CARYSIL LIMITED (CARYSIL) Q2 2027 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to Clarison Limited Q2 and H1 FY27 Earnings Conference Call hosted by GoIndia Advisors. This conference call may contain four looking statements about the company, which are based on the beliefs, opinions, and expectations of the company as on date of this call. These statements are now the guarantees of future performance and involve risk and uncertainties that are difficult to predict. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star, then zero on your touchstone phone. Please note that this conference is being recorded. I now have the conference over to Mr. Chirag Parekh. Thank you, and over to you, sir.

Yeah, good evening, ladies and gentlemen, and thank you for joining Carousel Limited quarter 2 and H527 earnings conference call. Extend my warm, festive wishes to all of you and your family. Our results and investor presentation are available on the stock exchanges and on our website. Joining me today is Nusannan Sharma, Executive Director and Group CFO, along with GIA, Investor Deja Advisors. Quarter 2 performance. Desquired a challenging global environment, pleased to share that Carousel Deliver is highest ever. Second quarter revenue of 275.7 crores, a growth of 14.6% over last year. A core business, a thing business continues to be our main growth engine. The quad thing volumes grew about 10% to 217,000 units. And, of course, sinks contribute about 54% of our revenue. Stained and still volume also grew by 8% to 47,000 units. Together, our sink contributes 65% of our revenue. Our faucet volume grew by 8%. Kitchen appliances 12% and surfaces 23% on our revenue this quarter. With this wider portfolio, Kerasil is steadily becoming a complete kitchen solution provider for our customer. Capacity expansion, granite sink plant is running at a 92% utilization, stainless steel plant running at a 91% capacity utilization in quarter to FY27, which is close to optimum level. Our addition, 250,000 units of annual capacity of quartz sink and 150,000 in steel sink due by the end of FY27 comes at the right time. In line with Make in India, we are also doubling our faucet and kitchen appliances capacities to 100,000 units each, which will reduce our dependence on imports. This too is on track end of FY27. International business. Our long-standing partners like IKEA, Lowe's, Home Depot, and Auden, Deflay continue to be a large share of their business. We've extended our partnership with Home Depot, Canada, and U.S., starting working with Hayfler in Australia, New Zealand, Thailand, and Indonesia. And received our first Amazon by Amazon U.S.A. In the UK, Carousel Products Limit recorded its highest ever half revenue of 6.2 million pounds. Our services business saw a software demand to 5.8 million pounds against 7 million of last year. In the US, the United Granite grew its revenue to 5.6 million dollars from 5 million, approximately a 10% plus growth. Domestic business has been one of our biggest opportunities. And our growth engines. Indian consumers are increasingly choosing premium brand and design-led kitchen products. So, our business grew by 30% in the first half, and India contributed 21% of our revenue versus 19% last year. Expanding our presence through galleries, brands through experience centers, B2B vertical with developers, and also online platforms like Amazon and Flipkart. To build our brand further, we have signed... Renowned actor, Mr. Bobby Diol is our brand ambassador for FY27 and 28. We remain on track to achieve our 500 crore domestic revenue over the next three years. Innovation and outlook. We are preparing global launch of our nanotechnology-based things in 2027, starting with Europe and U.S. This is a silk. Smooth finish of a granite sink with other additives other than quartz. This is approximately 25% of the global revenue of the other competitors. By entering into this segment, we'll be able to increase our market share in the luxury segment globally. Also, the value addition is approximately 20% more than the... Current granite sinks. We are maintaining our FY27 guidance of 15% revenue growth with an EBITDA margin of the guidance given 18 to 20%. We still remain, plan to remain at the upper side of our margin guidance. Our priorities are clear, growing four categories, completing capacity expansion on time, and improving profitability to allocating with discipline. We also like to give news that there is It's been a big win by Democrats in the United States. So we see now a strong momentum of orders coming from the United States. We're already seeing some immediate trips by our customers to our factory as early in next week. So we are very confident that there will be a huge momentum now coming from the United States, not just for granite sink, but also for stainless steel things. Now, I would like to hand over to Executive Director Group CFO, Mr. Anand Sharma. Over to you, Amin.

