increase, and South is also in the similar lengths.

And more or less we have covered the cost of increase of gas. And with some added margin, but more or less covered the cost which have gone up.

The reason why gas prices for Q4 and currently, how it stands?

See, there is a varied combination. You see, what has happened in the month of March, all the plants in Morbiv were shut down. So almost, there is no calculation. Now we have started the Morbi plants from 16th of April. As far as the gas prices in North are concerned, the government of India made a restriction that you will get for the first two days 80 percent and 65 percent. It's a varied price, as you might be aware. So, given exact number is difficult to say, but calculated by the prices have gone up quite a bit.

And we have different type of gases in our non-Morbi plants.

I'm going to talk about it. Thank you so much.

Thank you. Next question is from the line of Sneha from Nuwama. Please proceed.

Thank you for your opportunity and congratulations on great set of numbers. Just continuing with the last participants, questions where you generally used to give a breakup of North, South and West average gas prices. Could you give that to us for Q4?

So, north is roughly 55.54 rupees per SEM for quarter 4. South was 49.6 and west was 46.57.

And could we have current prices key as possible?

Yes.

Whatever value is working out today.

So, April the price in north is roughly 62.5, south is around 81 rupees and west is 79.

Sure. So, like the chairman and you know, you have gas prices.

Yeah, gas prices, not gas prices. Yeah.

Understood. So, you are saying that you also have biofuel because of which the average fuel prices must be on the lower side. Is my understanding correct? Yeah, correct.

Yeah. So, average fuel price would be lower than the gas price.

Understood. This is where we would have some advantage versus Morley and what would be the current mix of biofuel 20-25% if I'm not wrong?

We are out fifteen percent. No, north plant is about thirty percent. Thirty percent. For the whole?

Yeah, yeah. It has north plant, three plants, three plants. It has north plant. Yeah. In there, they are using coal in spray time. And south also coal in spray time.

Understood. Understood. And secondly, for an extension to this, given there is a steep increase in grass prices and the waves, you know, we have taken size increases through to manage the margins. Any end users demand impact that we have seen on ground, not just because of the size increases, I think we have seen it across the construction space, like we have seen sharp increases, let's say in wood, in, you know, air chassis, I mean, across the board. Are you seeing any amount of hit taking place in the construction sector?

Not really. I think the demand is there, and that is a very small segment in the entire real estate project. So, just for that price increase, they will not stop their construction. So, we are looking at a good demand for the year.

Any guidance that you want to give?

See, guidance, as you are aware, I have always given, right? It didn't work out. So, after I give guidance, you will say... I have not done this. So, my request would be going forward not to give any guidance and we perform and prove to you people that we are doing a good job exactly.

Perfect, sir. Got that on the volume front. Anything on the margin front that the margin could stabilize your...

We are confident that with the current scenario, we should be maintaining between 18 to 19%.

Perfect, sir. Thanks a lot, sir. I'll get back in the queue.

Thank you. Next question is from the line of Praveen Sahai from PL Capital. Please go ahead.

Yeah, thank you for opportunity and many conversation on a good set of numbers. My first question is related to the fuel. As you had given that the fuel prices have increased in all the three locations, but if I look at your fuel expenses as a percentage of sales has been down. So is that the impact has not reflected in the Q4 or the price hike which you had highlighted already taken, you know, that's the impact as well.

So we took a price hike in early March.

Your question was fuel prices down in the Q4?

Yeah, fuel prices as a percentage of sales has been down.

It is because of the lower production, we produced less 7%. We sold more and we are comparing the percentage on sale. So sale is higher and production is less. Sale is higher by 11%, 12% and production is down by 7%. So as a percentage, the fuel price has gone down. In fact, actually the price per square meter has gone up.

Right.

Got it.

Yeah, yeah, correct, sir. Second thing on the price hike, as you said, that early March, you had taken the price hike. So in the coming quarters of this quarter Q1, we will see the entire benefit of what 12 to 15% of increase in the prices in our realization.

We should see that there is some increase in the price realization.

We cannot quantify any number because it is a very dynamic situation. So we have taken the price increase. We might have to give some discount as well. Absolutely.

Like in projects, we might be a little more flexible in terms of our pricing.

But one thing is that the price will be much higher than what we used to see earlier.

