Earnings Call Transcript - XNSE:BIRLANU 2026-11-03

Operator

Ladies and gentlemen, good day and welcome to Birla New Limited's Earnings Conference Call. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Amit Shah from CDR India. Thank you, and over to you, sir.

Amit Shah, Representative

Thank you, Nirov. Good afternoon, ladies and gentlemen, and welcome to Birland ULt's Q2 and H1 F527 earnings conference call for investors and analysts. Today we have with us Mr. Akshat Sheth, Imagine Director and CEO of the company, and Mr. Ajit Kapadia, CEO. We will first have Mr. Akshayat making the opening comments. He will be followed by Mr. Ajayat, who will take you to the financial perspectives. Before you begin, I would like to point out that certain statements made in today's call could be forward-looking in nature, and details in these regards are available in the earnings presentation that has been shared with you earlier. I would like to invite Mr. Akshayat to present his views on the performance and strategic imperatives that lie ahead. Thank you, and over to you, sir.

Akshat Sheth, CEO

Thank you, and good afternoon, everyone. Thank you for joining us today. At the outset, I want to share that Billanoo has delivered yet another strong quarter of growth and profitability. The revenue for our India business grew by 17% to Rs. 588 crores, and this is now the third consecutive quarter of double-digit revenue growth. Thank you. Deliberate choices we have made over the last couple of years, strengthening our portfolio, building a sharper and more efficient execution engine on both sales and operations, and investing behind our brands. These efforts are now showing up in our numbers quarter after quarter, and we intend to build on them. I will walk you through the performance of each business before updating you on the strategic agenda and the progress on that. Our roof's business continued to be the strong growth engine for the company, with revenue up 28% over last year and a volume growth of 21%. We are also selling a richer mix with a share of value-added products 35% higher than last year. There is a sharp focus on cost, and the benefit of operating leverage helped us improve margins further, even as input costs were on an increasing trend. To make these gains structural, we have initiated a comprehensive value enhancement program internally specifically for the roof segment. It is already bringing in savings with the full benefit expected to come through at an annual level from next year. We continue to strengthen our leadership in this category with market share gains during this quarter as well. In Walls, our revenue grew by 5.4%, along with a significant step-up in margins, which expanded by over 200 basis points over the previous quarter and 120 basis points over last year. And this was supported by better realizations, improved mix, and tighter cost management across all our products. We are also broad-basing our growth. Alongside our traditional institutional channels, we have significantly increased our retail presence, giving the business a wider and more resilient demand base. PIPES has delivered a strong turnaround this quarter, with revenue growing at nearly 20% over last year and also sequentially, while margins improved by 630 basis points. The quality of growth has improved as well. Value-added products, including fittings, now make up 47% of the portfolio, which is significantly higher than last year. Our focused market development efforts are clearly paying off, with our priority markets growing significantly faster and gaining share. We've also introduced new business segments such as manufacturing as a service within pipes, which lets us make better utilization of our assets. And we are building on these to further improve the overall margin profile of the business. Construction chemical grew by about 35% despite severe cost and pricing pressure arising from the ongoing geopolitical situation. Growth was held by focused market development and an expanding product portfolio. At Clean Coats, which is our most recent acquisition, revenue was up by about 50% compared to same period last year. Even as foundational work at Clean Coats is now in place, and it has built a strong order pipeline for the rest of the year and beyond. As input costs stabilize, we expect the operating leverage to support a gradual recovery in margins as well. I'm now turning to Parador, for which it was a challenging quarter. Demand in key European markets remained weak, compounded by broader global sluggishness, and revenue declined about 4.4% over last year. Profitability was impacted by cost pressures and lower volumes. We are acting decisively to reset the business for recovery. There is a cost-out program being led by the BCG team in Germany, alongside a range of other measures to restore the margins. At the same time, we are not losing sight of the long-term. Parador continues to build its presence in the new markets, notably the US, India, and the Middle East, and to win new customers in the commercial segment. And finally, to strengthen the core of DIY and retail business in Europe. These efforts will position Parador well as its markets recover. We remain confident in Parador's long-term potential as a premium flooring brand. At a consolidated level, revenue for the quarter grew 9.2% to Rs. 885 crores. Overall profitability, however, was impacted by the weaker performance at Parador. Aside of Parador, the India business continues to deliver on our stated objective of value building growth with double-digit growth and steadily improving margins. Let me now update you on our strategic priorities and where we continue to make significant progress. On the capacity front, our greenfield boards plant at Nellore is on track to begin commercial production in the fourth quarter of this financial year. We also expect to break ground on our second new project in Hyderabad by December. Together, these will significantly strengthen our position in the fast-growing premium boats category. On the go-to-market, focused market development is delivering results in both pipes and construction chemicals, and our expanded retail presence is broad-basing growth in walls. We will extend these learnings across the entire portfolio. On product innovation, this quarter, we launched several new products such as the EcoRoof, QuickSeal, and Polytech waterproofing 2K in roofs and construction chemicals. And this has helped strengthen our presence in the higher value segments. Several other exciting launches are planned for the second half of the year. On sustainability during the quarter, we commissioned rooftop solar at our Golan and Chennai units and have also approved solar capacity at two more manufacturing units. We expect green power to exceed 20 to 25 percent of our energy mix within the next two years, reducing both our energy costs and our carbon footprint. Finally, we are seeding new engines for future growth and value creation. One such initiative is an AI-enabled materials discovery platform that helps architects and designers find, evaluate, and showcase design possibilities. It brings Birlanu closer to the specifiers who shape material choices, and we look forward to sharing more as this new business scales up. We, however, remain vigilant as external risks have only intensified in recent weeks. Geopolitical uncertainties and global supply disruptions continue to drive inflation in key raw materials, energy, freight, and currency. High inflation and tight liquidity are likely to weigh in on near-term demand, and the El Nino effect poses a risk to farm output and therefore rural demand. We are responding with discipline and agility, keeping a tight grip on cost through several cost-out programs and initiatives across our businesses, managing risks proactively and building on the gains of the first half of the year. We will continue to pursue pricing and efficiency actions when needed while protecting the investments that drive our long-term growth. These risks, notwithstanding our strong performance in the first half, gives us good, solid confidence for the second half of the year. With a stronger portfolio, a richer product mix, and new capacity coming on stream, and an unwavering focus on execution, we are well-placed to sustain that momentum and deliver a strong second half of the year and, in aggregate, a strong FY27. So, with that, let me hand over to Ajay. Thank you for dialing in and your interest at Birlanu.