Thank you, sir. Ladies and gentlemen, let me give you through the consolidated performance for Q2 FY27. Revenue from operation, 275.7 crore. It's increased by 14.6% Y and Y basis and 5.2% Q and Q basis. Total income, 278 crore, up by 13.9%. Gross profit, 149.7 crore, which is 16.8% higher. Gross value also improved by 133 basis point to 53.9%. EBITDA grew to 54.1 crore, up by 9.3%. Margin for Q2 FY27 was 19.4%. Compared to Q2 FY26, 20.3% and Q1 FY27, 21.2%. This marginal decrease is on account of higher raw material cost and CFRET. Profit before tax and profit after tax, both has increased by 10.3% and 5.8%. EPS is 9.97 as compared to quarter to FY26, 9.56. Half-year basis, considered performance, revenue from operation, 537.9 crore, up by 15%. Total income, 542.8 crore, up by 15.2%. Gross profit to 94.9 crore, up by 19%. Gross margin also improved by 174 basis point to 54.3%. Ibiza, 110.1 crore, up by 17.6%. Margin by 42 basis point to 20.3%. Before tax, 82.2 crore by 23.3%. Profit after tax, 61.1 crore, up by 21.3%. EPS increased to 21.02 as compared to last year's first half, 17.59. With this, we can now open the floor for question and answer. Thank you. Over to you, operator.

Thank you, sir. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on your touchstone telephone. If you wish to remove 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 while the question queue assembles. The first question comes from the line of Resha Mehta with GreenEdge Wealth. Please go ahead.

Yes, thank you. Congratulations for a decent show. First, I just wanted to check whether, you know, we've lost out on any export revenues for, you know, want of container availability. Was that a challenge or high rates were a challenge? Any disturbance and loss of revenues on that front?

So, I think as a company, I think we've got the highest revenue in terms of export and for India. Yes, there has been, you know, tremendous challenges as far as the availability of containers are concerned, the higher freight charges, but we've been able to, you know, we've been able to fairly weather across this. Strong headwinds and we've still been able to put on a great performance. So nothing, we probably would have flipped about a few containers here and there, but nothing significant.

Got it. And only, you know, growth by, you know, across products. I see that surfaces have degrown in terms of revenues, while kitchen appliances revenue growth has also been flat. So if you could comment on these two specific product segments that why in this quarter it was subdued and what are our expectations going ahead?

Yeah, so as far as the surfaces are concerned, I think this whole strategy, like focusing on more exotic stones, and which is one of a kind, I think that's really worked. Somehow, even in spite of very high inflation in the United States, the quartz, the granite thing, I would say more natural exotic stones have been continued to do fairly well. And we targeted more premium. So that strategy has really worked. As you would have seen that the appliances sale has also grown by 10% on quarter on quarter on quarter. There is one piece of whole new appliances which we are planning to, which we unfortunately could not launch it before. Diwali this year, we'll be able to now launch it in 2027, and this is in line with our Wabidiol new launch, which we are doing by end of this year. So, we are quite hopeful that this new premium product will fetch a lot of... Attention and traction in the market. And second thing is we've also now been very careful of this BIS certification. So most of our appliances now, the total almost 70 to 80 percent of the appliances are manufactured by us in-house. And we are now almost cutting down on imports as much as 70 to 80. So there has been a supply chain issue as far as the assembling and the manufacturing, the appliances are concerned because the first year we started doing it. And I think as you know, quarter on quarter will definitely improve. And I think we should be all set for 2027 because by March, the BIS, you will not be able to import anything post March 27.

