Bigbloc Construction Limited (BIGBLOC) Q1 2027 Earnings Call Transcript

Ladies and gentlemen, good day, and welcome to the Big Block Construction Ltd. Q1 FY2027 Earnings Conference Call, hosted by Valoram Advisors. As a reminder, all participant lines will be in the listener mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star, then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Purwangi Jain from Valoram Advisors. Thank you, and over to you, ma'am.

Thank you. Good afternoon, everyone, and a very warm welcome to you all. My name is Purwangi Jain from Valoram Advisors. We represent the Investor Relations of Big Block Construction Ltd. On behalf of the company, I would like to thank you all for participating in the company's earnings call for the first quarter of the financial year, 2027. Before, cautionary statement. Some of the statements made in today's earnings conference call may be forward-looking in nature. Such forward-looking statements are subject to risk and uncertainties, which could cause actual results to differ from those anticipated. Such statements are based on management's belief as well as assumptions made by and information currently available to the management. Audiences are cautioned not to place any undue reliance on these forward-looking statements in making any investment decisions. The purpose of today's conference call is purely to educate and bring awareness about the company's fundamental business and financial performance for the period under review. Now, I would like to introduce you to the management participating with us in today's earnings call and hand it over to them for opening remarks. We have with us Mr. Mohit Sabu, Director and Chief Financial Officer, and Mr. Manish Sabu, Promoter. Without any delay, I request Mr. Mohit Sabu to give his opening remarks. Thank you, and we're with you, sir.

Good afternoon, everyone, and thank you for joining us today for the Big Block Construction Ltd's earnings conference call for the first quarter of financial year 2027. We are pleased to begin FY27 on a strong and encouraging note. The first quarter marks an important inflection point for Big Block as the investments and capacity expansion undertaken over the past two years are now beginning to translate into higher utilization, stronger Operating leverage and a meaningful improvement in operating performance. Over the last several years, we have transformed ourselves from a regional AAC block manufacturer into a diversified green building materials company. During this period, we have significantly expanded our manufacturing footprint, diversified our product portfolio, and built a stronger platform to serve the involving needs of the construction industry. Our revenue has nearly tripled over the last seven years, reflecting both the scale we have created and the growing We are following acceptance of our products across our key markets. The last two years, in particular, were an important investment phase for the company. We undertook significant capital expenditure to expand our manufacturing capabilities, upgrade our manufacturing capabilities, strengthen our market presence, and create the capacity required to support our next phase of growth. While this investment phase temporarily impacted reported profitability through higher depreciation in finance costs, These investments have significantly strengthened our business platform and positioned us to participate in the next phase of industry growth. Importantly, a major capacity expansion cycle is now largely behind us and our focus has therefore shifted from capacity creation to capacity utilization, operational efficiency, cost optimization, cash flow generation, and profitable growth. We are already beginning to see the results for the same. During the quarter, we achieved sales volume of 2,21,545 cubic meters, representing a healthy 32% year-on-year growth. In spite of industry-wide labor availability challenges, our plants operated at an average capacity utilization of around 69%, reflecting resilient execution and healthy demand across our key markets. We are now approaching operational breakeven. As utilization improves over 75% and day on, we expect operating leverage to strengthen further, resulting in better absorption of fixed costs and a meaningful improvement in our profitability. We believe this marks the beginning of the return phase on the investments made over the past two years. Outside improving utilization, we are also implementing several initiatives focused on energy efficiency, cost optimization, and operational productivity, which we believe can support marginal improvements going forward. During the quarter, approximately 52% of our power requirement was met through solar energy. This represents an important step in reducing our dependence on conventional power sources while improving our overall energy efficiency. We are also progressively introducing electric forklifts across our operations. This initiative is aimed at improving material handling efficiency while reducing fuel maintenance and operating costs. Over time, the increased adoption of electric material handling equipment is expected to contribute positively to our operating efficiencies and margins. As our client is now operational, further expanding our product portfolio and enabling us to participate in the growing opportunity in the construction, chemicals, and allied building material solutions. As we scale up the business, we expect it to increasingly contribute to our product mix, revenues, and profitability. As a future-driven company, we are continuously adapting our processes and operations to align with the evolving needs of the industry and the environment. As part of this approach, we are implementing measures that will help reduce our overall carbon footprint and improve resource and energy efficiency. Importantly, these initiatives will also have the potential to enable the generation of carbon trade creation, creating an additional value opportunity for the company while supporting our long-term decarbonization goals and sustainability goals. These initiatives together Automation and Continue.