Right. And last question, sir, because Morvi yet to fully resume or, you know, come with a force. So such a benefit what you have received in the Q4 in terms of the volume growth. Please, we can see in the coming like this quarter and the coming quarter till the Morvi is not coming back with the fully production.

No, from first of May, Moorby is also starting their production. GRBC is giving gas to whoever wants to take it in Moorby. So that quarter-force scenario is not there anymore. Now gas is available to anyone who can take it and produce and sell. That is the current scenario going forward from May 1st onwards.

You see, two things are happening. One minute, one minute, let me explain to you. Two things are happening. For the first time in last five years, the gas prices are going up like this. The gas prices, which was 47 or 48 rupees landed, is, as of today, is 84 rupees and 50 pesa landed for the model players, which includes the tax, which includes the calorific value equalization. Point number one. Point number two, for the extra price, you have to give a vendor into GSTC. Third point. When it comes to pricing, you have to select these prices. Morbi has, as we are all aware, Morbi has always reduced the prices, reduced the prices. First time, they have to take a 35 to 40 percent high. A product like 4 feet by 2 feet, which is selling at 20 rupees a square feet, has to be sold at anywhere between 27 to 28, because that is the impact of gas. So, how can they sell cheaper? Now, they are not sure whether they can sell at these prices. So, as of today, nobody knows how many plants will run, how many plants will be able to run properly. Secondly, the plans which will run properly are, one, who has created a brand in Morby, there are a few players, I would say 10-12 players who have created a brand for themselves, yes, and secondly, who are outsourcing for organized players or some other players, who have backup demand, yes, I will produce and they will buy. Besides that, there is a lot of questions, lot of questions should be answered on Monday 4th, because 1st, 2nd, 3rd is a holiday from, people are expecting to start, but Monday you will know how many players have started. My answer to that.

Thank you so much, sir, and that's really helpful to understand the current situation. All the best, sir, for future.

Thank you. Before we move to the next question, a reminder to the participants to ask a question, you may press star and one. Next question is from the line of Sonali Salgaonkar from Jefferies, India. Please proceed.

Thank you for your opportunity and congratulations on a good set of numbers. So, my first question is the production. I was just trying to align the numbers. The production is down by about 7%. The sales is up by 12%. Is it fair to assume and interpret that there was a lot of finished wood inventory lying with you earlier, which was ready, which you sold off in March? And going forward, with that inventory liquidation behind us, our sales would be more in line with our production. Is that the right way to look at it?

So, you are right. First, the inventory has gone down because of this shutdown of Morby. Our inventory has gone down. Secondly, going forward, currently, all our plants are running at full production. So, with our combination of our own plants running at full production and our stocks, we will be able to service all the sales orders and outsourcing as well. Outsourcing still is a little problem because as we just said that Morby, a lot of plants are still shut down. But we have enough stocks and are transferring a full capacity to service the market, to do our numbers.

Understood. Now, just as a follow-up, what is the current capacity utilization of our plans? If you could please participate that at the outsourcing in Moorby and in the other regions, and how much percent of our supplies coming from the market?

Sunali ji, our production will be, as Rishi said just now, from 16th of April, all the plants are laying in full capacity. But today, as Kajariya, we are outsourcing to the extent of almost 27-28% of the materials from Morbi. Now, there is a question. in the month of April, and April was, of course, tough, but how much we get in May, things could get normal as we go forward, but right now, that's a question mark, because many plants, as I just said, few minutes before, are not running, because they are not running for a simple reason. The gas they got, started getting gas, is only from 16th of April, and then again from 1st of May, for the people who have not started the plants yet. So, as we go forward, we know, but our plants are running full, and as rightly said by Rishi, See, our slopes have come down by almost one and a half million square meters. In the month of March itself, because the monthly plans were shut down and we sold more. So that's how we, we have, stocks have come down and we also realize better cash flow because of tightening up the norms.

Got it, sir. Very clear. And just one last question from Mayan Expo. Definitely Gulf accounts for about 25% of the U.S.

Your line is not clear.

Sorry.

Sorry. Is this better now, sir? Is this better? Yes. Sir, on the exports, we understand Kajalia doesn't export, but Moorbi used to export about 25% of its sales in Gulf. So with that getting impacted, do you foresee more competition once the Morbi starts producing from the 1st of May? And also we understand that they have taken price highs, but with us taking about 15% price highs, do you think that the competition could be more from Morbi in the domestic market?