So, okay, I could reconcile your statement with Kishan Appliances because the growth there was 1%. So, probably because of the BIS disturbance, you know, the growth has been muted. But surfaces, I think you were saying that we did well in some natural premium stones. But if I look at the revenue, that has de-grown by 3%. So, that's what my question was that why have surfaces de-grown?

No, no, UK, UK, that is right, UK. So anyway, UK is right now very soft, and that's why you would have seen the surface is, I think, a small drop of 3%. How much is it?

In terms of revenues, yes, because I think when you look at faces as a product, the revenue degrowth is 3%, but if I look at carousel surfaces, the UK subsidiary, that is degrown by 25%. So, again, the degrowth here has accelerated. So, any, you know, near-term visibility in terms of at least arresting the degrowth?

Yeah, so I think, as you said, the UK is now, you know, is passing through a bit of rough time. We have just appointed a new head for the services. He would be now taking charge for next month, and he's been asked only to drive the business of the services. So I think we want to get the services back on track. There are a lot of opportunities, but we just wanted someone to focus on. So after Mr. Julian Aniston, which left the company last year, we were looking to find a... The placement of somebody who focuses on the surface in the UK. So I think we are quite hopeful in the coming quarter, you will see an increase in the surface.

But, you know, at the same time, sir, if I look at carousel products, which is also, you know, based in UK, right, UK-based subsidiary, that has grown at 11%. So, you know, again, of course, there are macro headwinds in the UK, but why would carousel products have done well? That is, yeah, yeah, that is the thing. See, there are two very different segments of the market. One is surfaces which goes into kitchens, and one is goes, kitchen sinks and pockets are used for more. And so lastly, on the United Granite revenues, right, so that has also slowed to, you know, just 4% growth. You did talk about carousel surfaces in UK, but United Granite has also slowed down its growth in terms of just 4%.

10% growth. The revenue grew from 5 million to 5.6 million.

In the first half.

In the first half.

Yeah, I was talking about Q2. Q1 has been handsome growth, but Q2 has slowed down.

Yeah, so Q1 has a better growth, Q2 a little slow growth, but overall in the first six months, it's gone by more than 10%.

Okay, okay. And since, you know, we are so buoyant about, you know, new partnerships, you know, and with new customers, new OEM partners, would you think that maybe 15% revenue growth is conservative and we may like to revise it upwards at some point of time, maybe say in Q3 or thereabouts?

Yeah, I think, I mean, very honestly, I've never seen this kind of optimism or Positivity coming from the demand, you know, it's kind of reconfirming and validating our future growth story has been a tremendous interest in our company across the world, and mostly now from Europe and the United States. I think there are some big deals which is, you know, which is on the edge. And I think if these kind of big deals have been realized and what we hear from our U.S. customers and they're all coming to see us, there must be something going on right now. So I think if something of this realizes, I think, you know, we will be able to, we will probably see an upside above 15%. Yeah.

Got it. All right, sure. Thank you. Best wishes to you, Anand, sir.

Yeah, as of now, we are being conservative on, you know, we don't want to over-promise on anything, but yes, the great opportunities. Thank you.

Sure. Thank you. Thank you, Dushar.

Thank you. The next question comes from the line of Erdik Vafna, with Monarch Network Capital. Please go ahead.

Hello, sir. Congratulations on this good set of numbers, despite of the challenging headwinds which we faced during the quarter. But now, sir, as we see that now since the US election outcome has been out and we see that this is a great positive for us, so do we expect any kind of political changes or any kind of industrial changes which can happen and which shall benefit Kerasil the most? Do we expect anything like that?