The line for the management has been disconnected. Please wait while we reconnect them. Ladies and gentlemen, the line for the management has been reconnected. Yes, sir, please proceed.

Sorry for the disconnection. The regulatory of the industry remains highly strong and encouraging. The demand continues to be supported by healthy activity in the real estate and infrastructure sectors, along with the increasing adoption of lighter, faster, more efficient and sustainable construction materials. AAC and other green building materials are well positioned to benefit from these structural trends. Increasing awareness around energy efficiency, faster construction timeline, reduced structural load, resource efficiency, and sustainability is supporting the long-term adoption of these products. We believe these are not merely short-term trends but represent a structural shift in the way buildings are designed and constructed, creating a significant long-term opportunity for the green building materials industry. Going forward, our focus remains on four key Thank you. First, improving utilization and plant efficiency across our manufacturing networks. We have already created significant capacity and our priority now is to increase throughput and improve asset productivity. Second, increasing the contribution from higher value products such as AAC wall panels. Wall panels provide an attractive opportunity to participate in the growing demand for faster, lighter, and more efficient construction solutions while also supporting an improvement in our overall product portfolio mix. Thank you. We are increasingly focused on ensuring that the capacity we have created translates into higher utilization, stronger profitability, healthier cash flows, and better returns on capital employed. Now, let me take you through our financial performance for the quarter. For the first quarter of financial year 2027, the revenue from operations stood at approximately INR 79 crores, registering a strong growth of approximately 40% year-on-year, primarily driven by higher sales volume. EBITDA improves significantly to approximately INR 6 crore compared with INR 1 crore in the corresponding quarter of the previous year. This represents a substantial improvement in operating performance with EBITDA margins expanding to 8% approximately. Thank you. The company has invested in capacity, strengthened its manufacturing platform, expanded its product portfolio, and built a broader market presence. Our focus now is on unlocking the value of these investments. With improving utilization levels, a supportive demand environment, strong volume, momentum, and increasing operating leverage, we remain confident of delivering stronger profitability, healthier cash flows, and improved returns on invested capital over the coming years. Our objective is clear to grow volumes, improve utilization, expand margins, strengthen cash flows. We believe the foundations we have built over the past several years provide us with a strong platform for the next phase of growth. Q1 is an extremely encouraging start to FY27 and we look forward to building on this momentum through the year. With that, I conclude my opening remarks and would now like to open the floor for questions and answers.

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 handset while asking a question. Ladies and gentlemen, we will wait for a moment for the question queue assembles. on the line of Manish Kela with Swastik Investments. Please go ahead. Am I audible?

So, sir, your PPD says that your current capacity utilization is 69%. Is that correct?

Yes, that's right. It's approximately 69% for Q1 of FY27.

Yeah. Is this across all the three segments that you operate in?

So this is majorly for AEC blocks because that is the biggest segment that we have which contributes majority of the turnover right now.

And so 69% is the utilization, capacity utilization across AAC blocks. Okay, and how about the other two segments? What is the current capacity utilization?

So, AAC panels and AAC blocks is a fungible capacity, and this 69% is across the AAC block installed capacity that we have. The construction chemicals plant recently began in May, and for that, for this quarter, the capacity utilization is in the range of almost 20-25%, will be We'll be gradually scaled up over the next couple of quarters.

And when you say that the capacity is fungible, right, is it across all your plants or is it a particular plant?

I have currently installed. Three are exclusively for AAC blocks and one plant has a fungible capacity for AAC blocks and panels. For that plant, the capacity utilization is approximately at around 40% since AAC panels is a new product and we are doing a category creation for the Same in the market. It's not a product that was available in our country earlier, but it's a product that we have recently introduced and we are the only company in the country currently who is providing a single panel which is a height of up to 6 meters and it is still reinforced and it is being used in lots of industries, data centers. Executing the upcoming bullet train stations on the Mumbai-Yamdabad route, and are in the process of executing work orders for two bullet train stations, and are in talks for a few more with the AAC wall panels.