I think you didn't hear this analogy. I said two things. One, they have taken a price hike of 35 to 40 percent for a simple reason. That's an impact of gas only. I am not talking about other inputs like packing and all that, but just the impact of gas is roughly about 35 to 40 percent, number one. Number two, as the plants were closed, the question of export doesn't even arise. Because in the month of April, the export has hardly been 400 to 500 crores. Why? I give you two reasons. One, the plants didn't run. Secondly, a lot of exports to Gulf are affected. Give you a small example. Before the war on 28th of February, the freight was $300 for UAE. Today, the freight for UAE is almost $4,000. So, how can they export and how will the buyer get? So, these are the factors.

Sorry, my question was that once Moorby starts producing from first of May, and I agree with you that the exports are definitely impacted, would that increase the competitive intensity in the domestic market? That was my question.

That is what I said earlier, out of 500-600 plants which people say in the investing community, which I agree. Not more than 150. As of today, there are only about 70, 80, 90 plants which are coming. And as I said earlier, a few minutes back, that on 4th of May, you will know that how many plants are running. Our estimate is not more than 150 to 160 plants ultimately will run from 1st of May. If they run, there is a big shortage as it is in the domestic market. And why will they export and have this headache? They will rather feed the domestic market because domestic market is important. Coming to competition, there is already a big vacuum. If you go to Morbi today, you will find many plants don't even have a single box. Everything has been sold. And that's a scenario which has been told to us by people, because we have no material. Because what the dealer said, then during the month of March, who were buying from or me, they told them, yeah, I give you money of the past, I give you money of the present, give me whatever you have on the old prices. So they have cleared their stocks in total. So, it's a very, very positive scenario for the so-called organized players who have multi-locational plants going forward for the whole of 26 minutes.

Got it, sir. Very clear. Thank you and all the best.

Thank you, sir.

Thank you. Next question is from the line of Rahul Agarwal from IKIGA SS. Please go ahead.

Hi, sir. Very good evening and congratulations for a very good number. So firstly, on the bathware side, this 50 crore buyout of the PE investor, is it for the entire 15% stake or is it lower?

Thank you.

They invested $10 million, eight years back. So, we bought the entire state for Fifi Kauru by mutual discussion and negotiation.

Got it, Sanjuji. The second question on the cost side, you obviously mentioned that 18-19% EBITDA margin is achievable next year. But when I look at, you know, this year, there have been a lot of cost-saving efforts which you have made. This staff cost of 530 crores for fiscal 26, the number looks like stabilized at 130 crores per quarter. How should we look at this cost going forward for the other expenditure and staff cost? I'll just repeat myself. My question was that this year, it was a restructuring year for Kajaria. You've done a lot of effort on the cost side. For fiscal 26, the staff cost is now stabilized at 530 crores, which is 130 crores a quarter, and other operating expenditure will also come down substantially to 480 crores, right? If this is the base for fourth quarter run rate, how should we look at fiscal 27 on expenditure side?

In the similar grounds, we are not looking at…

See, similar… You see, you have not calculated one thing. For the year 25-26, in volume, overall volume, we grew at 3%. We are talking about a much positive growth going forward, as we have seen in the quarter 4 at 11%. We are saying that it will be much better growth as we do it, because we are not giving any numbers, as I said, but we'll do much, much better as we go forward, number one. Number two, some cost increase will be there, of course, because when you start a new year, some cost increase will be there. But very marginal. It will be very marginal, and it will be much more nullified by the volume growth which will happen, and the price increase which has taken place from 1st of April, because actual price, second price increase only came from 1st of April.

The income, I mean, absolute number, there could be some increase, mainly in case of labour and all, but in terms of, as Chairman said, as a percentage of till, it will be lower.

Very clear, sir. And last question, sir, when I look at the production, you know, my sense is for Kajaria in-house production is about 60-65 million square meters. And please correct me if I am wrong.

No, it is 84 million square meters. 87.

Yes, so I was actually breaking it down into three parts. Own capacity, joint venture, and outsourcing. I was looking at own capacity and joint venture is about 89 MSM. I agree with you. The question I'm asking is the fourth quarter? When I look at production, it looks like the JV production obviously is declined purely because of some, you know, gas supply issues in Morbi. But it happened in the month of March.