So I think the, I think, you know, the best thing that's come out of this whole election is the... Positivity towards India, especially when there was this tariff looming on our head for a while now, and I think we'll definitely go on a bad path. This will obviously help, I think will boost a lot of our current customer confidence in. United States that goes across Karan to Lowe's, to Home Depot, to Menards, to MSI, to Ferguson, across, and to Krause. Our United States clients are very excited about the outcome, what has come. People have planned their visits to come and see us. There has been a lot of fresh inquiries in the planet and in the industry of things, which has been... Floated to us now in large numbers. And also, secondly, I think there is also an opportunity where there is a lot of supply chain issue from Europe to the United States. So I think we would be kind of reaping the... One was this looming sword on our head was about this tariff, you know, which nobody knew where it was going, and I'm not saying that it's going away, but it is 100%. We are very confident that this will now, this will not definitely help us to reach a trade deal with India. So, I think we all are looking very positive at this point of time and we can, you know, I think our business with the United States will be more. Bullish in coming future. And also one important thing is I want to mention is this nano technology products which I mentioned, which will purchase another about 20% value addition, which is about 25% of the luxury kitchen sink business in the world. We are launching it in the KG show in the United States in Las Vegas on first week of. So we are launching new models with this new material filler system, and I think that is also quite exciting for us. Secondly, we are also launching first time our new premium stainless steel kitchen sink that also at the show. So I think overall we look very excited with this outcome of the results.

Got it, sir. So, sir, we expect the things to change as fast as it could. So, this should benefit us. And, sir, apart from this, can you quantify more on the Amazon US order which you had mentioned earlier in the call? We have received the first order, right?

Yeah, we received the first order from Amazon US and which will obviously be the election again. You know, everybody is a bit of kind of conservation as far as ordering goods, because I think this will also bring a lot of positivity in Amazon side too, and which will also help us to improve our business with Amazon in 2027.

Okay, sir. And so this order would be Quartz and Changes, things both?

Sorry? Right now, I mean, right now, I would say this for Granite Sinks. We will be getting our first new stainless steel sinks order by end of this year from different customers in the United States. So, we see some good momentum coming on steel side also in the United States next year.

Okay, sir. Got it. And then one last final question, sir. Um, as we saw in, uh, um, In the notice sent on the exchange regarding resignation of the CFO. So, sir, have we found any new CFO or anyone who can join him?

Yeah, so I think I want to also clarify good opportunity. I think me and Anand have shared a great relationship. But as you know, that Carousel is looking for Carousel 2.0, this whole new phase of growth, and where I would like to have all the CXO-level people as close to me, working very close to me. Anand has been a tremendous contributor to the company many years. He's had a great relationship, but there are also personal challenges with him. So we cannot enforce this to anyone. So it's always tough to find as competent as Anand, but fingers crossed. I think we have already shortlisted the candidates, and we should be... Good morning, everyone. So, it is not going to be long till you have a new CFO. Thank you.

Okay, sir. Got it. Thank you, sir.

Thank you. The next question comes from the line of Sanjay Lada with Pashtun Research. Please go ahead.

Yeah, hi. Hi, sir. Thank you for the opportunity. So I just wanted to know, you know, in the Q2, what I wanted to know is the cost of Rombadal side is perfectly fine and it is pretty much controlled and therefore we see gross profit margin increase. But when I come down at the EBITDA level, the employer cost and other expense has been increasing rapidly. So, if you can clarify on those level and specifically for a Q2 perspective.

No, so I think one thing is very clear that companies are on a rapid expansion mode, and we are enhancing our capacity. We need to train people ahead of time. So there is overlapping of employee cost, one. And secondly, that if you are on an expansion phase, we've also hired a lot of new people more on, like we hired a CTO, we hired a lot of project head, a lot of engineers. So there's also a lot of new team which is coming into place, and this is basically to take care of this extra. The capacity, which is going to be realized by March 27th. So once the capacity and sales is in place, the employee cost will be diluted to that extent. So, we don't see. As far as percentage of the employee cost, Rising in 2027, in terms of percentage to revenue.

Okay, so my second question would be, we are increasing our courts in capacity, and which will be live in early FY27. And still saying, we have already done the capacity. And my My question is, since we are, you know, in talks with... So much of, you know, new customer and the existing customers are also, you know, increasing their capacity and increasing their footprint with you. So how do we see the capacity, you know, then? Because this would be pretty much for your perspective point of view. Then again, we will go for a new capacity or how do we see?

