Cello World Limited — Q2 FY26

Cello World Ltd Q2 FY2025-26 Earnings Conference Call https://www.youtube.com/watch?v=1s_tLjTXEtg Published: 6 months ago

0:00 Ladies and gentlemen, good day and welcome to Cello World Limited Q2 FI26 earnings call hosted by Monach Network 0:09 9 seconds Capital Limited. As a reminder, all participant lines will be in the listenonly mode and there will be an opportunity for you to ask questions 0:18 18 seconds after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on 0:27 27 seconds your touchtone phone. Please note that this conference is being recorded. 0:32 32 seconds Before we begin, please note that this conference call may contain forward-looking statements about the company which are based on the beliefs, 0:40 40 seconds opinions, and expectations of the company as on date of this call. These statements are not the guarantee of future performance and involve risks and 0:48 48 seconds uncertaintities that are difficult to predict. I now hand the conference over to Mr. Rahul Dani. Thank you and over to you sir. 0:58 58 seconds Yeah, thank you Sai. Good morning everyone. On behalf of Monach Network Capital, we are pleased to welcome the management of Cello for their Q2 FI 26 earnings call. We have with us today Mr. 1:09 1 minute, 9 seconds Gorov Rahul's joint managing director and Mr. Aturi Parodia CFO and we also have SJ the IR advisors. Um and now I 1:16 1 minute, 16 seconds hand the call to Mr. Gorov for his initial comments and then we'll move to Q&A. Thank you and over to you sir. 1:23 1 minute, 23 seconds Thank you Rahul. Uh good morning everyone and a very warm welcome to our company's earnings call. Joining me is 1:30 1 minute, 30 seconds our CFO Mr. Atur Poria and investor relations advisor SGA. The results and presentations are available on the stock exchange and on our website. I hope you 1:39 1 minute, 39 seconds had a chance to look at the same. During Q2 financial year 26 we recorded a healthy 20% topline growth to reach 1:47 1 minute, 47 seconds revenues of rupes 587 crores. With this we crossed the,000 cr revenue mark on a half yearly basis for the first time and 1:54 1 minute, 54 seconds achieved revenues of rupees 1165 cr. We saw healthy uptake across key categories 2:01 2 minutes, 1 second ahead of festive season. The GST rate has been reduced from 12% to 5% for approximately 10% of our product 2:10 2 minutes, 10 seconds portfolio primarily within the hydration category. GST rate for all of the other products uh remain unchanged. 2:18 2 minutes, 18 seconds Before we delve into our category wise performance, uh we are very excited to update you about our agreement with respect to Cello brand for writing 2:26 2 minutes, 26 seconds instruments and stationary. We are very excited to bring this back into our company soon. Many years back we had divested this brand to a global company. 2:36 2 minutes, 36 seconds Recently they exited this business in India and the promoter group of Cello World Limited found an opportunity to get the band brand back into our fold. 2:46 2 minutes, 46 seconds CPIW, a member of the promoter group of C of Cello World Limited, the umbrella entity holding the Cello brand in other 2:54 2 minutes, 54 seconds classes as well, will acquire the trademark for stationary and writing instruments that is Cello brand from the 3:01 3 minutes, 1 second big group. One of the subsidiarities of Cello World Limited has entered into an agreement to lease the trademark for Cello brand for stationary and lighting 3:09 3 minutes, 9 seconds instruments from CPIW. Upon execution of this agreement with CPIW, Cello World Limited will operate stationary and 3:16 3 minutes, 16 seconds writing instruments portfolio among two brands namely Cello and Unomax. 3:22 3 minutes, 22 seconds The Cello brand continues to enjoy strong consumer recall and trust in the writing instrument segment and our focus will be on enhancing operational 3:30 3 minutes, 30 seconds efficiencies, optimizing costs and leveraging our established manufacturing and distribution infrastructure to unlock the full potential of the business. 3:40 3 minutes, 40 seconds Now coming to category wise performance. 3:43 3 minutes, 43 seconds Uh during our quarter uh our consumer segment maintained a healthy year-on-year growth of 23%. Supported by 3:50 3 minutes, 50 seconds good festive demand. The festive season particularly benefited the consumerware segment the most driving strong sales across our key product lines. 4:01 4 minutes, 1 second Year to date our glassware plant had a utilization close to 55%. 4:06 4 minutes, 6 seconds Whereas we saw about 60% utilization levels in Q2 of this financial year. I'm 4:13 4 minutes, 13 seconds pleased to share that our glassware plant has achieved break even during this current quarter. Despite active dumping pressure from Chinese suppliers, 4:22 4 minutes, 22 seconds we have successfully scaled up production and gained market share. Our focus now is on continuing expanding our market share in the coming quarters. 4:34 4 minutes, 34 seconds Currently we have around 110 SKUs in this vertical and we plan to expand the portfolio to about 150 SKUs going 4:42 4 minutes, 42 seconds forward. We are also undertaking solar based cost optimization initiatives at the plant which will further enhance 4:49 4 minutes, 49 seconds operational efficiency and reduce energy costs. 4:53 4 minutes, 53 seconds Strategically our focus remains on import substitution in in categories such as tumblers and storage. 5:01 5 minutes, 1 second We have witnessed strong consumer acceptance in these segments with our with our products now being priced at par with imported alternatives 5:09 5 minutes, 9 seconds underscoring the quality and competitiveness of our offerings. 5:13 5 minutes, 13 seconds Our steel category experienced a decline during the current quarter due to supply constraints. We had we had to source 5:21 5 minutes, 21 seconds steelware from other OEM manufacturers at a slightly higher cost which affected profit margins during this quarter. Our 5:29 5 minutes, 29 seconds steel plant will commence production from December of 2025. 5:34 5 minutes, 34 seconds Once operational, it will significantly strengthen our supply chain. We expect this expansion to enhance our cost competitiveness, support margin 5:42 5 minutes, 42 seconds improvement, and contribute to the overall growth of our steel business in the coming years. 