Ajit Kapadia, CEO

Thank you, Aksat, and good afternoon, everyone. Building on Aksat's comment, I will take you through our financial performance for the quarter and the half year ended on 30th September, 2026. Starting with quarterly performance, our India business, and here India business is basically Birlanu standalone business as well as clean course business, delivered another strong quarter with revenue growing 17.3% year-on-year to Rs. 588 crore. EBITDA increased to 40 crore from 12 crore in the corresponding quarter last year, while EBITDA margin expanded by over 400 basis points to 6.8%. This marks our fifth consecutive quarter of EBITDA margin expansion, reflecting sustained improvement in operating profitability and reinforcing our confidence in the strategic direction we are pursuing. At the consolidated level, revenue grew 9.2% to Rs. 885 crore. However, the challenging business environment at Parador weighed on overall profitability. Turning to our first-half performance, our India business sustained its strong momentum, with revenue growing 13.8% year-on-year to Rs. 1,422 crore. EBITDA doubled to Rs. 138 crore from Rs. 69 crore in the corresponding period last year, with margins expanding by over 400 basis points to approximately 10%. At consolidated level, revenue for first up stood at Rs. 2,059 crore, registering growth of 11% year-on-year. Consolidated EBITDA increased to Rs. 82 crore from Rs. 63 crore in the corresponding period last year, representing growth of approximately 30%. Let me now take you through the performance of individual business segments. The roof segments delivered a strong performance with revenue growing 28% year-on-year to Rs.244 crores. EBITDA margin improved by 320 basis points to 11.5% compared to 8.3% in the corresponding quarter last year. The margin improvement was driven by operating leverage and focused cost management. We expect our ongoing value enhancement initiatives to provide further impetus to profitability as the benefits progressively materialize. The Walls segment reported revenue growth of 5.4% to Rs. 164 crore. Despite relatively moderate revenue growth, the segment continued to improve its profitability, with EBITDA margin expanding by 120 basis points year-on-year to 12.3%, supported by better realizations and an improved product mix. With the Naylor Boards plant expected to commence operations in Q4 of this financial year, we are confident of further strengthening the wall segment revenue and revenue growth and profitability. Our pipes business witnessed a strong recovery during the quarter, with revenue growing 20% year-on-year to Rs. 132 crore. EBITDA margin improved by 630 basis points compared to the corresponding quarter last year. The business recovered from a challenging quarter 1 when the industry witnessed degrowth amid abnormally volatile raising prices. The improvement in business momentum provides confidence as we enter the seasonally stronger part of the year. Construction chemicals delivered revenue growth of 35% during the quarter, supported by strong tractions across its portfolio. The business navigated elevated raw material costs and pricing pressures arising from the prevailing geopolitical environment. Moving to Parador, the business-phase demand headwinds across key European markets coupled with elevated raw material prices. The revenue declined by 11% in local currency terms and 4% in INR terms, which, along with cost prices, adversely impacted profitability. We are progressing the cost optimization programs in partnership with BCG with a clear focus on improving the underlying cost structure and enhancing Parador's profitability. In view of the operating losses at Parador, we have recognized an additional provision of 90 crore towards diminution in the value of our investment in Birlanu International GmbH, taking the cumulative provisions to Rs. 164 crore as of September 30, 2026. The assessment reflects the prolonged weakness in the key European markets' geopolitical uncertainties and their impact on Parador's operating performance. The carrying value of the investment will be reassessed on a regular basis, considering Parador's financial performance. The provision has been recognized as an exceptional item in the standalone financial statement. Moving to our balance sheet, we continue to place strong emphasis on cash flow generation, efficient working capital management, and maintaining financial flexibility to support our growth ambitions. Our total debt stood at 896 crores as of September 30th as compared to 852 crores as of March 31st. The increase was primarily driven by investment in ongoing greenfield projects and other capacity expenses and initiatives to support future growth. Our working capital position has strengthened significantly compared to both previous year and the corresponding period of last year. Alongside this, we remain focused on strategic sourcing and current forex risk management to mitigate cost volatility, safeguard margins, and support stronger cash generation. As mentioned by Aksat, both the Naylor and Hyderabad board's projects are on track as per our plan. We are closely monitoring project execution and capital deployment to ensure a timely completion within the plan investment outlay. Before I conclude, let me also start an update on clean codes. The integration of clean codes with Birlanu is expected to be completed by end of this year, subject to the requisite statutory approvals. We believe this integration will create further opportunities to realize synergies across operations, procurement, and other business functions while further strengthening our portfolio. Overall, H1FY27 has been encouraging, particularly for our India business, with sustained double-digit revenue growth and significant improvement in operating profitability. While the external environment, particularly in Europe, remains challenging, our focus will be on sustaining growth momentum, driving further margin expenses, and strengthening cash generation through operational efficiencies, effective working capital management, and disciplined capital allocation. We remain committed to enhancing the quality of our earnings and delivering sustainable value for our shareholders. With that, I conclude my opening remarks and hand the call back to moderator to open the floor for questions.