No, I think by the capacity, see, I think, let me put this into two pieces. So, I think that the capacity, what we are investing in infrastructure is for half a million things, where we are going to invest on the first phase of investment 250,000 things as far as the machinery is concerned. Anything which we want to move to another 250,000 cents, it will take about four months' time for the company, which is good enough with time the new customer would give it to us. As far as the current... Capacity is concerned and the challenges that we have, like, for example, last month we did our highest sales and we kind of ran over 100% capacity just for one month is because we had kind of huge orders. We had to put up a great incentive scheme with our, you know, workers and we also improved. Production cycles at the manufacturing level, so which has helped us to kind of outdo performance last month. So if any of these rush orders come, something before the capacity come in place, I think we have our team in place. Like you said, the employee cost has... The horizon is because we have a lot of employees. We are backing us up. We fear we increase the capacity, work over time until the new capacity comes up. As we all know, supply chain is the biggest issue at this point of time globally, and we do not want to let this opportunity go.

So, my another question would be, since, you know, what we are seeing and what we are hearing in various other management across the industry, we are seeing that freight cost has been increasing rapidly in the quarter and in coming period of time as well. So, how do we see that and is that pressure full along and including this, we are talking about? 18 to 20% margin of EBITDA level is that would be maintained because of the, you know, globally pressure going on.

Yeah, good. Question. I think this margin, unfortunately, we probably have missed our target margin in quarter two. That's what I come to here. But if you're looking at the current global situation, I think our company has done very well. Our team has performed very well because it is unprecedented trade cost. And the disruption in supply chain, which is going inside the world. Now, the quarter two, I think probably is the worst ever challenging quarter we ever had, where we had the highest cost or challenges in terms of every input cost of whatever it is, straight to anything. So, I think this margin of 18 to 20 percent. Already, I think we did how much? 90-20%? So, standalone was 21%. So, already on the standalone, we already doing 20%. Yeah, UK and US was quite flat. So, that's why it has kind of on consolidation diluted the margin. But on the concern is also 19.4. So only my answer to you is moving forward, right now we see a trend of cooling down, we see the raw material prices going down, we see the freight gradually going down. So I think I can only see any.

Thank you so much for answering my question. Thank you.

Thank you. The next question comes from the line of Bala Muralikrishnan with Oman Investment Advisors. Please, go ahead.

Hi, good morning, Sharaji. I'm a good friend. My first question is regarding the stainless steel steel. I heard it from Satachi in the last quarter. But the volumes of this quarter are not perfecting, so it is clarifying that one, and even in the Q3, you can see some non-eventations. So what could be the volume action?

He is saying the capacity has been increased, but the volumes have not come, but in the quarter 2, in the stainless steel thing. So it has been the flat at 91%. Yeah, so I think quarter on quarter, we're able to maintain the sales, if there are not improvements, but like I said, that there is a new inquiry for sales. You will see in the coming quarters. But as far as the fundamentals, I think we are still very strong, stainless steel is doing well. And this new technology where we are going to press the things with 15 radius and 25 radius, which will only happen in quarter four.

Okay, understood. So, Lani, secondly, on the some deals with agreements you discussed in the last quarter, like Ops, New Zealand, Bayland, and Canada also, what is the process on the, have those deals been utilized, and have you started any dispatches with countries first?

Sir, I'm having a bit difficulty understanding you, so if you can go slow and a bit louder, please.

Yeah, in the last quarter, we discussed about some agreements with Australia and New Zealand retail customers, and also some Canada customers. So, is there any progress there, and have you started any dispatches to them?