5:48 5 minutes, 48 seconds With a top line of rupes 81 crores, the writing instrument segment recorded a yearon year growth of 16%. 5:55 5 minutes, 55 seconds This growth is supported by encouraging signs of revival driven by new product launches in mechanical pencils, art 6:03 6 minutes, 3 seconds stationary and internationally licensed kids products. 6:07 6 minutes, 7 seconds With the addition of the Cello brand under this portfolio, we are highly optimistic about the growth prospects of this business. Upon completion of the 6:16 6 minutes, 16 seconds transaction, the company will issue a separate communication outlining the subsequent course of action, strategic initiatives and other relevant details. 6:26 6 minutes, 26 seconds The furniture business also had a decent quarter with a 8% year-on-year growth in revenue which reached rupees 84 crores. 6:34 6 minutes, 34 seconds The growth is family driven by product addition into this category. 6:40 6 minutes, 40 seconds These effects these efficiencies across segments were also reflected in the working capital position. The inventory is on an reducing trend with channel 6:49 6 minutes, 49 seconds stocks easing out. Ecom and Quickcom both saw a major shift in terms of channel mix which is also helping us in this respect. 7:00 7 minutes Overall, we remain on track to achieve double-digit revenue growth for the year with EIDA margins around 22 to 23%. 7:08 7 minutes, 8 seconds Underpinned by strong execution, discipline, cost control, and the benefits of our capacity expansion. 7:15 7 minutes, 15 seconds With the ramp up of our glassware plant and the steel plant, we look ahead to a stronger financial year 27. I will now 7:23 7 minutes, 23 seconds hand over to our CFO, Mr. Atul Parolia for the financial highlight. Thank you very much. Thank you Arab and good morning to everyone. I will be sharing 7:31 7 minutes, 31 seconds the financial detail for the quarter gone by. In Q2 FI26, we achieve a revenue of IN 587.4 Cron-ear 7:42 7 minutes, 42 seconds growth. AITA stood at 141.3 cr with a healthy AITA margin of 24%. Our PAT stood at 85.7 cr with a margin of 14.6%. 7:53 7 minutes, 53 seconds Speaking of the revenue mix over 71.9% of revenue came from the consumer 13.8% from the right instrument and the 8:01 8 minutes, 1 second remaining 14.3 from the mold foundation and light products. Sales contribution of both the general trade and export are on the downtrend at 73.3 and 6.7% 8:11 8 minutes, 11 seconds respectively. Contribution of online sales was about 11.6% and modern retail at 8.4%. 8:18 8 minutes, 18 seconds In terms of segment wise margin writing instrument led by with a 55% gross profit margin followed by consumer at 50.2 and model furniture at 40.9. 8:30 8 minutes, 30 seconds Now coming to H1 financially at 26 performance revenue was 116.5 cr with a year-on-year growth of 13%. 8:40 8 minutes, 40 seconds AITA stood at 267.6 cr with a margin of 24%. PED was at rupees 158.7 cr with a 8:48 8 minutes, 48 seconds margin of 14.2%. Our cash flow from operation stood at rupees 261.7 cr. On the balance sheet side we continue to maintain a healthy net cash position. 8:59 8 minutes, 59 seconds With this I would like to open the session form for question and answers. 9:05 9 minutes, 5 seconds Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press 9:12 9 minutes, 12 seconds star and one on the touchstone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are 9:20 9 minutes, 20 seconds requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. 9:33 9 minutes, 33 seconds The first question is from the line of Anerut Johi from ICICI securities. Please go ahead. 9:41 9 minutes, 41 seconds Yeah. Uh thanks for the opportunity and uh uh congrats to the entire team for uh acquisition of Cello uh pens brand. Uh 9:50 9 minutes, 50 seconds so just certain clarifications here uh AAM group has also purchased the uh business from BICO as per the uh BC 9:59 9 minutes, 59 seconds announcements. So if you can elaborate bit more on the transaction of the deal uh how it will be done uh uh whether the 10:09 10 minutes, 9 seconds brand only will be purchased by uh the rest of the business by ATOM or how how is it uh working out if you can 10:16 10 minutes, 16 seconds throw more uh clarity on this. Secondly, uh what will be the uh uh revenue uh 10:23 10 minutes, 23 seconds addition like the software assets for example distributors, retailers, all other designs uh uh in a way all other 10:31 10 minutes, 31 seconds copyrights etc. Everything is purchased by uh fellow or uh uh any anything is gone to Autumn. if you can clarify a bit 10:38 10 minutes, 38 seconds more on that and uh eventually uh uh how do we build the uh acquisition in terms of numbers like uh where do you see the 10:47 10 minutes, 47 seconds uh acquisition panning out in let's say FI27 months will be required for the uh 10:54 10 minutes, 54 seconds transaction completion so how do we see uh the revenues building up for pence business in uh FI27 and then last 11:02 11 minutes, 2 seconds question uh what will be strategy on UNOMAX brand because uh anyway we have an establish brand in pence. Yeah, thanks. 11:10 11 minutes, 10 seconds Right. Uh thank you Anida. Uh so basically uh you know for us we are basically entering into an agreement 11:18 11 minutes, 18 seconds with bigishi for uh the pen brand itself. Uh so it is basically the trademark copyrights uh and the brand 11:26 11 minutes, 26 seconds itself will be acquired by CPIW which will be then leased to Cello World uh in 11:32 11 minutes, 32 seconds a in a separate subsidiary uh on on all the other numbers. I think it is a little premature for me to uh you know 11:40 11 minutes, 40 seconds give you out revenue numbers and things because you know once we once we close everything we will issue a note on what 11:50 11 minutes, 50 seconds will be the revenue potential what is the kind of capex that will be required um you know and overall that's how you 11:59 11 minutes, 59 seconds know we'll be issuing a separate note on this uh a little later I think on the third piece um we will be running both 12:06 12 minutes, 6 seconds the brands uh you know simultaneously Unomax and Cello uh and you know they even today they continue to exist though 12:14 12 minutes, 14 seconds we were not managing the brand Cello they continue to exist in the market uh and I think both have you know established themselves