So, sir, across the other plants wherein your capacity is not fungible, is there something which can be done to make it fungible because, I mean, if you would have noticed... Obviously, that increase in finance cost depreciation, which is eating into profits, and although your sales are growing well, but the profitability is definitely missing, right, since at least the last seven or eight quarters, and that is also reflecting in the depressed stock price performance.

Thank you very much. Once we reach that, we will begin the monetization phase to further improve our margins.

And so what's the target in terms of improving your margins? So what is the test factor going to take?

So, if you would have seen our results over the last 6 to 8 quarters, I think when we did the capacity build-up, the capacity utilizations were quite on the lower side from around 40-45% reaching up to 70% now. And now that we have reached 70% capacity utilization and built up the necessary market or the target profile customers for the same, we will be looking at improving our margin.

So, the margin improvement, I understand, is going to come from benefits of operating leverage. Is that correct? And will that be in the form of price hikes?

Yes, sir, that's what we are targeting over here.

And when are we targeting, what do you say, the go-live of the new capacity, the new facility in Central India?

We acquired a land in MP about 15 months back, and since the industry was going through a little slow phase and we also were not at peak capacity utilization, we thought of just delaying the installation for the MP plant. Now that we are on the verge of reaching 70-75% plus capacity utilization, we will be looking at setting up the capacity for MP and expanding to that region.

So, I guess the construction would have not started as it, right? It is only the land which has been acquired.

So, the land is acquired and we have taken all the necessary government approvals like construction permission, plant pass, pollution control board permissions, etc. And hopefully post-monsoon, we will be looking at beginning construction at this site.

Sir, again, coming back to my previous question, can't we do anything to make the capacities fungible across the other two or three plants wherein you currently do not have that option? What is it which can be done to kind of do something on that front? Is it doable?

Thank you. Operational for AAC blocks as well as panels. And in today's demand scenario, where we have already reached 70% plus utilization, we feel that's not the right step. And if we see a further improvement in volume from the AAC wall panel segment, we have the option of expanding that capacity from the current 250,000 cubic meters per annum to 500,000 cubic meters per annum by putting up some necessary auto plays and additional machineries.

Got it. So, final question around the Central India plant. So, the construction will start now, right, given that you are already at 69% capacity utilization. So, you expect this construction to complete what in the next one and a half, two years? So, how much time would that take?

So, over the next couple of quarters, we will be deciding to begin construction at that NP plant, and we begin to, we target to start commercial production at that plant in FY28.

Okay, Adam. Thanks for your responses. I'll join the NPQ.

Next question comes from the line of Hassan Muchale, an individual investor. Please go ahead.

Hello, sir. I am participating for the first time in this conference call. Can you please help me with the total market size for AAC block and AAC panel secretly?

We have managed, there is no particular market size that we have right now since this is a category creation that we have started doing and it's a new product that we have introduced in the country.

Okay. Okay. AC Block.

I'm sorry to interrupt Mr. Hassan. The management line has been disconnected. Please wait while we reconnect them. Ladies and gentlemen, the line for the management has been reconnected. Yes, sir, please go ahead.

So, sorry for the disconnection again. So, regarding the market size for AAT blocks, AAT blocks, the total installed capacity in India would be about 2 to 2.5 crores cubic meters per annum. After that, we have an installed capacity of about 1.3 million cubic meters per annum. But since AAC blocks is a bulky material with a transportation radius of almost 300 to 350 kilometers, we are currently concentrated on the Western India space. And in Western India, the total installed capacity would be at around 9 to 10 million cubic meters per annum.

So we consider about 8 to 10 percent of the total market size for the Western India AAC block space. So, out of this 90%, you said that we have 10%. Remaining 90%, who must be the major competitors?

So, in terms of the other competitors, one of them is Magic Leap, and another would be Hyderabad Industries Limited, which is Birlan, you know. And apart from there, lots of small regional players, which are multiple partners or small players.

Understood, sir. So, that is what I am coming from. If you look at the material expenses with respect to our sales, which has been... So, our margin on material is compressing year-on-year. What is the challenge? I mean, we are not able to dictate the price or we are not able to pass on the input cost.