So, we have signed a good deal, I would say a great deal with Haefeler, New Zealand and Australia, and we have got our first orders in this quarter. and which would be dispatched by next month. And this coming quarters, I think the deal was about around 25,000 to 30,000 things a year. And I think we expect to be on track next year. But if your question is, have we received the orders? Yes, we have received the orders. Also from Canada and also from New Zealand, Australia.

Good morning, everyone. Lastly, on this long-term care system, in the earlier presentation, we indicated that we want to move the quad-sync capacity to 1.5 million by FF331, and also in similar lines, stainless into 500,000. So, given the current trajectory, we are adding 0.25 million tons. So, do you think, I feel these figures would be a little bit too conservative. Maybe there is a lot of scope to add capacity by that time. So, I would like to know what is your thought from this one, sir.

Yeah, so I think we are on track with, you know, what we are doing. Obviously, we will see on how quarter and quarter shapes up and what are the new deals kind of shaped up. We are very excited to see the quarter, the next quarter, I think because there are some very interesting deals which can take place. And then we can probably significantly move the trajectory to the positive side. But as of now, the 1.25 and I think on the long term, 1.5 million, 10.5, I think, think is okay. And then when, you know, further things improve, we will see to enhance the capacity. But if the question is, do we have the further capacity to enhance, I think we have a huge infrastructure and land, whether we can further enhance the capacity right now.

Yes, Gusha, so under last year, under... Yeah, please go ahead. Yeah, and maybe by this month's end, we'll go to the market showroom for a visit, maybe we can share this information with the team.

Yeah, yeah, sure.

Yeah, you were saying something.

No, the thing is, you see, and I've been saying this again, there's 4 million things in the market. Supply chain is a problem around the world, and whichever company is able to do at a great cost and a great supply is on time, which is going to be a leader. So, you never know what things get disrupted in Western part, since all our competition is coming from the Western part. So, you are absolutely right. I think we should be geared up. If something goes wrong, we have heard that one of the Italian companies will start or will be closing down. So you never know if something like this happens. Then we may get, you know, quite a huge momentum. I mean, quite momentum in terms of the orders. And the same thing is happening on the stainless steel side. The freight cost is so incredible coming from the Far Eastern supplying to Europe and to the United States that people are now, I've never seen such a flow of inquiries also for the stainless steel side. So things look pretty easy. Interesting. I think we need to just keep a good watch. And, yeah, we should be ready to enhance the capacity if some kind of this, you know, some things change dramatically. You never know how fast things can change in this global scenario.

Yes, sir. That's good, sir. And good luck to Anand Sharma Sadwar. We have been with the company for many years, and we should have luck to you. Thank you.

Thank you so much.

Thank you. The next question comes from the line of Sagar J. Twani with Philip Capital. Please go ahead.

Yeah, thanks for the opportunity. I have a couple of questions. First on, you know, what was the impact of sea freight cost rise and RM inflation each on the EBITDA margins, if you could break that down? And also, any pricing action that we have taken during the quarter, or are we going to take any pricing action going forward to combat the RM inflation? That is question number one.

Yeah, so I think to put both sea freight and raw materials cost in fact, I think the impact is about 1.5 percent, 1.5 to 2 percent, and that's why I probably missed a margin target. Second question was on the price. Yes, I think we already have increased 5% price, but if something goes wrong further than this, see some inflation. If some infantry cost comes in terms of freight or in terms of, but the best part is all our exports to the major customers are all FOB basis. So since it is on a, since on a FOB basis, there is not much impact on us. And also if there is an increase in the raw material cost further than this, that will be passed on to the customers. But we'll have work on, fundamentally, we'll ensure that the margin guidance is not, is, that we are able to stick to the guidance, upper, upper side of our margin guidance.

This price side that we have taken, it was effective from when?

We did from last month. Okay, so next quarter will have a full quarter impact. Yeah, positive impact. Yes, sir.

And second question is on the India, you know, business expansion. So, what's the, you know, expansion strategy in India? Are we going, expanding region-wise, state-wise, or is it that we are tapping specific cities and towns across India, given that we have a premium positioning, premium luxury positioning? So, what's your expansion strategy?