of course is has 12:23 12 minutes, 23 seconds a much higher brand equity we'll of course you know do justice to both by having separate teams working on this 12:32 12 minutes, 32 seconds although there will be shared infrastructure and other efficiencies that are to be gained from this transaction. So of course we will be 12:40 12 minutes, 40 seconds issuing a separate note out clarifying everything. Uh for now it is a little premature for me to comment on that. Thank you. 12:49 12 minutes, 49 seconds Okay. Surely um uh any uh uh just one question uh still happening on that but 12:55 12 minutes, 55 seconds any any royalty to be paid to BIC for the brand or to even AAM group anything 13:02 13 minutes, 2 seconds uh on that uh or nothing as such one uh that question and lastly uh with the 13:09 13 minutes, 9 seconds glass plant now stabilizing uh should we see that the probably the initial costs are over and we should build in uh 13:18 13 minutes, 18 seconds steady margin expansion starting with uh FI27. Uh that's it from my side, right? Uh so basically in terms of uh 13:26 13 minutes, 26 seconds the brand we uh CPIW which is the entity that holds the Cello brand as well, we'll be acquiring it. Uh so it's 13:34 13 minutes, 34 seconds there's no royalty post that and it'll be leasing it out to Cello World at no additional cost as uh with other and no 13:43 13 minutes, 43 seconds royalties as well. So there will be no royalty in this case to Cello World at all. Uh secondly in terms of the glass 13:51 13 minutes, 51 seconds utilization levels uh as I mentioned that you know it has come to about 60%. 13:56 13 minutes, 56 seconds Uh we will be most likely maintaining this as we grow our sales uh over the next two quarters. This utilization 14:04 14 minutes, 4 seconds levels will grow slightly but not by much because I think currently now we have reached a good utilization levels 14:10 14 minutes, 10 seconds uh and now as our revenue will increase then the utilization will keep increasing. Uh but for now the good part 14:18 14 minutes, 18 seconds is that uh we not no longer losing money. Uh it is now broken even. So now it'll start generating some amount of 14:26 14 minutes, 26 seconds profit though not very significant uh for at least the next couple of quarters but it it has started generating you know a very nominal profit uh for now. 14:38 14 minutes, 38 seconds Okay. Sure. Uh this is very helpful. Uh many thanks. 14:42 14 minutes, 42 seconds Right. Thank you so much. Thank you very much. Ladies and gentlemen, a reminder to press star one in order to ask a 14:50 14 minutes, 50 seconds question. I repeat, kindly press tar1 in order to ask a question. 14:58 14 minutes, 58 seconds The next question is from the line of Rahul Dani from Monarch Network Capital Limited. Please go ahead. 15:04 15 minutes, 4 seconds Yeah. Uh yeah, thank you sir and congratulations on a good set of numbers. Just a couple of questions from my end. Um now just wanted to get some 15:12 15 minutes, 12 seconds sense as to what kind of utilization have we reached for the Opalware division right now and incrementally would we be kind of looking to increase 15:19 15 minutes, 19 seconds capacity here right so in the opalware we are about close to about 85% uh utilization levels 15:27 15 minutes, 27 seconds and I think uh you know post this uh you know we will now be a little circumspect uh you know trying to basically because 15:36 15 minutes, 36 seconds currently you know putting up a new plant uh he's basically adding a significant amount of capacity. So, Opel 15:43 15 minutes, 43 seconds where because it's a furnace uh we need to add a significant capacity to make it uh you know viable. So, I think for now 15:52 15 minutes, 52 seconds we will uh we'll try to first utilize 100%. uh that will be our first priority and post that uh you know if the if the 16:01 16 minutes, 1 second market is also aligned and we think that this category can grow at that pace then of course we're open to you know expanding this uh capacity going forward. 16:10 16 minutes, 10 seconds So what kind of growth would we have seen in the open by division for the quarter if you could just quantify the percentage? 16:17 16 minutes, 17 seconds So I we do not uh you know give out separate uh contributions for uh each uh 16:24 16 minutes, 24 seconds category you know maybe uh if there is a question on that I can answer it offline later but would that be a double digit kind of 16:31 16 minutes, 31 seconds growth would would yes yes okay sure and just wanted to get some sense on the molded furniture business 16:39 16 minutes, 39 seconds you know just wanted to get some outlook here because you know margins have contracted quite a bit so just uh how are we looking at this division in the future Sure. 16:48 16 minutes, 48 seconds So mold division as they've always maintained that uh you know it's going to be a you know up and down kind of a a path because uh we don't see too much 16:56 16 minutes, 56 seconds growth potential in this business uh in terms of revenues. Uh so our only uh thing is to keep premiumizing 17:05 17 minutes, 5 seconds uh adding outdoor furniture which is a little premium and slowly increase that uh to increase our EBIT margins. uh we 17:13 17 minutes, 13 seconds do not see very high revenue potential here but having said that uh you know we we are always looking out here to add newer categories you know apart from 17:22 17 minutes, 22 seconds molded furniture and which you know we're still thinking on and eventually there'll be something else that will also come up here so I think future 17:30 17 minutes, 30 seconds there will be some expansion here into different for into different category sure sure thank you so much and all the 17:43 17 minutes, 43 seconds Thank you very much. The next question is from the line of Pravin Sah from P capital. Please go ahead. 17:50 17 minutes, 50 seconds Yeah, thank you for opportunity and uh many congratulations for a good set of numbers. 