So, over the last couple of years, as you said, we have done a lot of capacity expansion. We have increased our capacity. And in order to increase the capacity utilization, there was a pricing pressure in the market, and because of this, the margins were contracted. As a result, the raw material cost as a percentage of sales is showing on the higher side. Now that we have reached almost 70% plus capacity utilization, we are now targeting price increases in the market.

So, we will get acceptance in the market, or still we will have some challenges?

So, I think over the... All the same pricing. Now that we have reached, you know, the volume growth that we are targeting to reach, we will be now able to pass the price increase to the market. And across some markets and some segments over the last one or two quarters, we have already done some price hikes and passed on to the customers. And across other markets, we will be now looking at continuously increasing the prices. In some markets, we have already gotten the necessary conversions. Also, to come down to your point, as of today, AAC Blocks has a share of just around 9-10% in their walling material segment, whereas Red Bricks still has almost 80-85%. So, the conversion from Red Bricks to AAC Blocks will keep on happening, and eventually over the next... Thank you.

Increase the price hike. I'm not talking about. But eventually, when we are through with the capacity utilization, we reach our ideal capacity utilization. This material expenses in relation to sales will back to the two years back, I mean, 30-35% or so.

So, we just cannot see the material expenses as percentage of sales. Generally, what we do is we target on the EBITDA margin. Because there are lots of times when we are able to save on the transportation costs or on some other overhead disrupts. And on the lower side, the EBITDA margins have gone quite low, but over the last couple of quarters, we have been able to improve the EBITDA margins. With Q1 at 27 at around 8 percentage, we are further targeting to improve EBITDA over the next two to three quarters.

Okay. Depending on this AAC panel, how much sales volume we achieved in this quarter?

So, AAC panels had a sales contribution of approximately 5% in the rubric revenues of the company for Q1, FY27.

Okay, okay. So, it is still as very initial stage of...

Yes, so as of today, the total capacity that we have is about 1.3 million cubic meters. Out of that, around 1.05 million cubic meters is just for AAC blocks. And 250,000 cubic meters is the fungible capacity between AAC blocks and panels. But in spite of that, this is a category creation that we are doing. And it's a great product which is being accepted by a lot of large corporates. So we have done a project for ITC. We are executing a bullet train station for L&T. And we are in talk to a few other large corporates. Thank you, Oscar, Metro Seasons.

And sir, in terms of margin, how much incremental margin we get in AAC panel compared to AAC blocks?

So, you think panels will have almost 30-35% EBITDA margin possibility as utilization levels keep on improving.

Thank you so much, sir. One last question. As we speak earlier, that current capacity utilization is around 69% for the quarter, and we will be starting with the MP facility creation post-mansoon. But, sir, my small request is that we should first monetize on what capacity already has been built on rather than expanding. So, if this capacity utilization for coming next to quarters keep on the same, maybe 75%, then we should go ahead with the capacity expansion at MP. Rather than looking at the quarter one number only, we should look at some more further improvement in the utilization.

So, honestly, I think we bought the MPLand about 15-16 months back to put up a new plant there, and the reason we put on hold the capacity expansion was the capacity utilization was on lower level. Secondly, now that we've reached almost 69-70%, I said we'll be taking up that expansion over the next couple of quarters, and hopefully by then we'll reach 75% plus utilization levels. Yes. Thirdly, coming down to the point, in this industry, the maximum utilization levels possible are almost 80 to 85 percent. Since our raw materials are fly ash, which is a waste from the thermal power plants, there are some other issues or challenges while operating a plant. So the optimum capacity rate which we have achieved in any particular quarter is around 80 to 83 percentage. And fourthly, MP is a separate market altogether, which we are looking to target. And we already have a little bit of presence there, and we have tested the markets by sending materials in that market from our existing unit near Ahmedabad.

Okay, sir. Okay. That's great, sir. Because what is happening now, currently it looks like we are funding the losses from bank borrowings, because our bank borrowing is continuously increasing, whereas our losses are getting narrowed, quarter and quarter. But some of the other way, it looks like we are funding losses through bank borrowing. Nevertheless, thank you so much, sir. I appreciate your responses. Thank you so much. Thank you.

The next question comes from the line of Tashar Tikande, an individual investor.

Hello, am I horrible, sir? On the revenue bifurcation side, I want to understand, sir, which customer segments amongst residential, commercial, and infra have contributed most to our volume growth, and what is your future expectation on this brand?