Don't forget that it happened only in the month of March. January, January, Morbi has been also normal.

Yes, sir. Yes, sir. So, just from 16th of April, when you are saying that gas is available for all of our plants, should I assume it is also for our outsourcing partners and joint venture plants put together? Yes, absolutely. Absolutely, yes.

Yes, outsourcing. Joint venture partners, yes.

Outsourcing partners is a question mark.

Because we are not completely outsourcing 100% from each of the outsourcing partners, we are having some percentage of our sales. So if they can't put their plant fully on their own, then they will not produce just for us a small percentage of the sales. So that's a question mark. As we go forward, we will get to know more about it as the event unfold.

Got it, sir. Because that is almost 30 million square meters we have sold from outsourcing partners last year. So, that will all get compensated from your in-house production from JV, their own plants. Is that correct?

It is not that the whole outsourcing will stop. The outsourcing will reduce that too in initial months. If the Moorby has already started and from first of May, Moor plant will open, they will have to sell. So, they will have to sell to Kajaria first. So, it is a one or two months disturbance in the supply. It is not a permanent disturbance. Because when we are ready, when we are giving assurance, as servants have said, if the plants are running, who have the brand and who have confirmed order, if I, there can be a situation that we have, we are outsourcing from 12 plants. So we may outsource, let's say, from 12 plants going forward.

No, no, you see, last year we sold 18 million, produced at about 87, 86 million, and we outsourced about 32 million square meters of price. As Sanjee was just saying, suppose A doesn't run. We will die with B. The question is very simple. Material availability is not a problem for Kajariya and Kajariya. He has to outsource. This year we have to outsource almost 40 million plus. Right? So we will outsource from A. If not A, B, C. As plans move out, this problem is limited to probably for the month of April and May. As things normal, people will come forward to our listing and say, Why don't you buy from us? So, outsourcing will not be a problem in terms of 12 meters as the initial,

initial it's a problem, going forward will not be a problem.

Because we will be realigning our suppliers' institutions.

Got it, sir. Got it. Very clear, sir. Thank you so much and wish you all the best for fiscal 27.

Thank you. Next question is from the line of Ritesh Shah from Investec. Please proceed.

Hi, sir. A couple of questions. Sir, first, if you could please help clarify. Sir, you know that Morbi will need an increase of 35%. I think you said 20 rupees and then 27 rupees. But, sir, you also said initially that 16 to 17% price increase invests and hours will be in similar lines. So, I just wanted to understand the timelines for both the numbers.

Hey, you see, what you have not understood, Morbi per se was selling a product, let's say, of 20 rupees per feet, that's a 4 feet by 2 feet type, right? Today, as far as they are concerned, their costs have grown up by 35 percent because of increased price of gas. So, their prices have grown up from 20 to 27 or 28 depending on the customer. As far as treasury is concerned, I was already selling at higher price. So, my price increase is only 15-16 percent which covers the cost of gas and this thing. So, that is what the scenario is. If somebody supplies you from Burbi, he was earlier supplying you at 20 rupees, today in the supply, you had a minimum price of 27, 28, maybe 29 rupees also. So, their cost is escalation is 35 to 45 percent.

There are two things. One, if the Burbi price is cheaper, so, and our prices, the branded pair prices are higher. So, the same cost will be less. Same amount of increase will be higher percentage for Morbi and less percentage for Kajariya, number one. And going forward, the difference will minimize. Number two, our gas prices have gone up much higher than the non-Morbi.

You see, for Morbi, whatever we outsource, he's talking about that. Our prices were already higher when we were selling, so the difference will minimize. I have, as V.C. said earlier, Thank you.

Another clarification. Sir, Morpi, you have told me that Rs.47 is somewhere at Rs.84. And in our case, you indicated Q4 was Rs.46.57 and April, you said, was Rs.79. So, how should we look at the Rs.79 and Rs.84? Like, Rs.79, you also indicated, was gas.

I have to launch a lot of 79.