Operator

Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press R&1 on the touchstone telephone. If you wish to remove yourself from the question queue, you may press R&2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles.

Operator

Participants, you may press star and one to ask the question. First question is from the land of Jitain Paramahar from Auram Edge.

Operator

Please go ahead.

Jitin Parmar, Analyst — Auram Edge

Yeah, good afternoon, Akshay, Ajay Bhai, and all. Congratulations on good standalone numbers. There is definitely an improvement, and I must comment the management for that. But, my question is again on Erador. So, FY27 guidance was of more than baking even. And that is now followed, that was in August 2026. Three months later, we are again doing a 90 crore write-down. And, you know, the first one was around 75, 74 crores. So, 45% value, I think, we have already kind of written out. Also, you know, basically, to break even, you had guided that, you know, Peridot needs to do 140 to 144 million per year. I think we did around 60 million in the first year, first half. So, are we confident that we will do 80 million euros in the second half? And also, you know, the best quarter we've had since FY24 for Terador was 1.7 million, which is in Q4 FY25. For half, we have already got a whole of 4.5 million. So in the second half, can we do more than that to make it, you know, EBITDA positive? So that is one question. And we have gone through all the concourse since 2019, and we kind of basically built the table, and there are 23 paradoxical financial commitments that have been made on 11 concourse. We find the delivery very, very low, maybe one or two, and 21 have been missed. And also, if you remember, in FY25, Q2 call, I had asked how wrong a rope will be due to Parador. So, it's an angst also from us investors that, you know, something needs to be done about this. And each time we hear that, we will turn it around, but it is not happening. So, can you throw some light, you know? And there should be some light at the end of the tunnel, right? Or we have to abandon it. So, if you can throw some light on this. Sorry for asking these hard questions, but I think it is high time that something needs to be done about Peridot.

Akshat Sheth, CEO

Thanks, Susan, and thanks for your question and your comments. And I think I understand the sentiment. In terms of something that needs to be done, one major activity we have undertaken is there is the engagement of PCT to come in and do a comprehensive cost restructuring. We are now in month three of that engagement. I am also encouraged by the results that have come so far. The team overall, the initiative has identified a value envelope of additional about 9 to 14 million at a limited line level, and that is what we are pressing on. Now, this is a comprehensive restructuring on the cost line across all possible line items. So, that's a major, major initiative that has already been undertaken, and the first set of ideas are beginning to be implemented as well. So, we will see the results of that within this financial year itself. The second positive and which we need to see the full results, the investments in the new markets, namely North America, Middle East, India, there is a lot of good positive traction. If you recall, and as you recount many of the earlier calls, the whole thesis has been for us to diversify geographically, and the activity in these markets is critical for that. I'm happy and confident to report that in these markets, the momentum is very good. For instance, in the U.S., already in these six months, we have done more, almost twice as more as what we did in full financial year last year. We are on track to finish in North America for this financial year at nearly 4 to 5x of previous year's performance. So, there are those green shoots. We need to wait out and see the results before any other decision or conversation is done on that.

Jitin Parmar, Analyst — Auram Edge

Okay. So, how long it will take for the BCG exercise to conclude? And what is the new timeline?

Akshat Sheth, CEO

In terms of the identification of value opportunities and designing of initiatives, we are at the end of that phase. So, the diagnostic and the idea identification has already been done. We are just about concluding the design phase and implementation has also simultaneously started. Overall, engagement will run up to the end of the financial year because that's largely the implementation support. But a lot of the results and how much of that 9 to 14 million envelope actually translates on ground will be visible within the next three to four months.

Jitin Parmar, Analyst — Auram Edge

Okay. So, my question, I know I talked a lot, but there was one question on, you know, about the August guidance that, you know, So, Parador will be beta-positive this year. Do you see that happening or that looks bleak?

Akshat Sheth, CEO

So, at the moment, the first milestone for us to ensure is, as we are out of the summer months, to ensure that in this remaining part of the year, which is H2, we should be positive. How much are we able to cut into the losses of the first half of the year? That, I think, is something that we should see how that situation works out, also contingent on how the demand is picking up in the core European market. But overall, coming into this conversation, as we are already in November and October has passed, there is some positive rebound as far as the revenue is concerned. So, the first milestone is to ensure that the second half of the year we are positive and create surplus to cut into the losses of the first half of the year.

Jitin Parmar, Analyst — Auram Edge

Okay, perfect. Thank you for answering my questions very patiently, and I wish you all the best for this turnaround. It is very, very important for the company to do that. And if I have any more questions, I'll come back in queue. Thank you.

Akshat Sheth, CEO

Yes. Thank you, Rathir.

Operator

Thank you very much. Participants, you may press star and one to ask a question. Next question is from the land of Pariksit Gupta from Fair Value Capital. Please go ahead.

Pariksit Gupta, Analyst — Fair Value Capital

Thank you very much for the opportunity and for the detailed opening remarks, and also congratulations on consistent growth in the India business. I have a few questions. First, a clarification on the pipes and construction chemicals update. The press release mentions, and even your opening remarks, that the growth in pipes has been around 20%, and the construction chemicals around 35%. However, the segment results mentioned 16%. So can you please understand, help us understand the disconnect here? Is it the Putti business or something else?