17:57 17 minutes, 57 seconds Uh the first question sir related to the your commentary you had mentioned that the new capacity coming on a stream 18:05 18 minutes, 5 seconds across plastic wear and the steel bottle. So uh if you can give some color on that uh how much is the potential 18:12 18 minutes, 12 seconds increase in the capacity and the impact on the revenue because of that. 18:17 18 minutes, 17 seconds Right. Uh so uh in this quarter also I think uh our major pain point was steel category uh because you know we saw a 18:25 18 minutes, 25 seconds little contraction there because mainly due to the demand was there but uh the contraction was due to shortage uh 18:33 18 minutes, 33 seconds supply shortages uh because as you all know that uh there is no more uh you know imports that are possible and we 18:40 18 minutes, 40 seconds had to rely on some of the OEM manufacturers that have already started capacities in India but even after that they are not able to fulfill all the 18:48 18 minutes, 48 seconds demand or all the SKUs. Uh so I think uh with uh this with the uh you know 18:55 18 minutes, 55 seconds expansion that we have done already in this category uh we are starting that uh uh that facility in next month and that 19:03 19 minutes, 3 seconds should basically stabilize in the next uh you know four to 5 months and I think then that will fulfill the so this is 19:10 19 minutes, 10 seconds more substitution of the imports rather than expansion of capacity uh that will happen uh in terms of plastic houseware 19:19 19 minutes, 19 seconds uh We are starting a very small amount currently. We are just adding some amount of capacity with the steelware. 19:28 19 minutes, 28 seconds Not very significant but of course the potential is to add more in that particular area where our glass plant 19:36 19 minutes, 36 seconds also is at in Rajasthan. Uh so as revenues grow there we will keep adding capacity further. 19:46 19 minutes, 46 seconds Okay. And uh secondly that uh you also highlighted related to the steel prices uh which has actually impacted uh your 19:55 19 minutes, 55 seconds margin. So with the opening of or with the uh you know the opening of this such kind of capacities uh you are hopeful the uh the the margin to come back. 20:06 20 minutes, 6 seconds Yeah. See basically currently we are trading right uh and uh so trading margins whatever you know the OEM 20:13 20 minutes, 13 seconds suppliers also have uh which with which manufacturing we'll be able to bring it down a little bit so I think that's where uh you know the margin growth will 20:21 20 minutes, 21 seconds happen because currently we've lost a little margin there because uh previously uh you know when the imports were on uh everyone the the pricing was 20:30 20 minutes, 30 seconds much better uh in India the pricing is a little higher uh for every manufacturer 20:37 20 minutes, 37 seconds uh so I think uh whatever the trading margins are that we'll be able to gain through manufacturing I think that's that's why the margin profile should 20:45 20 minutes, 45 seconds improve okay and uh also on the guidance uh 12 to 15% of a growth with a 23 to 23 and a 20:54 20 minutes, 54 seconds half% of a margin for this year uh where it is now 21:01 21 minutes, 1 second so currently in H1 we are at 13 1.5% uh for the first 6 months uh of growth and we are at about uh 21:10 21 minutes, 10 seconds sorry 12 12.7%. My bad. And uh in terms of uh eBid the margins we are at about 21:18 21 minutes, 18 seconds 24% which is uh with the other income as well. If I remove that we are at about 22. Uh so I think we want to be in the 21:27 21 minutes, 27 seconds 20 to 23 range uh is without the other income portion of it. I think operational income is what I'm talking 21:35 21 minutes, 35 seconds about. So I think we are on track uh you know to achieve this 12 to 15% for the year. If this kind of momentum continues 21:45 21 minutes, 45 seconds uh which we have seen in the you know last quarter we should reach there uh 21:51 21 minutes, 51 seconds you know uh pretty pretty easily. Yeah got it sir. uh so uh also on the you 21:59 21 minutes, 59 seconds know the brand acquisition that's uh BIC cell group and uh so with these uh uh 22:07 22 minutes, 7 seconds brand acquisition do you see the what if the revenue the BIC uh cell do uh you 22:16 22 minutes, 16 seconds can able to garner such numbers see I think see BIC already has a certain amount of revenue uh that is 22:24 22 minutes, 24 seconds there uh and I me understand this category very well. Uh and with the 22:31 22 minutes, 31 seconds Cello brand if UNOMAX is garnering these uh kind of margins with Cello having a 22:38 22 minutes, 38 seconds stronger uh brand equity uh I think we can turn this around uh you know in the next of course it'll take some time uh 22:46 22 minutes, 46 seconds but uh in the next 1 one and a half year uh you know we should be looking at similar numbers like Unoax. 22:54 22 minutes, 54 seconds Okay. Do you have a capacity for the you know this kind of a revenue? 23:00 23 minutes Yes. So already we had about 30 35% capacities that were empty uh in our 23:07 23 minutes, 7 seconds UNOMAX facility and you know these this is not very difficult to expand you know it's more uh expansion of machines. uh 23:16 23 minutes, 16 seconds if you have a little bit of space also in your uh facility by just expanding some machines and some production lines 23:23 23 minutes, 23 seconds you are able to because these are all 7 eight times acetone kind of product lines so you are able to increase capacity pretty swiftly so I think we 23:32 23 minutes, 32 seconds will the idea would be to use our current uh infrastructure and and as we grow we will add infrastructure uh you 23:40 23 minutes, 40 seconds know so with that you know with we will come up with a separate note on what will be needed at least for the next uh 23:47 23 minutes, 47 seconds year or so uh to achieve the growth uh you know or at least have the number that uh currently they are doing 23:56 23 minutes, 56 seconds right and uh uh the major focus would be on the domestic market. 24:01 24 minutes, 1 second Yes. So Cello of course has a much higher you know base when it comes to the domestic demand 24:10 24 minutes, 10 seconds more than onomax also currently and you know traditionally also it has been you know a leader in this category. So I 24:18 24 minutes, 18 seconds think by you know doing some tweaks getting some good products and uh you know in the market I think we will be able to you know gain a little bit of 24:27 24 minutes, 27 seconds market share in this particular category. 24:30 24 minutes, 30 seconds Right. Right. And uh coming to the your export business because this quarter we had seen a good 12% of a growth you had uh uh given for a quarter in the export. 