Yeah, so I think if you know we have hired PwC for my leadership one and two restructuring process, which is on, one thing hasn't come out very clearly is that if you want to, the kind of growth we are looking from India, and I very honestly, I think we are underperforming as a brand and as a company in India, and that's why I kind of put our growth. I think to 500 crores. So India is going to be our growth engine. And if you want to go to 500 crores, there are a few things we need to do, but I can only touch the few important things. First is that you need a good leadership team. So one leader is not enough to drive this whole India business. So we are basically going to split this whole into e-com business, B2B business and B2C business. Further, when you go to leadership two, we are going to split it in terms of category, things and profits one, and appliances into two. So, there is an accountability and ownership for each of these. We would be strongly governing by the KPIs for all the team members till the ASM level and try to give them targets. Uh... And have a very strong monitoring control, which we honestly don't have right now. Third is, right now, this whole exercise is going to take place, and we feel that there are the top 8 to 10 centers where Carousel is doing well. We see that territory itself having a lot of growth opportunities. So we try to expand our team around all these 8 to 10 regions across India. And at the same time, we are also trying to look at what are the gaps in the market which the company needs to do. I think so we are on a track right now to shape this up. I think by end of, you'll be able to hear this news in the next 30 to 60 days about a new team and new structure and what we plan to do. Yeah.

Yeah, thanks for all that clarity. Last bit on, you know, the advertisement and the branding expenses, how should we look at it going forward, given our fast-paced expansion in India specifically, given that we have a brand ambassador now in place? Also, we plan to add another few brand ambassadors as part of our last conversation. So, your comments on add and, you know, the branding expenses, maybe for next year, that should be helpful.

Yeah, I think this is one important fact I forgot. I think this is called brand store expansion. So on the brand store expansion, we only have 20 brand stores across India, which most of our peers have more than 150 to 200 brand stores. So I think this is where one about a large chunk in the 27, about 25 to 30 crores may be able to. Invest as a company to kind of go to the revenue of, build a road to a 500%. I think, sorry about that point, I forgot. And as far as the marketing, the brand ambassador, I think one thing is very clear. We internally spoke about this, that we need a very clear 5% pure advertising. Expenses is going to build a brand in India, not with JCP, but purely on terms of advertising and branding. And in September, Bobby Deol, we are going to spread across the TV series. We are going to be on social media. We are going to see the billboards in major cities where... Teresil as a brand is a leader. A lot of, you know, promotion with Bobby around. So, I think you'll see that the company is now going to spend as high as 5% only on advertising as far as this. The second question would be yours. How much will we dilute my? What we're going to do is we are going to minimize the discount of 5% which we are giving to just to bring more of a push strategy. So we are going to stop doing that 5% of extra discount which we are giving to the distributors and that 5% we are going to use for brand building. So try to see that our margins are not disturbed.

And that way, the economies of scale should also help in kind of improving the margins, in fact, in addition to the discounting rollback. Correct.

You know, this whole thing of Bobby Deol and obviously I know him also as a person, also a great, great, great guy. What the impact or a lot of questions were asked that why did you hire a male brand ambassador versus a female, you know. So, I think this whole concept of getting a male man inside a kitchen, Cooking for females, most of the chefs are men in, you know, the world, who are the best chefs in the world. Bobby has such a great impact, what I see recently, and I think this is really going to build the brand to the next level. You know, it's going to catch a lot of eyeballs. Yeah. So we are quite excited to do something different than the industry.

Thank you for answering all my questions. All the best. Thank you.

Thank you.

The next question comes from the line of Nippur Kemka with Siri Igui Search. Please go ahead.

Yeah. Hi, sir. Good evening. So, my first question was, do you think there is a sufficient pool of gravity for attracting top talent to Bhavnagar, a city with a size a tenth of Ahmedabad and a population less than a million?