Akshat Sheth, CEO

That's it, Parishan. The third leg of this segment is Putti, where there's been a decline of about 17%. As we have shared in the past, the strategic focus is on construction chemicals in pipes within this segment, and that's where we are pushing on. And we've already shared 20% and 35% respectively as the growth in pipes and construction chemicals. So the aggregate number is explained by the decline in PUTTI. And putti also is, in real terms, if I may just clarify, there's no decline in a light-to-light basis. Typically, putti has a spike during the Diwali season. This time, it's deferred by a month, and that is why there is a timing effect to it. But on a light-to-light basis, we are above the same level as last year in putti.

Pariksit Gupta, Analyst — Fair Value Capital

This is very helpful. In terms of the pipes growth, can you please help us understand what was the volume growth and the inventory gains? I ask this question because some of our competitors, they have been able to grow volumes by over 20% and in terms of value, you know, close to 40%. So just wanted to understand how much of it was volumes for us.

Akshat Sheth, CEO

Yeah, so I think the comparison, the numbers you are quoting is not all competitors. It is a particular competitor. And in a quarter like this, different players seem to have adopted different game plans. Some have focused on volume at the expense of profitability. Also, the mix of agri in this quarter has had a significant bearing on some of the volume growths that are reported. So, I'm just contextualizing the macro picture for us. Number one, you asked about inventory gain. In our numbers, the inventory gains are marginal, so it is almost negligible. Overall, the revenue growth was about 20%, of which about 4% was the volume growth, and the rest was from a pricing and mix perspective. So, 15% was pricing and mix related. Significantly for us, and that's where the comparison becomes complete, we've also grown on the profitability side by about 630 basis point. So, overall, at the EBITDA margin level, we are now north of nearly 5% at a price level. And the choice for us was to ensure that we are growing in a profitable manner and we are not sacrificing on the margin as far as the segment in this particular quarter is concerned.

Pariksit Gupta, Analyst — Fair Value Capital

Understood. This is very clear. Next, on the walls business, can you also again break down the 5% growth into volume levels as well? And if you could also help us with the capacity utilization levels across our boards and blocks capacities?

Akshat Sheth, CEO

It's essentially three products, blocks, boards, and panels. Overall, the growth in revenue is about 5.5%. The volume growth is in the vicinity of about 1-2% at an aggregate level. The realization growth is, depending on which product, is anywhere between 5-9%. And at the EBITDA level, the growth in profitability compared to last year is close to 120 basis points. So, we are now, in this segment, about 12.5% at our EBITDA margin.

Pariksit Gupta, Analyst — Fair Value Capital

And the capacity utilization level?

Akshat Sheth, CEO

Capacity utilization are, depending on which product segment, are in the vicinity of about 85%.

Pariksit Gupta, Analyst — Fair Value Capital

Next question on the design, the AI-based design platform. Can you please help us understand more of the, you know, objective around this platform? Is it more for the awareness of Birla new products, or are you also going to showcase other brands' products as well? And, you know, I'm sure you know this, there are existing players such as LiveSpace, and they showcase multi-brand building products. They have architects on board, and they worked on a very specific business model where it's more like a freemium sort of a thing. However, our, I guess, the target user is an architect or a designer. So, can you please help us understand the exact objective behind this?

Akshat Sheth, CEO

Yeah. So, the overall objective is twofold. Number one, this is being viewed as an organic build of a new business segment, which will be enabled and driven by a tech platform. The idea is that we engage with a large mass of the specifier community in the building product space, and there are several propositions that we are building around it. The second objective is with the connect with the specifier community, there is also a benefit that flows into our existing products and our B2B business. So that's the second objective that we are driving. As you would have noted in the board meeting yesterday, there's been an effort to create a subsidiary. We want to drive this as an independent business line, of course, within the Bilano umbrella. In terms of its exact product features, et cetera, I would let the details emerge at the right time. I think it's slightly early. We are still in early development stage. And we'll share more details in subsequent conversations around this.

Pariksit Gupta, Analyst — Fair Value Capital

Okay, thank you for this. Just my final question. On the solar installations and savings of energy costs, in the recent past, the power and fuel expense has been close to 4% of our sales, with it being around 14% of the other expenses. Considering the current projects coming alive as well as the project under immediate pipeline, what is the contribution of margin savings, margin expansion that we are anticipating here?

Akshat Sheth, CEO

This solar project, it is in a phase manner.

Ajit Kapadia, CEO

It will take around six to nine months' time at different locations. So, overall, the cost-enveloped savings will be in the range of 4 to 5 crore in annual business.

Akshat Sheth, CEO

And that 4 to 5 crore, of course, pertains to our existing footprint. The new plans that are being set up, I think we'll share those saving estimates as these plans actually get commissioned. But roughly speaking at each location, depending on the regime and the state government's rules, We are trying to convert anywhere between 40 to 50% of our energy consumption to green or renewable based. And on a typical basis, if I do a rough back of the envelope, the savings are to the tune of about 30 to 35%.

Pariksit Gupta, Analyst — Fair Value Capital

Understood. These are all very helpful. Thank you very much. Yeah, please.

Akshat Sheth, CEO

Yeah, no, no, that's it.

Pariksit Gupta, Analyst — Fair Value Capital

But again, thank you for answering all the questions, and I'll rejoin the queue for any more.

Akshat Sheth, CEO

Thank you. Thank you.

Operator

Next question is from the line of Vineet, Dala, from Xylem Investments. Please go ahead.