24:41 24 minutes, 41 seconds Uh so is that the export especially in the uh writing and uh uh segment has a revived uh comeback or such kind of momentum to continue. 24:53 24 minutes, 53 seconds I think uh export has actually come back to its previous levels uh where it was it had declined a little bit. 25:01 25 minutes, 1 second uh but having said that I think it'll continue at this level uh you know it should it will not dip I feel for the 25:07 25 minutes, 7 seconds year it doesn't seem like um unless the US kind of because we have not been hit by the tariffs as yet uh the orders have 25:16 25 minutes, 16 seconds not slowed down but uh uh you know we have a decent amount that we sell to the US as well so if nothing gets hurt there 25:24 25 minutes, 24 seconds I think we should continue to you know do these numbers Right. Sorry. Thank you and all the 25:32 25 minutes, 32 seconds best. I have some more question. I'll come in the queue. Sure. 25:36 25 minutes, 36 seconds Thank you very much. Participants who wish to ask a question may press star and one at this time. 25:43 25 minutes, 43 seconds The next question is from the line of JShi from Kotak. Please go ahead. 25:50 25 minutes, 50 seconds Yeah. Uh hi, thanks for the opportunity and congratulations of uh you know acquiring back brand. Uh my first 25:57 25 minutes, 57 seconds question is on demand. uh you know if we sort of you know you've seen a a good uptick in demand uh this quarter and 26:04 26 minutes, 4 seconds partly probably attributable to early festive or strong festival. So how do you see the demand environment continuing you know post festive and is 26:13 26 minutes, 13 seconds there a improvement in the underlying sort of you know demand across your categories across markets or you know 26:20 26 minutes, 20 seconds what were you seen in uh September quarter was it uh you know a function of early festive or is there a improvement per se? 26:31 26 minutes, 31 seconds Uh thanks J. Uh so basically uh yes there was an uptick for sure. Uh you know though this actually could have 26:38 26 minutes, 38 seconds been slightly better if uh the GST announcement had not come in uh uh because we have not really benefited a whole lot from the GST side of things. 26:48 26 minutes, 48 seconds uh but of course from the sentiment we have of course benefited I feel uh but uh other than that it seemed like this 26:55 26 minutes, 55 seconds thing is back uh you know as we have seen in the last because this has been by far the best uh uh quarter in terms 27:03 27 minutes, 3 seconds of demand uh you know it seems it still we don't the the festive demand I feel we got a bit of October also early 27:12 27 minutes, 12 seconds festive had a certain role to play uh but even the you know most part of October was pretty good. Uh the traction 27:21 27 minutes, 21 seconds seems good. Uh but it we have to wait and watch uh you know how things will pan out in terms of uh you know the the 27:30 27 minutes, 30 seconds overall demand across categories across geographies. Uh we've seen a growth uh that's that's definitely there in the 27:37 27 minutes, 37 seconds consumer side for sure. Uh but what we need to see is that the demand stays where it is. Of course it is it has also 27:46 27 minutes, 46 seconds helped that a lot of channel stock has been cleared. So uh we are hopeful that you know this demand uh will continue to 27:53 27 minutes, 53 seconds see a you know growth or at least uh this demand will be steady for the next few quarters. 28:01 28 minutes, 1 second Sure that's helpful. Second is you know on a sequential basis your mar gross margins have uh you know come off 28:08 28 minutes, 8 seconds sharply uh even in consumerware uh segment and you know I think with scale up of uh glassware business we thought 28:17 28 minutes, 17 seconds that gross margins would be stable if not better so what's driving that and how should we think about you know the trends there 28:26 28 minutes, 26 seconds right so I think uh because we in the glassware side of things uh the costs are still high, right? Because 28:34 28 minutes, 34 seconds utilization levels are still low and utilizations are low also because of sales catching up. So as revenue because 28:42 28 minutes, 42 seconds you're not making money in the glassware business. So if glassware would have contributed uh to the overall margins then you would have seen a 1 and a half% 28:50 28 minutes, 50 seconds extra margin uh growth. So though it has contributed to revenue, it has not contributed to the overall margin 28:58 28 minutes, 58 seconds profile. uh second of all uh I think the product mix also in our kind of categories does play a role uh so 29:07 29 minutes, 7 seconds sometimes you know uh one or 2% uh here and there could be there in terms of pro 29:14 29 minutes, 14 seconds what kind of products have been sold and also as as we have you know in the last quarter also I mentioned that we have 29:20 29 minutes, 20 seconds still not been able to raise prices uh as the uh as the costs have gone up because 29:28 29 minutes, 28 seconds every year of course the costs are going to go up and we were able to pass it on this year though hopefully from now onwards if the demand stays good uh we 29:38 29 minutes, 38 seconds will be able to see an improvement there in terms of lesser discounts uh that we would have to pass on uh so I feel this 29:45 29 minutes, 45 seconds is a function of two to three things uh it is not that it is going to be like this it should improve only from here uh 29:53 29 minutes, 53 seconds also the steel wear as I said also had something to do with it because the margins there has also contracted because of you know supply shortages 30:01 30 minutes, 1 second because because of OEM manufacturers that are selling to us at a slightly higher cost today. So with manufacturing coming in there those efficiencies 30:10 30 minutes, 10 seconds should also kick in and lead to slightly higher gross margins there. So I think uh all these factors once they are back 30:17 30 minutes, 17 seconds on track uh we should see a good uh you know number there again coming back. 30:23 30 minutes, 23 seconds Sure. And the final one now I know that you know you cannot uh disclose uh you know everything or all details on Cello 30:31 30 minutes, 31 seconds writing instruments yet but first is when do you expect to close this uh you know uh transaction following which you 30:39 30 minutes, 39 seconds indicated that you'll come out with a detailed press release. So is it expected very soon in a week or two or could it take more time? So they're very 30:48 30 minutes, 48 seconds close. I think this should close within this month itself and uh we should ideally start seeing revenues in Cello 30:57 30 minutes, 57 seconds World by January. So by the last quarter so we should see revenues in Cello World. 