Then you work out yourself. In, in, in north, we are getting just from... India Limited, and we are getting three types of theirs. That's RLMG, then the Hedri Hub, and the JCC. Format of India has already described a formula that you will get 80% of normal and 20% of spot price. They started with that on 9th of March. Then they reduced it to 65, then 55. Again, they brought it back to 65. As of today, it is 80%. 80% is the normal, 20% is the spot price. As far as South is concerned, for South East Asia, we are in the same formula. For Kala Aski, last year, last one, we paid a half price because we have no contact of spot price. We have, from 1st of May, we will get a normal price. We have entered into long-term contact with India. So that's the scenario. Is that clear now, or would you like to?

Yes, I have some, probably I'll call, essentially, after the call. Sir, my second question was, how much is the inventory that we have in million square meter? Is it closer to 1820? Inventory?

Inventory would be about 11 million square meters total.

11 million square meters, okay. And so how much would the... Hello. And sir, how much would be the inventory at the JB partner levels or outsourcing partners? I'm just trying to understand that we have significant advantage not only because of size, location, but also the inventory that we have at our hand, which could also be low-cost inventory.

But there is no low-cost inventory, because the prices have already gone up from our chapter, so there cannot be low-cost inventory. Inventory is a normal, but market is being produced is being sold. So, what she said earlier, we have inventory. Whatever inventory is there, it is okay, because our plants are in the future capacity. There is a problem in what we were outsourcing. In outsourcing, last year we outsourced to the extent of 22 million square meters, this year we will be outsourcing to the extent of 40 million square meters. As things normalize, we will get materials from outsourcing. And as I said, if A doesn't start, B will start, C will start, they will come to us and say, yes, sir, you buy from us. Simple.

Correct. Correct. This is helpful.

It is not that we or somebody else is in the entry of one month or two months. In Morbi, for your information, they have to end up the whole act. There is no material. They have sold everything.

Correct. Wonderful. Wonderful. And, sir, lastly, any specific reason for the buyback decision at this point in time? How should we read into it?

That's more to me. The buyback decision is more to give the market confidence that we're very confident of good numbers going forward.

We feel that we're going to do well, and it's better.

It is that buyback was not tax efficient. So, from this time, it has become more efficient. So, this is a better way of returning money to the shareholder. So, one, we were having enough cash on the balance sheet, which is much more sufficient than our capital. Two, it is tax-efficient to the shareholder. Three, it will improve our ROE also.

Sure, this is very helpful. Yeah, and the sister. Thank you. Thank you so much. Thank you for the answers.

Thank you. Next question is from the line of Utkarsh Nopani from Anandrati. Please proceed.

Yeah, hi, sir. Sir, my first question is regarding the tile's production. So, if you see it has gone down by 7.5% in March quarter, but you have mentioned that all of our plants are currently operating at full capacity. So, just wanted to confirm from you that whether our tile's production volume is not likely to get impacted in Q1 as we have seen in Q4?

So, the tile production was down by 7% in March. In March quarter, because March, the plant was shut in Morbi plants. Now much lower. Now, as I said, from 16th April, all the plants are only at full capacity, even the Morbi plants.

Okay. So, like, on a bio-wide basis, we can see some bit of a decline in our production in the current June quarter, is it correct, sir? Because we have started the plant from 16th of April.

Correct. Correct.

Okay. And the second thing, sir, like you have mentioned that many plants in Morvi are still shut. So whether our understanding is correct that also sales volume for us might get impacted in the current June quarter, but it will go back to the normal level as things normalizes in Morvi.

We're absolutely correct. Absolutely correct.

Okay. And third thing, sir, I just wanted your sense that our sales volume has grown at only 6% over the last 7-year period. So what would be your guidance on the volume growth over the next 3-5 years for Kajabi?

I think our chairman has already said about this and we will not say over it.

Sir, I did not get you, sir, like when you have said. Sir, can you please repeat once again? What would we have done, sir?

I already said, I am Harbar guidance, as they say, in the earlier years, it didn't work out for various reasons, because we have no control over the outside atmosphere. We have a control over what we are doing, but we don't have the control over the outside atmosphere. So, keeping in line, we have decided not to give any volume guidance, number one. Number two, we will perform as we move along. In a positive manner. That's all at this stage.

Okay, and sir, lastly, like on the fuel side, sir, you have mentioned that our gas procurement cost in north is around, say, 62 rupees versus, say, around 80 rupees for west and south. So, just wanted to know what is the reason that our gas procurement cost is so low in north compared to the south and the west region?