Vineet Dala, Analyst — Xylem Investments

Hi. So at the outset, I'd like to congratulate on the India segment, but at the same time, I'd like to echo the concerns around Parador, which were made by the earlier participants. So, my question is, work 26 and this quarter, we've impaired around 164 odd crores of our investments in Parador. In the same period, we've raised the corporate governance, sorry, the corporate guarantee limit from 45 to 50 odd, 55 million dollars and also doubled our SVLC. So, I have like two questions. First, what is the total exposure today and how much of these limits have actually been neutralized? And is the SBLC within the 55 million limit of the corporate guarantee or it fits on top of it?

Ajit Kapadia, CEO

So, as on today, our exposure is 40 million euro, 20 million euro, as you mentioned, is SBLC and against corporate guarantee, it is 20 million euro.

Vineet Dala, Analyst — Xylem Investments

Okay, so 40 million dollars. Okay. So, I was just wondering, I wanted to understand why are we increasing support while simultaneously, you know, we are writing down the investments and what really happens to these financial supports in case, you know, we prefer to wind down Parador.

Akshat Sheth, CEO

The question on why are we supporting Parador is an important part of our portfolio. It's in an investment phase. The core markets that it has been operating in have seen difficult times. With that said, with the game plan that we are executing, and we are trying to diversify both in terms of geographical breadth and also the consumers or customers that we are serving, there is an investment phase in the business. All of this is being done with a line of sight of a rebound and resurgence as far as the business and the core fundamentals of the business are concerned. So, as an operator, the way we look at it is like, in my previous answer, I was talking about this new business that we are setting up on the tech side, which will have an investment cycle and then a return cycle. Parador has been going through that investment cycle. I do acknowledge it's been longer than what many of you would expect, but we are making these investments with a view of returns coming through and these strategic plays actually paying off. So the green shoots that are coming from the markets that we have invested in the last 12 to 24 months also gives us that confidence.

Ajit Kapadia, CEO

Vinit, I would like to add one more point. These are the provisions we have created considering the current market situation. In case the Parador starts generating cash flow, this provision will get reversed.

Vineet Dala, Analyst — Xylem Investments

So you are talking about the impairments, right, in the investment?

Ajit Kapadia, CEO

No, this is a provision created in the investment value, equity investment in Parador. We have not done impairment of goodwill in the standalone. It is impairment is lying in the Parador.

Vineet Dala, Analyst — Xylem Investments

No, that is fair, but my question is because, you know, 40 million is fairly significant. It is almost 50% of our market cap. So, what really happens to, like, in case, like, if it would be a small probability event, but if that really materializes and we have to, you know, wind down parallel. So, what really happens to this $40 million?

Akshat Sheth, CEO

See, remember this 40 million also is an aggregate of acquisition financing that was done at the time that the asset was taken. And so it's not that this has been pumped into support the operations entirely. That's not the case. So one has to distinguish between the two. I do not want to indulge in any speculation on what may happen. And there are, apart from this, there are 100 other scenarios we can discuss in a bit, but not a useful conversation to have at this time.

Vineet Dala, Analyst — Xylem Investments

Okay. Fair enough. Okay. Thank you. Okay. Thank you, Vinita. Thank you.

Operator

Ardisabhan, Jumevra Star, and one to ask the question. Next question is from the line of Achillesh from North Star. Please, go ahead.

Akhilesh, Analyst — North Star

Hi, thanks for the opportunity. Sir, I wanted to ask you whether you had some clear line of sight today on which would be the first quarter where you think Parador is reflecting its potential as performance. Is it going to happen in Q3, Q4 as you sit here today, or do you think it's a year out, it's not visible right now? And secondly, this new investment into the platform, what kind of budget are we keeping in mind for this new venture? Because it will be an investment phase, and again, will it be a drag on our earnings?

Akshat Sheth, CEO

Let me answer the second one first. I think on Parador, I have already answered this question in the previous query, so I don't think I have much more to add on that. On the second one, this is an asset-light model. The first approval we've taken is to the tune of about 5 CR, which will be consumed over the next 12 to 18 months. The line to breaking even is not a long destination time. So, this is not an asset-intensive, capital-intensive business model that we are going after. So, this is not in any way going to materially impact the finances of the business, but if it goes through and is successful, as per the plans that we have made, it will have a significant positive rub-up on the business.

Akhilesh, Analyst — North Star

Okay. And, sir, just one more question, although I know it's not entirely, you know, your domain, but are the promoters interested in increasing the stake in the company at this market cap, given it is a fraction of the sales the company makes? They own about 40% in the company. Is this something that they are looking at in any shape or form?

Akshat Sheth, CEO

You've already given the answer, not my question to answer, please. So, I honestly don't have much to comment on. Okay.

Vineet Joshi, Analyst — Individual Investor

Thank you.

Akshat Sheth, CEO

Thank you.

Operator

Thank you very much. Participants, MFS star and one, to ask the question.

Operator

Okay.

Operator

Next question is from the line of Vinay Gupta from Prewise Wealth Management. Please go ahead.