31:03 31 minutes, 3 seconds So that is that is what we are currently looking at. Of course there are some details to be closed uh post that we'll have a better idea of things. 31:10 31 minutes, 10 seconds Sure. And you did mention that you know in one and a half years time sell world should be at a similar level as you know. Were you referring to 31:19 31 minutes, 19 seconds profitability or were you referring to topline? 31:24 31 minutes, 24 seconds Top line I feel that cello world should be ahead of it right. Cello world is already clocking better top line than you as of no it is actually not clocking 31:33 31 minutes, 33 seconds currently. currently because that also includes their exports uh uh which will be kind of uh dual exports. So they they 31:42 31 minutes, 42 seconds do exports in the big name as well. Uh so that is why it also includes export. 31:46 31 minutes, 46 seconds They have significantly gone down. Uh but of course still doing better than UNOMAX. Uh but uh I think what we are 31:54 31 minutes, 54 seconds going to be more concerned about is to bring back revenues with profitable growth. Uh so that is why you know we of course we we are still you know thinking 32:03 32 minutes, 3 seconds about how we are going to be going about it and that is why you know once we are fully aligned and fully know the numbers 32:10 32 minutes, 10 seconds uh we'll be in a better uh you know I'll be in a better position to tell you uh what exactly we are looking at for the next year and post that also uh what we 32:20 32 minutes, 20 seconds are thinking of what numbers are achievable with the same kind of margin profile as you know one final question you You started sell 32:30 32 minutes, 30 seconds writing instruments business in 1995 and then exited in 2015. So uh you know 32:37 32 minutes, 37 seconds it's practically a 30-year-old brand and uh if I remember correctly in 2015 that scale was 600 K plus topline and 25% margin. Is that correct understanding? 32:48 32 minutes, 48 seconds Uh correct. Absolutely. Yeah. 32:50 32 minutes, 50 seconds Is there any structural change in the market or brand equity in the last 5 10 years after you sort of you know uh that 33:00 33 minutes uh we should be aware about or you think that the brand equity is still as strong and structurally uh from a distribution standpoint it's still you know a very 33:08 33 minutes, 8 seconds solid uh brand or trademark that you've acquired. So I think uh the equity is very strong. 33:15 33 minutes, 15 seconds I think there were uh managerial inefficiencies uh that were the leading cause of the contraction in revenue. Uh 33:23 33 minutes, 23 seconds even if if you go 2 three years back the revenue was still pretty good. Uh the last 2 three years has been very bad 33:30 33 minutes, 30 seconds right? Uh I think so 2 3 years of you know does not underscore the entire brand equity and I think the brand 33:37 33 minutes, 37 seconds equity still remains very strong. uh where we have spoken to a lot of the channel partnersh as well and uh we feel that uh you know 33:46 33 minutes, 46 seconds the the operationally how things were done and uh you know whatever the the the product mix and the product 33:55 33 minutes, 55 seconds innovation was not there uh which was which has really caused the contraction. 34:00 34 minutes So I think just doing some things right uh will lead to good numbers here. Uh and I think we understand this category 34:08 34 minutes, 8 seconds extremely extremely well. Uh so turning it around should not be very difficult. 34:13 34 minutes, 13 seconds Uh of course but we'll of course look at the details of how we are going to get around it. Uh but I we are pretty confident. 34:21 34 minutes, 21 seconds Sure. Thank you so much and congratulations. 34:25 34 minutes, 25 seconds Thank you very much. The next question is from the line of Mr. 34:29 34 minutes, 29 seconds Achel from Noama Institutional Equities please go ahead. 34:36 34 minutes, 36 seconds Yeah. Uh good morning. Uh thank you for the opportunity. Uh two questions. One uh you know um I I couldn't follow the 34:44 34 minutes, 44 seconds explanation what you gave with respect to the gross margins. Uh you know the gross margin on a QQ basis. I'm talking 34:52 34 minutes, 52 seconds from first quarter to second quarter like consumer is down from 56% to 50%. 34:58 34 minutes, 58 seconds and writing it down 58.8 to 55. So I was just curious to figure out you know what 35:05 35 minutes, 5 seconds has driven this and uh you know uh how do we see it going forward? You did indicate your guidance on the AIDA 35:12 35 minutes, 12 seconds margin but I'm just trying to figure out for from the gross margin level please. 35:17 35 minutes, 17 seconds No, so gross margins when I spoke about the contraction there are two two to three factors as I said one is that the 35:24 35 minutes, 24 seconds glass plant the glass sales are higher uh which is from the new plant which currently 35:30 35 minutes, 30 seconds has higher uh costs. So that basically is is captured here. Uh second is also 35:38 35 minutes, 38 seconds the steelware which are which is basically which which there is a contraction of gross margins there for the moment uh which will come back and 35:46 35 minutes, 46 seconds the third is discounts. So the discounting has still been there basically and the costs have gone up right the cost has gone up from June itself but now and the has also changed. 35:58 35 minutes, 58 seconds So a lot of our products actually so 2 to 3% I would attribute basically to glassware and steelware the rest 1 2% 36:07 36 minutes, 7 seconds will always be varying because of what sells uh because we have such a wide portfolio of products sometimes you know 36:15 36 minutes, 15 seconds the more sometimes the premium sells a little more sometimes uh you know the more cost 36:22 36 minutes, 22 seconds uh uh you know products that are more priced more sensitively sells more. So 1 to percentage variation will always be 36:30 36 minutes, 30 seconds there. Uh but this 6% as I said is a temporary effect uh which will which we'll of course see uh coming back in the next few quarters. 