I think you've been here. One of the earliest speakers asked this question. I answered it. Again, I repeat for the benefit of everybody. Government of India has set a certain formula. They have made Gale as a nodal agency on Nitro Mark that you will coordinate with the entire gas pipeline because of this war. Now, what they have done, as per government guideline, whatever you have lifted in the last six months, you will get 80. They started off with 80% at normal prices, 20% at spot prices. Got reduced to 65, then to 55, again raised to 65, and again to 80. As of this morning, we are getting a north plant gas at 80% at normal prices, 20% at spot prices. As far as South Asia is concerned, we are getting in this same formula, because there, the CGT company there is going by this. In Kalasi, we are getting gas from thin gas, and we have no such agreement for the month of April. So, we have to pay for prices. We have just entered into an agreement, two days back, and we will get. At normal prices and sink gas from 1st of May. So that's the scenario. Morby scenario, you are already aware. So I don't have to talk about it. So it's a very fluctuating, fluctuating thing. If I tell you, no, I am getting gathered at this. These prices go many because every day the norms are changing. My government of India and I continue my daily. So whatever it is, we share the formula. If required, so you can later work out and tell you the gas prices.

Okay, thank you. If you can just throw some light, how is the supply of propane at the moment in Morbi in comparison to the genuine future?

I hear propane is not allowed for the industry. The Orbiter of India has issued a circular on 5th of March that propane will not be supplied to industry. It will only be used for domestic LPG production. No industry is getting propane for your information.

Okay, thanks a lot, sir.

Thank you.

Thank you. Participants, to join the question queue, you may press star and 1. Next question is from the line of Saurabh Jain from HSBC. Please proceed.

Thank you for the opportunity and congratulations for a great set of numbers. I just wanted to continue from the previous question on propane. So why do you understand that in the recent times, the propane is not allowed? But when the expectations are that the Morbi is going to get back the production line, what is your sense? Is it going to be like a permanent shift to natural gas and propane not being allowed to Morbi even for the long term? Is that a structure shift that you're assuming or when it is normalized and they might get back and shift back to propane?

See, how can we say that right now about propane? Also, the propane price is 160 rupees, and it depends on the horse situation. So, right now, household cooking and fertilizer are the most priority factor for the government to give propane to. So, this is a very fluid subject which we cannot comment upon, because the price was a very high of propane.

You know, I wanted to get a sense because you are closer to the industry. What is the inner circles indicating? Like government is serious about making a permanent shift to natural gas or things can go back to propane in the long term point of view, is what I'm asking.

Neither for you nor for us to decide. It all depends on the war situation and what is happening. Government's first priority is to give LPG to domestic, number one, which you are also aware. They are also aware. Second priority is to give to fertilizer, because that's an area they can't afford to this thing. I just give you a small information. The fertilizer prices, there is a shortage of fertilizers in India, shortage of fertilizer in India, and the fertilizer is being sold at 100% premium. And the import of fertilizer which is coming is at double the price of Indian production. So that is why the priority of the government is to make sure. Third priority, as you know, earlier was power. Industry was coming later. They are not giving any gas to the power industry. They say, no, I can't give you gas. Industry has been put on a priority number three.

And when I'm saying industry means all industry.

My second question is on the biofuel thing that you mentioned, is it possible to share what could be the comparable biofuel cost for you on a per SEM basis?

Biofuel cost varies, but I can share you. The northern plant, the biofuel cost is about 20 rupees per SEM, comparatively. And in south, they are using coal, in morbi, they are using coal. Because in what you call this, cabotage coal. You cannot use coal, so that is why we had an option to use bioplast, which the government has allowed.

But it looks like a very good arbitrage now, you know, getting biofil at 20 rupees compared to...

You see, let me tell you a little bit about the ceramic tile plant. The current plan consists of two major facilities. One is called a sprayed air, one is called a kiln. Kiln can only be run on gas, natural gas, or propane, or LPG, which is gas. As far as sprayed air is concerned, it can be run on biofuel, it can be run on coal, it can be run on gas. So we can only use biofuel in sprayed air. And that is why when we give you this information, that 30% of the fuel today is biofuel, which is used in the sprayed air in northern part of it.

Okay, so you are related to the fact that it cannot be taken more than 30% as overall fuel mix. Hey, tell me, you cannot use it.

Correct, correct.