Vinay Gupta, Analyst — Prewise Wealth Management

Yeah, Akshita, thanks for the opportunity. You know, it's been discussed. I think this is a question we keep on discussing on every call, and it's already been discussed. But, you know, the paradox, you know, thing just does not solve. I mean, it's been like four, five years now, right? You talk about this being in, you know, investment phase. We acquired this, if I remember correctly, at 600, 300 crores. Now, the total valuation of our company is, you know, near about that. We are throwing, you know, every quarter or every year, you know, we already in the first hour, we have thrown about 100 crores on that business. Every quarter, there's something or the other that keeps on affecting Paradox. Either it's weak sentiment or either there is pricing or something or the other. Do you think we are really throwing, you know, good money after that? And eventually, we cannot write down the other parts of the business to zero because, you know, just to safeguard one of the assets. I mean, even if it turns around, let's imagine, you know, three, four years on the line, it turns around. But the cost that we are paying today is immense. I mean, we were, you know, at 4,000, 5,000 crore company. Now, we are barely even 1,000 crore. So, you know, I think the management really needs to draw a line that, you know, some battles may be, you know, just ready to be give up. Okay, let's just not fight this battle. Maybe it will create value after four, five days, but it's been way too long, and then, you know, your bandwidth is being used too much in a particular business, while the other businesses are showing up, and, you know, all your efforts are being reflected there. So, why not just hive it off? If you think, or if the management or the promoters think that this is a viable business, might as well just, you know, hive it off and, you know, get its own set of investors who are interested in, you know, turning around. I mean, the core business is doing well, but because of this one part, nothing has been captured, no value has been generated for anybody, and it's been four or five years. So, you know, that's my, you know, just wanted to have your take on this, and that you can, you know, consequently say that these are my comments also. Thank you.

Akshat Sheth, CEO

Sure. No, thanks, Vinay. Okay. See, we hear what you are saying and what the call is before you also mentioned. As far as bandwidth is concerned, I don't think bandwidth is a challenge. If that was a challenge, then there would not be a turnaround on the existing part of the business or the core India business. The fact that it is on a good trajectory, there is both revenue and profitability growth. It should also give you confidence that I don't think there is any cannibalization of bandwidth. We are putting the bandwidth in all the right pockets, and we have the teams and the leadership to drive these businesses in the right fashion. See, and as I have shared on previous calls, as operators and in our seat as management, we continue to explore all options for all our portfolio companies or portfolio segments. As far as the question of hiring off effector is concerned, we don't think now it's a time to do it. And there are reasons, as I spelt out earlier in the call, why we feel that is the case. But as a company, overall, at a portfolio level, all options are actively evaluated at all times.

Vinay Gupta, Analyst — Prewise Wealth Management

So, actually, thank you for answering this, but I do understand, but, you know, I'm sure you also understand the anxiety of the shareholders. I mean, one part in all the other businesses, right? I mean, the turnaround has taken, I think, massive amount of capital. I mean, you know, literally, I think 100 crores is a total PVT of our other division, right? If we, you know, had a standalone this business and other business, the valuation would be significantly higher. So this business is not only dragging profits, it's also driving down the valuation of the company as a whole. And it's like, this does not, you know, I'm sure you are considering everything, but I would still say that please take it on the right path. I mean, it's getting more and more. I think everybody is getting very desperate because the value destruction has been massive because of one part of the business and everything else that you are doing right is just not getting reflected. So, yeah, I think I'll just rest it here.

Akshat Sheth, CEO

Okay. Thank you. Thank you, everyone.

Operator

Thank you. Next question is from the line of Aditya from Securities Investment Management. Please go ahead.

Aditya, Analyst — Securities Investment Management

Yeah, hi, sir. Time for the opportunity. Sir, I had a question on your polymer division. So, now we are on a run rate of 750 crores, but on a bit level, this segment is still making losses. And if I compare this quarter's result, you know, with other pre-listed type companies, which I reported results, the profitability has improved quite a bit for most of the other companies. But for us, on a few of QBCs, we are still making losses in this division. So if you just help us understand what would lead to turnaround in this division.

Akshat Sheth, CEO

So, on the polymer division, which is an aggregation of pipes, construction chemicals, and putty, I don't think there's a story of a turnaround as much as it's a growth and a scale-up story that we are pursuing. And I think it's important to also look at these three segments slightly differently. As I said, there has been a significant profitability improvement for us. Quarter on quarter, if you see the results for, I think, three to four quarters, including this one. This quarter, we have grown our profitability by about 650 basis points. And that shape of the P&L was an important thing to rectify, which we had done. And the volume growth is what we are pursuing with and the revenue growth that is also now visible and we will continue. So, somewhere the aspiration with which we are growing is that we have to almost be growing at double the industry average growth rate over the next three to four years. So, pipes, we are on steady ground and with the acquisition that was done, even the results of that segment are fairly strong. So, I see no cause of concern or a need for a turnaround. Yes, there is a need to keep pressing the accelerator as far as revenue scale up is concerned. Construction Chemical, the youngest part of our portfolio, been around for maybe last two to three years, also got a leg up with the acquisition of team course that we did. Again, here, partly we are building the channel and the sales team, so there is a little bit of investment ahead of the curve, but that said, it's not much. Overall, as a sub-segment, it is still profitable. There are similarities, which is why quarter two may look slightly different, but we are confident that we finished this full year on a profitable note. So, there is absolutely no concern here. In fact, the acquisition of Clean Ports is shaping up very well. It has given us a portfolio of specialized products, higher margin products, and we are pushing hard on building that sales engine. One early result there from quarter two is that we have done close to 50% more revenue than the same period last year. And today, as we exit October, enter November, we are at a stage where there is more demand than we can service out of our production facility. So, overall, it holds a lot of promise, but like with any new business build, it has to go through its spaces of the right building blocks being put in place. So, we are doing both simultaneously. Putty, of course, we have also outlined is not a strategic growth agenda for us. So, it's more in a hold and maintain formation. And it's allowing us channel access for the construction chemical product. So, there is a useful objective that it shows.

Ajit Kapadia, CEO

And Abhikar, this EBIT also includes large portion of depreciation costs because of the new investment in the last 6, 7, 8 years, including two acquisitions. The 40 crore is annual depreciation we charge in this segment.