So we have a mix of various customers in our customer profile. Thank you. So this is how the customer profile looks like in terms of sales volume. In terms of contribution, so the industrial segments or the infrastructure segments are something which we do not easily bifurcate because when we are building to L&T, we are not very sure whether it's for the L&T infrastructure segment or the building. For infrastructure and industrial segment, the sales are almost 20% to 30%, whereas to a residential or a commercial segment, the sales are almost 70% to 75%.

Okay, sir. And the biopication you had provided... So, is it going to remain the same, or is there something, some change do we expect in near term?

So, I think we'll continue with the same bifurcation of sales channels over the coming quarter, because we have built up over the last two to three years, and we have been able to scale up our volume to this profile and channel. But we are keeping on exploring to add more and more corporates to our corporate profile, Customer profile and just... Sir, that might have a little increase going ahead.

Okay, understood, sir. And my last question is on the finance cost side, sir. The finance cost increased sequentially during the quarter. So, since we have completed a month, Is this likely to remain at current levels, or do you expect data reduction and better cash generation going forward, sir?

So, sequentially, the finance cost has not increased. It has gone down, I think. So, maybe there's some error in seeing that. And as I mentioned, we have done a lot of KPIs and are in the process of continuously reducing our bank rates as well. So, I think the finance cost should keep on going down over the next few quarters.

Okay, okay. So, I mean, from the entire date do we have currently, so by end of this financial year, so what is the amount of date are we expecting?

By the end of the financial year, it should reduce by almost 25 to 30 crores.

Okay, sir. Okay. Thank you. That's it from my side. Thanks.

Thank you. The next question comes from the line of Branagh, an individual investor. Please go ahead. Peace for it. Mr. Pranav, your line has been unmuted. Please go ahead with your question.

Hello. Hello. Yes, please. Yeah, good to you, sir. So, I have questions regarding the, you know, material costs. So, how has fly ash prices and availability has evolved over the past? I think there has been a normal increase, maybe between 5-10% in the flyers' prices, but apart from that, it is majorly because of transportation costs and not because of the material costs. Okay. Since we have seen a hike in diesel prices to 13% of almost 8-10% over the last one of the quarter, that's the reason we have seen this price hike. Apart from that, the flyers' prices of availability is not so much of a challenge for our regions right now.

Okay, okay. Thank you, sir. That was unique.

Next question comes from the line of Manish Kela with Swastik Investments. Please go ahead. Thank you for the opportunity once again.

Sir, is the labor shortage issue behind us now? Is that resolved?

So, yes, that's totally behind us. Generally, in every year post-holy, from mid-March up to mid-June or first, second week of July, there are labour shortages because of, you know, the harvesting season as well as the marriage season in the small towns, etc. But, yeah, today we are totally shorted with labour plants as well as in the market side.

So, because you talked about this challenge occurring every year, like the impact is more in terms of production or is it in terms of increase in labor costs?

So, at the plant level, we do not have so many issues. The more of the issues are on the market side or the customer side. In our plant levels, over the last couple of years, we have done a lot of automation, thereby reducing the overall requirement of labors. Additionally, you know, as and when the labor shortages keep on improving, keep on increasing, the conversion from bread bricks to AC blocks and from other materials to AC panels will keep on increasing because these are materials which help construction to be done in a much faster with a lower level of labor requirements.

So, are the AAC wall panels profitable for us, or is it still breakeven? And also, what are the industries driving demand for AAC wall panels?

So, AAC wall panels currently, the utilization levels, as I mentioned, the turnovers are just around 5%, but it's a fungible capacity that we are making blocks as well as panels.

But we have not been able to, I mean.

It's not a loss-making business, but it's a future growth prospect business. So, that's what we are targeting on. Secondly, coming down to what we are targeting on for the AAC wall panel, since this is the only product available in the market, and it is a steel reinforced product being used for customers the likes of ITC and L&D who understand what is the need or requirement of the future. So, the categoric creation is happening at the right place. The awareness is growing continuously. So, that's what we are targeting on. Going forward, we can see continuous improvement in the volume contribution as well as the revenue contribution from the AAC block segment, AAC panel segment.