You see, I think your question has come to me. How come I have been able to handle in Baunagar, right? Such as your friend, Brett Gahinagar. What attracts Baunagar is the carousel, the amount of momentum, the infrastructure, what we have. I think if you are, have you been to our factory before? No. No. Okay. Good. So, you should come, and you'll realize that this is probably the best place to stay. Secondly, if somebody wants to really be a better quality life, getting away from this hustle and bustle, a lot of inflation costs, a lot of weather problems, right? Bombay also crossed 300 AQI recently, right? In terms of, I came from, I mean, and I kind of fell. Sick, right? Because of the weather. So, for example, then my CTO I hired is from Bombay, and yesterday he called me, he said, sir, I want to move with my wife to Baonagar. I'm not able to tolerate the weather. Secondly, he said the quality of the life I get in Baonagar, I was astonished to see. Third is the working culture at Carousel, the new headquarters coming up. It really... It's exciting, a lot of sports complex, team building. So, I think this is a lot of other good things which we have. We are not completely like 100% you need to be here. We give a lot of like a week, like 5 days, 10 days, you know, work outside our factory. That is also fine. We don't want that 100% somebody needs to be based there. So, we are also very flexible sometimes in a bit of high-hydrate walking style, but most of my time… The CXO levels you need to spend with the chairman of the company. Now, whether I'll be in Bonner, you can spend there. If I'm in Bonner, you need to spend here.

Understood.

But you'll be shocked when you see the new CXO levels joining us, and from which company they are coming and joining me. Tell me there must be something good that we must be doing. Yeah.

And, sir, secondly, have you considered bulking up your inventory of raw materials in the last six months because of this disruption, and at the time when free trades have also sold?

And why what? Is your question on inventory building? Yeah, inventory of raw materials. In inventory, yeah, we did. Build a bit of inventory raw raw material, and that's why we have as far as the inventory is a bit higher on quarter 2.

But, like, in quarter 2, if I see, it was mostly, I believe it was mostly largely same as FY26.

I think we have already booked material for next three to four months because of the pricing what we are getting. So what we discussed earlier that we are booking an entry in advance so that we have a fair pricing available to us. We have not built more stock. From until we have a normal stock, in terms of import items, we have some contracts.

Okay, okay. So, but if in the, let's say in the future, if the situation repeats again, so wouldn't it be wise to build up some raw materials like extra raw materials for this kind of situation?

So, there is a lot of volatility happening and our main raw material, MMA, KMA has a link with the crude and its prices going up and down. So, we don't want to suck to a one price. Any up and down, it's even out in the next six months or three months. So, up to three, four months, we can take a position. But more than three, four months, there is no visibility. So, we don't want to disturb that kind of visibility.

Understood. Understood. Okay. Okay. Thank you, sir. Thank you.

Thank you. The next question comes from the line of Rishabh Shah with Systematics. Please go ahead.

Hi, so my question is regarding the kitchen appliances and the faucets where we are doubling our capacity, which will be done by the end of FY27. So we'll be reaping the benefits in FY28. I just wanted to know what sort of asset turnover or the additional revenue that we are planning on and what would be the target utilization for the sale?

See, this is very asset-like model because it's more assembling than the manufacturing, so the turnover will be five to six times of the capex what we are doing. And on utilization, it will gradually increase utilization we are targeting for next year 80 to 85%.

Okay. Okay. Thank you.

Thank you.

Ladies and gentlemen, due to time constraint, that was the last question for today. I now have a conference over to the management for closing comments.

Thank you very much for joining this call. We hope that we are able to clarify all your queries. However, if you have further queries, you may reach out to GI, Invest Advisor, right to the company. Have a great Diwali and a happy New Year.

Thank you, sir. On behalf of GoIndia Advisors, that concludes this conference. Thank you for joining us, and you will now disconnect your lines. Thank you.