Aditya, Analyst — Securities Investment Management

Oh, okay. Understood. Got it. And, is it possible to quantify losses we are making in Putti? Because, if the pipe and construction came to this point.

Akshat Sheth, CEO

No, no, we are not making losses. We are just about take-even as far as Putti is concerned. So, there is no question of making losses.

Aditya, Analyst — Securities Investment Management

Perfect. Understood. Sure. And lastly, sir, on Parador, I think in your opening, Nimas, you mentioned that this BCG initiative could give us cost savings of 9 to 14 million. So, did I hear it correctly? Because that is quite a big amount.

Akshat Sheth, CEO

Yes, that's the value angle that has been identified by that initiator so far. Typically, in exercises like this, you should assume a little bit of discounting by the time these savings hit the band. Now, whether that discount gets applied to the higher end of the range at 14 or at the lower end, I think that is what will emerge in the next few weeks. But that's not the kind of scale of saving that is being done. And I think I shared that number more to also convey that this is a deep cost destructuring that is being done. It is not a superficial exercise that we are doing.

Aditya, Analyst — Securities Investment Management

So, this cost-benefit, which you are expected to realize, this is more to deal with from internal improvements and not just from, you know, increasing sales, increasing sales from Paradox. This is more of internal takeouts, right?

Akshat Sheth, CEO

This is all internal take-offs. This is almost assuming we are working off the base of last year's revenue, and that's what we would like to take off internally. It has no linkage to sales volumes.

Aditya, Analyst — Securities Investment Management

Got it. So, the break-even for Parador would reduce material, you know?

Akshat Sheth, CEO

Correct. I mean, if these numbers land where they are supposed to, we would be shaving off a monthly break-even by at least a million euros. Annually, that 9 to 10 million is what we are looking at.

Aditya, Analyst — Securities Investment Management

Got it. Understood. And last question, sir. What would be the cost which we are paying DCD, which is currently reflected in the PVT losses of Paradox? Because I think these costs would not be there next year onwards.

Akshat Sheth, CEO

Yeah, at the moment, there is no cost booking because the program is entirely, so at the moment, it's not reflected. And yes, you are right, this will be one time in nature. I don't think it will be right for me to share the commercial details of the engagement just yet.

Aditya, Analyst — Securities Investment Management

Got it. Sure, sir. Thanks for answering your questions.

Operator

Thank you very much. Next question is from the line of Sai Yohan Elancharan, individual investor. Please go ahead.

Sai Yohan Elancharan, Analyst — Individual Investor

Thank you so much for the opportunity. Good morning to everybody, management team as well as other participants. So, sir, I'm calling in from Germany. My question is regarding Parador, right? I mean, it's not about improving the numbers or anything. It's about the overall sales. How are you looking to increase the overall sales? Because I see here around it's been a bit difficult with macro, with jobs and costs rising, right? And I've been to an OB, and then I've asked how people are actually buying the floorings. So there is not actually a very huge difference between us and the competition, except that that Parador is slightly premium. And what is the exact strategy which you're looking at here? Like, is it, let's say, anti-dumping duty for the Chinese floorings, or what is it that you're looking for for increasing the sales? Because the demand, I don't see it as increasing a lot, right? Because the number of people who are replacing their floors or their housings is not a lot. That is my first question. And second, I mean, the continuation of the question is also, like, I see your products in DM, right, the cleaning, four cleaning products which are sold in DM. I also don't see a lot of people actually picking it. So what is it that we are looking at in terms of increasing the sales?

Akshat Sheth, CEO

Your question is increasing sales in Germany and the Central European market, or your question is about…

Sai Yohan Elancharan, Analyst — Individual Investor

Exactly, yes, yes. It's been sales in Germany and Central Europe and overall sales for Parador as well.

Akshat Sheth, CEO

Okay, so let me respond to this at two levels. One, what are we doing at an overall company to increase sales volume? And I'm glad you are dialing in from the hub of the action, so you will resonate with some of the messages that I'm sharing. So first, as a company, one lever for sales growth is around geographical expansion. You would recognize that Carador as a company historically was very centrally European focused, and we are now opening or establishing a deliberative strategic presence in some of the faster growing large flooring markets in the world where we were present very tactically. So, markets like North America, where despite all the global turmoil, the chlorine market is on a good positive trajectory, and it's a large chlorine market. We are establishing a foothold there. India is a market where we did not play, so we are working towards building that one up. Similarly, a couple of other developing markets like Middle East and Southeast Asia are what we have invested over the last two years. So, that's one diva. Second, Paragon as a company was largely in the residential space and selling its product through retail channels, whether DIY or specialized high-speed retail. We have also added a layer of commercial sales on top of it. Now, commercial, growing in the commercial segment means building relationships with the specifier community and also product differentiation, which we have done over the last two years, and there is a good action coming in on the commercial side of the business. So, those are two themes at a global level. Specifically in Germany and Central Europe, much of the strategy, you are right, the market itself has been flat. In fact, it has declined if I compare it with four years ago to now. And much of our strategy is about gaining share. And there are two, three things that have worked well for us. First and foremost, as a consumer preference, people are moving from high street retail to DIY, right? Today, we stand on more shelves. So you visited OB and DM with the Bauhaus and other big DIY chains. We have increased our shelf presence, and the idea is that we are daily shared on the expense of other competitors. So, in high street retail, the share gain story has been playing out with product differentiation. So, that's the second leg. Third, I think what is helping us in doing this, and we have consistently shown the fact that if you compare even with the last 3 to 4 years, our volumes are either flat or there is a marginal increase. When the overall market has declined, tells you at the macro level we have gained share. It is essentially coming from the fact that a lot of our competitors are also falling by the wayside. Either they are folding up or they are restricting their areas of activity and which is also somewhere helping us. So the support fundamentals of the company and the fact that it stands for a certain brand and a premium positioning is helping in a market like that. Staying far is a big USP that we carry, which many of our competitors did not have, which is why they have pulled it. Does that answer the question, Saigon?