Got it. So, you talked about a couple of competitors to one of the questions earlier. So, that was on the AAC blocks, right, those competitors, and not on AAC wall panels?

Yes, that was for AAC blocks, not for AAC wall panels.

And, sir, what would be the cost benefits that we would have derived from renewable energy last year, and what is the expectation this year?

So, I do not have the exact details of the cost benefits that we would have derived, but over the last couple of years, we have increased our rooftop solar capabilities to almost 3.3 megawatts across the country. Thereby saving on the direct electricity bills. We are looking at introducing electric forklifts at our plant level, thereby saving on the diesel as well as the maintenance costs or the rental costs of the forklifts that we are running. These are the two changes that we are looking to do going ahead, which will further help in improving the operational efficiencies as well as the margin profile.

And, sir, how about the next three quarters? How do you see those panning out? Are your volumes again going to be strong like Q1?

Yes, so, generally, if we would have seen our results, every year, Q1 is generally the slowest quarter, and Q3 and Q4 being the strongest quarter. So, we are continuously looking at improving volumes going ahead.

And we do not see any kind of a pricing pressure, right, because you said you will be able to pass costs, and that is one other way by which we hope to be profitable.

So, yes, as I mentioned, we have already been able to pass on the price increase in some of the markets, and over the other markets also, we will be able to pass on the price increase in the upcoming quarters.

And, sir, one final question. How do the logistics cost work as far as this industry is concerned? Because you talked about the new plant, right, NMP. So, how feasible is it to move, what do you say? from one state to the other state. There's only a viable solution because the logistics...

Thank you. Gujarat and MP, which are coming in the radius that we are providing blocks. And we have done some market testing by selling material at sub-other locations as well. And MP has a very good acceptability of AAC blocks, as many of the government tenders and documents already mandate use of AAC blocks in the government projects and contracts. And a lot of government tenders or government projects contracts are being taken up in MP.

Got it. So, the distance challenge that you highlighted, is that for both AAC blocks and wall panels, or is it just for AAC blocks?

So, the channel of sales that you mean to ask?

No, no. The challenge that you highlighted in terms of...

This is only for AAC blocks, not for AAC panels, because AAC blocks all over India, there would be about 150 to 175 AAC block plants, whereas AAC panels, there are just one or two players manufacturing AAC panels right now, and AAC panels. Yes, and ASP banners from our manufacturing facility near Ahmedabad, we have been providing them or doing sites across India. We have done a few sites in Raipur, in Delhi, in Bangalore, in Chennai, etc.

It comes from the line of Deepak Pruthi, with wealth, with wisdom. Please go ahead.

Hi, congratulations on a great set of numbers. I can see... I just wanted to understand, I was looking at your numbers for the last three, four years. Significant improvement. 25 financial years. What was the reason of such high EBITDA margin in those years? Was it because the cost of raw material was down or was it because of lower competition intensity or higher demand that you were able to charge higher prices?

So, more or less, for FI24 and FI23, the real estate was all through a boom period, firstly, secondly, our installed capacities were being utilized continuously to the tune of almost 80-85% age, approximately, and looking at those utilization and the boom in real estate, we decided to end up installing a couple of more plants, and we did a lot of CAPEX, increasing capacities almost two and a half times. Now, whenever we do any capex, it takes a period of almost 12 to 18 months to bring up the ramp of the capsid utilization. So, we have already done all the work regarding the same and reached almost 70% plus capsid utilization in this quarter. And going forward, we will further look at improving the capsid utilization as well as hopefully the margins.

Okay, okay. So, what I get from your answer is that as your capacity utilization increases, your fixed cost spreads over higher volume and your, you know, whatever per AAC cost comes down and therefore your margin increases. So, it's a game of economies of scale. How is the competitive intensity now, and how do you see it going forward?

Looking forward, we don't see much of an increase in competition. And since we are an old player, we will be able to make the best out of the current market scenario and improve our volumes and margins.

Okay, okay. And just one last question before I join back in the queue. So what does your other intent... What does it include?

Check in detail, to be very honest.

No worries, no worries, no worries.

And you said seasonality of the business is basically lean in Q1, and... Okay, and how is the flood scenario in the areas where you operate, because you operate mainly, I think, in Gujarat?