We cannot use it in fuel. Yeah, sure, I appreciate it and just was trying to confirm it. Secondly, a lot of other players would also be trying to secure this biofuel because it is coming at a lower cost and also, you know, the crop has also recently happened for mustard. Are you seeing any challenges in terms of, you know, procuring this material for producing the biofuel?

Only two plants, the only two plants in north are Sumani and Oregon, they are already using it, and as far as mustard is concerned, there is no selling. The maximum production of mustard is in the state of Rajasthan, and plenty of mustard is available. Got it.

Second question, can you also give us some sense on how the growth trends are looking like in the month of April?

As we said earlier, we cannot give you month to month. First, our CFO already said that uprising quota is normally weak. So please try to understand two things. One, the Morbi plants are not producing at full capacity. Rishi just said that from 16th of April, all Kajaria plants are running at full capacity. Whatever we use in production for 15 days in Morbi plants has to be taken into account. Morbi, outsourced plants are not running in full capacity. They will run as in when they are comfortable. Chetan also said that right now, say from certain plants, we are buying only 20% of the capacity. He cannot earn 80% unless he has a source to sell. So that scenario will always be there. We cannot tell you what is happening in quarter one and on a daily basis. What we have said, we are looking for a very positive growth. And not only we at Kajaria, I also said in my opening, organized players like Kajaria, Somani, and Johnson, who have plants all over the country, will get benefited by this process because there is too much damage in Morbi. Please understand that. And get all the information, you'll have a lot of information when you go out there, that there's a lot of damage. So, kya hoga, kya ni hoga, nobody knows at this stage.

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

Thank you. Next question is from the line of Arun Baird, from ICICI Securities. Please go ahead.

Hi, sir. Congratulations on a good set of numbers. Sir, just how much was the ad spend this year in FI26?

It was around, I think, 9200 crore in the whole last year. We did it less as compared to the previous year because we did very hard negotiation and this year we are going to do much, much higher ad spend. Our new TBC has come, so we are just in the process of making plan on many, many channels or regional channels and others. So this year the ad spend may be 40 to 50 percent may be higher than what we spend in the... We've got a much more aggressive ad spend this year.

And second thing is, you know, the salary hikes, which last year was not given to employees, as you mentioned, this year, have we taken any decision then?

Some action will be taken, but we have yet to take a call, but some action will definitely be taken in a positive manner, because we are all part of the industry, we understand, they also understand that you as Kajari are making money, so we have to take a balanced call as we go to.

And, sir, third thing is, in last year, Q1 call, Q1 FI Q1 A6, we had mentioned that once we reached a run rate of 250 crores a quarter on the EBITDA front, that's 1,000 crore visibility, the salaries will be reinstated for the promoters. Sir, anything there you can help us with?

So, we have decided not to take the salary this year as well.

Okay.

So, sir, it's postponed to the next year, basically, whatever the numbers for this year, right?

She did not say postpone for the next year. She said we will not take this year.

Okay. Fair enough. Thank you very much.

Thank you. Ladies and gentlemen, as there are no further questions from the participants, I now hand the conference over to the management for the closing comments.

I think very good questions came out, and on behalf of all of us, but also I would like to add one or two statements. I think great effort has been done by Chetan Adjishi as a team. After unification, I think they have done a lot of work in the last financial year, supported by Karthik and NSEF. I must say that it's been a tremendous effort by these three people in taking the company to this height. And I am very positive that going forward, the results will be even better. A lot of good questions came, and we are trying to do our best to reply them in the right way.

And also, just to surprise you guys, we have kept a lot of good senior people in the company. A new CHRO has joined. A chief marketing officer joined for the entire branding of the company. A new chief digital officer has joined to take over the technology part of the company. Even for Keruit, Keruit as a brand has been struggling for a while. So by there also we've got a couple of very senior people, a chief business officer to look after the sales, an advisor who is handling the factory, both veterans of the industry. We've also got a senior purchase guy. So we've got a lot of good people. And I think that is the reason which we are so confident that going forward, because ultimately the team has to work, we're very confident that going forward we'll achieve what we want to achieve.

The good strong leadership team is in place now going forward.

Thank you, sir. On behalf of SPARC Institutional Equities Private Limited, that concludes this conference. Thank you all for joining us, and you may now disconnect your lines.

Thank you. Thank you very much.