Sai Yohan Elancharan, Analyst — Individual Investor

Understood. Thank you so much. I really appreciate the answer. My next question is regarding the roofing segment. So, like, what is it that we, as well as the industry, have done better in this quarter that we have seen a year-on-year increase? Or is it due to just lesser rainfall, which has helped us in hindsight?

Akshat Sheth, CEO

For our industry, lesser rainfall is usually a negative signal rather than a positive signal. So, that has not played out, and that will, what has helped is, I think, two or three things. One, there was almost a pent-up requirement for price correction in the market over the last two, three years, because if you look closely at our numbers or any of our industry peers, the cost increase was much more than what we could pass on to the market. Okay. So, somewhere that pent-up price increase held, and that held on the margin side. The second thing that's also held is one of our few competitive products, which is steel roofing. There has been a massive run on the prices of those products, which has also opened up a bigger demand market for us as an industry. So, there has been good solid volume growth as well at the expense of this competitive product. So I would say those are two big factors which have helped the industry in the first half of this year.

Sai Yohan Elancharan, Analyst — Individual Investor

Understood. Thank you. And my final question is, you had a guidance of, let's say, becoming a $1 billion company maybe a few years down the line. Which segment of yours do you think could be the leader in this run to $1 billion? Thank you.

Akshat Sheth, CEO

So, what we've been talking about last

Akshat Sheth, CEO

several quarters is about doubling down our portfolio, and within our portfolio, VALS is one segment where we have a clear path to doubling our revenue from where we were, say, at 500 crore level to 1,000 crore level. But the key growth engines in the India business would be around pipes and construction chemicals, where a growth path of 3 to 4x, so where the starting point was, say, a year ago, is what we are aspiring for. So in terms of both absolute and percentage growth, those would be the two segments where we are putting our money behind. Amazing.

Sai Yohan Elancharan, Analyst — Individual Investor

Thank you so much for your patience in answering all the questions. I wish you all the best and luck in both Parador as well as Birlano. Thank you.

Vineet Joshi, Analyst — Individual Investor

Thank you.

Operator

Thank you very much. Next question is from the line of Vineet Joshi, an individual investor. Please go ahead.

Vineet Joshi, Analyst — Individual Investor

My question for the management is, are we seeing any turnaround in European demand for housing based on your market intelligence? And what is the proportion of sales that comes from non-European region for Parador? And are we planning to make it more meaningful? For example, we mentioned that we are expanding the markets to U.S., Middle East, and India. So what is the proportion right now, and what is the more meaningful target that we are expecting in the near future? Yeah.

Akshat Sheth, CEO

So, are we seeing, and I'm making this comment with crossed fingers, because this should play out. And I'll also recall the previous quarter. In Germany and in other markets in Europe, this is probably now, for the last 12 to 15 months, there's been an increase in the number of new house permits and new house constructions that have happened, which is a significant change in trend from what we have seen in the previous three-year period. And typically, this cycle takes about 12 to 18 months for it to start hitting demand for flooring products because ours is almost the last product that gets fixed. But we saw that play out in upstream players in building products like Cementer sector where there was a demand uptick. So, we hope that this will continue and there will be, with adequate lag, there will be an impact on the flooring demand as well. So, that is what at least the data suggests from an economic perspective, which is both new bids and also renovations. So, yes, there is some data that is indicating a positive turn in those, especially in Germany. Your second question was on the market mix. Today, less than 10% of our sales in value terms is outside the European region. The first milestone we are hitting is that in the next three years, it should cross the 20% mark. So that's the shift in portfolio that we are thinking. Of course, this will be assuming that there would be a certain growth in the core European market as well. Thanks. Thanks for answering your question.

Vineet Joshi, Analyst — Individual Investor

So one more question that I have is around use of technology for your relationship with retailers. So right now, how do we sort of integrate our ordering process with the retailers? Are we using some app-based ordering or how do we fulfill their

Akshat Sheth, CEO

needs? How do we understand the demand?

Vineet Joshi, Analyst — Individual Investor

Can we throw some light on that as well?

Akshat Sheth, CEO

We can take this offline, and I'm happy to spend more

Akshat Sheth, CEO

time, but at a headline level, in the India business, a lot of our retailer demand and retailer engagement is being driven by a WhatsApp-based AI-driven tool, which is allowing us to capture the demand at a retailer level, process the demand at a distributor level for them, and ensure fulfillment, and allows us direct access to this retailer community.

Akshat Sheth, CEO

Thanks. Thanks for answering your question.

Operator

Thank you very much. That brings us to the close of today's call. I would now like to hand the conference over to the management for closing comments.

Akshat Sheth, CEO

Yeah. Thank you everyone for your participation today and your continued engagement with Billanu. For any further inquiries or information, please feel free to reach out to our investor relations desk. On behalf of the entire Berlano family, I wish you and your family a wonderful festive season. Happy Diwali to all of you, and enjoy the week ahead. Thank you once again, and have a wonderful day.

Operator

Thank you very much. On behalf of Berlano Limited, that concludes this conference. Thank you all for joining us, and you may now disconnect your hands. Thank you.