So, there were an issue for about 2-3 days twice in the month of July, but there are no such major issues for the flood scenario.

Okay, okay, okay, okay, okay. Okay, thanks. I'll join back in the queue.

Next question comes from the line of Hassan Muchale, an individual investor. Please go ahead. Thank you.

So, sir, my question is, what company's efforts on the branding side? This is the brand of the product.

We are already a well-established brand, and we have been working with all the large corporates, the likes of L&D, Runwal, Adani, PSP, since many years. So, that has been doing well, and now that we are improving our margins, we are looking at creating... B2B or a B2C brand as well. We are more of a B2B product, but we are now looking at creating a B2C brand as well. Okay.

So, sir, you look this business as more of a specialty or a commodity?

So, AAC blocks is more of a commodity industry, whereas AAC panels is more of a specialty product.

Okay.

Okay. And this, sir, chemical capacity we are coming with, it is going to be a substantial in relation to AAC block and panels.

So, we have been selling construction chemicals over the last 5-7 years. Earlier, we were doing trading of the same. We were getting them manufactured in our brand name from some manufacturing partners. But now, we have decided to set up the plant of our own. And at the same point of time, in the same infrastructure setup, using the same raw materials, we will be able to manufacture a few other construction chemicals as well.

Next question is that on the dealer distribution model, are we looking to leverage this model or our industry works on this model?

It's not like the industry works on this model. Everyone has a different model. There are some manufacturers who work exclusively only with dealers and there are some who work exclusively only with builders. We have a mix of both and thereby able to penetrate the necessary customer in the necessary way. We are exploring all possible platforms in order to improve our volumes. Okay.

So, sir, in our strategy, any consideration of expanding the distribution model?

So, as of today, the AC blocks that we are selling, we have an outward truck movement of almost 75 to 80 trucks from the factory, with a similar inward movement of almost 60, 70 trucks every day. So, almost a truck movement of 150, 60 trucks. So, it's not that distribution that we are looking to plan, we are looking to target the large corporates or the large customers only, whoever truckload requirements. And those should be, yeah, yeah.

Thank you. Due to this logistic moment, we are restricted to supply up to 250 or 300 kilometers. Sir, warehousing will not solve this problem. I mean, if we do the bulk transfer to a particular location, let's say, Madhya Pradesh, from our WADA facility, and from Madhya Pradesh we supply to the customer,

So, for AAC blocks, the more you handle the blocks, the more the blocks get rejected firstly, that's the reason warehousing is one way not possible. Secondly, the transportation cost will increase drastically and thereby make it unviable against the red bricks or other AAC block manufacturers. That's great. I appreciate that.

To ask a question, you may press star and 1. Follow-up question from the line of Deepa.

I don't know whether you answered this. Raw material prices, commodity prices. So what has been the impact and how do you see it going?

So, in terms of the raw material cost, in Q1, the pricing for diesel increased by almost 7-8%, thereby increasing the transportation cost across the segment almost 2-3%. That was a little bit of an impact, but I think all that is already factored in. Apart from that, our other raw materials include lime, which has not seen any major impact, cement, which is similar to what it was in Q4, FY24, maybe a normal change of almost 2-3%. And finally, one of the energy costs, which is coal, which we use for running the boilers at our factory. The costs for coal have grown up graphically by almost 50 to 60%. But since we had booked... For a period of almost three, three and a half months, we are quite, I mean, settled over there, and we will not have any challenges or issues. And post-monsoon, we again see the coal costs going down. And practically, I think the crude has also, from levels of 100, it has come down to levels of almost 80, 85. So, going forward in the long run, even the coal costs should come down.

I understand. And generally, just a question on customer. Thank you. So, this is my x-factory price and the logistic cost is added on the top of that.

So, this product is like cement and it is being sold as Langer site to the customer. That's how the industry runs.

If you ask a question, you may press star and one. Further questions from the participants, I now hand the conference over to the management for closing comments.

Thank you, everyone, for participating in this earnings call. I hope we were able to answer your questions satisfactorily and at the same time offer insights into our business and future. If you have any further questions or would like to know more about the company, please reach out to our Investor Relations Managers at Valoram Advisors. Have a good day.

On behalf of Big Block Construction Limited that concludes this conference, thank you for joining us and you may now disconnect your lines. Thank you.