36:41 36 minutes, 41 seconds Fair point. So is it fair to say that u you know from on an annual basis if I look at across these three segments they 36:50 36 minutes, 50 seconds should be maintained or we should see some contraction at each of these segment level crossation. 36:58 36 minutes, 58 seconds for the for this year we still maintain that it will uh you know the overall margin profile will be at about 22% uh 37:05 37 minutes, 5 seconds to 23% EIDA mainly because that we still need a couple of quarters for the glass to scale up because we cannot increase 37:14 37 minutes, 14 seconds utilization levels until our revenue catches up because uh if we start increasing that we'll only increase stock levels and this is a continuous 37:22 37 minutes, 22 seconds plant and you know you cannot afford in a continuous plant to keep stocking uh so I think that is one thing uh that will that is going to play a part. 37:31 37 minutes, 31 seconds Having said that the trend is of course upwards right in the steelware plant it will take about 5 to 6 months as I said 37:39 37 minutes, 39 seconds to stabilize and give those efficiencies. So I think post that you will be able to see things improve a lot 37:46 37 minutes, 46 seconds more in the next in the first quarter itself I think of financial year 27 you should see a lot of improvement 37:53 37 minutes, 53 seconds just to clarify this 22 23% in beta margin is it including or excluding other income it's excluding other income 38:03 38 minutes, 3 seconds okay understood and if you were to uh club September plus October uh you know what that growth would be at 38:12 38 minutes, 12 seconds the company level would that still be 20% or would that be more of 10 12%. I'm just trying to get to a sense about uh 38:20 38 minutes, 20 seconds the early festival impact or the least impact will put together everything. 38:25 38 minutes, 25 seconds So early festival of course has played a little bit of a part. Uh having said that yes of course it cannot be in the same lines as what it was last year. It 38:33 38 minutes, 33 seconds is it has come down from there a little bit. Uh but having said that the secondary sales has improved a lot on 38:41 38 minutes, 41 seconds the ground. So channel stock is very low. So that itself should hopefully lead to a good November, December. 38:49 38 minutes, 49 seconds Understood. Any quantification you could do how much uh was earlier and how much is now secondary uh uh channel stocking? 38:58 38 minutes, 58 seconds I I don't have a specific number for it. 39:01 39 minutes, 1 second uh but you know the overall sense is that uh it has improved a lot more because overall you know the cash flow 39:08 39 minutes, 8 seconds has also improved the payment profiles uh you know our outstandings have also been cleared very quickly so I think these are all 39:16 39 minutes, 16 seconds indicators of a much better uh thing and plus we've been talking to a lot of our channel partners and we see that the stock levels have been you know quite 39:25 39 minutes, 25 seconds low on their side as well and their secondaries have been much higher than their primaries Unless I look good. 39:35 39 minutes, 35 seconds Uh yeah, I think those were my questions. Uh just a clarification on the fellow brand acquisition. Um yeah, 39:42 39 minutes, 42 seconds is it right that you not acquired the plant and machine learning? You just bought back the brand. Have I understood right? 39:49 39 minutes, 49 seconds Absolutely you're right. And CPIW has actually bought a brand and it is leased to uh us just the way uh for other 39:57 39 minutes, 57 seconds categories in the process still we haven't closed but uh in the process very you know very close to closing 40:07 40 minutes, 7 seconds the mechanicism is the same right the timing I understand maybe a month away or something but if I understood right 40:14 40 minutes, 14 seconds that it is with CPIW and they will release it to Uh, hello voice. 40:21 40 minutes, 21 seconds Correct. That is exactly how how the other brands are used the same way. Yeah. Understood. Understood. 40:30 40 minutes, 30 seconds All right. That's helpful. Thank you so much. Right. Thank you so much. 40:35 40 minutes, 35 seconds Thank you very much. Participants who wish to ask a question may press star and one at this time. The next question 40:43 40 minutes, 43 seconds is from the line of Sam Kumar from Motilwal. Please go ahead. 40:48 40 minutes, 48 seconds Yeah. Hi. Hi. I got can you talk on Opalware how the Opel is performing? How is the competitive intensity in the segment? 40:57 40 minutes, 57 seconds So I think Opelware for us has performed decently well. Of course we are no longer in Opalware looking at 30% plus 41:05 41 minutes, 5 seconds growth. But having said that it's a good growth for the quarter and I think the we haven't still there has been new 41:12 41 minutes, 12 seconds entrance in this particular category. Uh currently of course it's been very premature. uh they have not really made 41:20 41 minutes, 20 seconds any dent in the market as of now but going forward competitive intensity in this segment will increase a little bit. 41:27 41 minutes, 27 seconds Uh but having said that we are already at about 85% utilization levels. So we are not very concerned. Uh we are of 41:35 41 minutes, 35 seconds course more concerned on when we can expand. Uh which of course we'll know very soon in the next five 6 months uh 41:42 41 minutes, 42 seconds if there is any scope of expansion in this category. uh but we we sit pretty good at uh the numbers that we are at 41:50 41 minutes, 50 seconds today. uh and maybe uh by end of uh you know this year we'll know that if we are able to add any more capacity or we'll 41:58 41 minutes, 58 seconds continue for the time being with the capacity that we have and can we expect the Q3 uh and Q4 you 42:06 42 minutes, 6 seconds we have a high higher apicious and mar day uh so uh we can expect a better demand in uh in across segment and 42:14 42 minutes, 14 seconds opalware will be higher a higher growth trajectory in Q3. 42:18 42 minutes, 18 seconds Yeah, I think you know the marriage season plays a part in Opel bear and uh it seems like a good marriage season. So 42:25 42 minutes, 25 seconds hopefully you know things will be good uh in the next couple of quarters. Okay. Okay. Thank you. 42:34 42 minutes, 34 seconds Thank you very much. The next question is the line of Pravin Sahai from PL Capital. Please go ahead. 42:42 42 minutes, 42 seconds Yeah. Hi sir. Uh thank you for the follow-up question. Uh this uh Cello brand is largely for the pain. 42:52 42 minutes, 52 seconds Yeah. Pen and stationary. So it includes a lot of other things like pen, crayon. 42:59 42 minutes, 59 seconds It can be for use for anything basically anything in the stationary segment. 43:03 43 minutes, 3 seconds So uh no just clarification it's like of 80% is a pen and the rest 20% is other is stationary. Is it like that or uh 43:12 43 minutes, 12 seconds different current revenues? We don't know sir uh how the street is. We will know that soon. 43:17 43 minutes, 17 seconds Uh but uh what I'm saying is this brand is for everything. Uh it's not it doesn't exclude any uh product. 43:26 43 minutes, 26 seconds Right sir. Uh second clarification on the glass uh plant. Uh so which impacting your margin. So at what level 43:34 43 minutes, 34 seconds of utilization of the glass plant do you see the impact of the higher cost will nullify? 43:41 43 minutes, 41 seconds So I think uh at about about 70 75% uh you know we we will start looking at uh 43:49 43 minutes, 49 seconds you know good margins coming in uh before that we might not have very good money though we we are not going to lose any more money we are going to make a 43:56 43 minutes, 56 seconds little money but having said that 75% is what we looking at and that will that utilization will grow hopefully grow 44:04 44 minutes, 4 seconds quickly uh we are you know putting all our efforts to grow that quickly but having said that it does take a little time because you know we are building 44:13 44 minutes, 13 seconds this demand from the scratch up uh and this is a 10-year horizon because these plants uh you know don't require much 44:21 44 minutes, 21 seconds capex after this now and once we build that demand uh you know we'll keep increasing our profitability margins 44:28 44 minutes, 28 seconds also by of course also the product mix right sir uh second on the receivable 44:36 44 minutes, 36 seconds days which has uh increased and it's the nature of business. I understand that's first half usually higher. So also you 44:44 44 minutes, 44 seconds had mentioned that uh you are you are getting a good payment uh uh payment profile improvement and all. So is that 44:52 44 minutes, 52 seconds easing out very fast in the month of October? 44:56 44 minutes, 56 seconds So October we had a very good uh collection. So uh basically that is why I was saying that you know September will of course show higher because you 45:04 45 minutes, 4 seconds know the sale was higher but uh uh in October our collections were good and based on that uh we are seeing that uh 45:12 45 minutes, 12 seconds the improvement in stock positions at our channel partner end as well. uh because otherwise you know payments would always come in slightly slower 45:20 45 minutes, 20 seconds after uh the festive season because you know even the other partners like the dealers pay a little later but uh if the 45:30 45 minutes, 30 seconds dealer profile improves then our distributor channel uh you know payments also improve and which we have seen in October. 45:38 45 minutes, 38 seconds Okay, good to hear that. And the last questions are related to the capeex. Can you give 26 and 27 capex for year? 45:47 45 minutes, 47 seconds Yeah. So I think uh this year would be a capex of aboutund 150 45:55 45 minutes, 55 seconds 150 around that includes of course the steel plant expansion uh which is close to about 75 odd road with land and 46:02 46 minutes, 2 seconds building uh and rest is of course maintenance capex. 46:08 46 minutes, 8 seconds Okay and 27 sir and going forth this will be I think next year it should be around 75 odd maintenance. 46:17 46 minutes, 17 seconds Okay. Okay. Thank you sir. 46:21 46 minutes, 21 seconds Thank you very much. Participants who wish to ask a question may press star in one at this time. The next question is 46:29 46 minutes, 29 seconds from the line of Deep J. Saniti from Mana Finance. Please go ahead. 46:36 46 minutes, 36 seconds Hi am I audible? Yes. 46:40 46 minutes, 40 seconds Yeah. Hi G congratulations on a good set of numbers and uh for the acquisition of brand. Now um my question was regarding 46:49 46 minutes, 49 seconds big cello uh it has done on an average last three years has done a sales of around 400 crores. Do you think with 46:57 46 minutes, 57 seconds this acquisition we'll be able to achieve that kind of sales in the next uh maybe by FI27 and do we have the 47:04 47 minutes, 4 seconds bandwidth in terms of our uh capacity utilization on our existing uh UNOMAX uh plant? 47:13 47 minutes, 13 seconds Uh so basically uh uh this uh a lot of their fees also covers uh you know exports uh that they were doing to their 47:21 47 minutes, 21 seconds own clients. uh so I think we'll have to uh look at that number uh you know very differently we'll we'll of course come 47:29 47 minutes, 29 seconds up with all the uh details about it uh once the acquisition is done uh because the thing is that uh we want to grow 47:38 47 minutes, 38 seconds this category uh and hopefully we are able to grow it very quickly uh but we will grow in profitability we'll we 47:45 47 minutes, 45 seconds won't not like to compromise on certain things uh and the quality of course because uh from what we hear there was 47:52 47 minutes, 52 seconds some uh things that were not the best which we would like to improve uh and uh you know grow it sustainability for 48:00 48 minutes sustainably for the future. Uh so I'll come up with more details soon on that once the acquisition is done and we'll also have a better insight. 48:09 48 minutes, 9 seconds So what you mentioned about in the previous question about your capeex will that cex also increase in terms of uh the writing instruments also? 48:19 48 minutes, 19 seconds So I think currently we do have the capacities uh of course some kex will be needed uh for uh the writing instruments 48:28 48 minutes, 28 seconds but we'll be very limited and within our own facilities. So we'll be adding machines, we'll be adding say molds, we'll be adding uh you know some tip 48:37 48 minutes, 37 seconds machines, some molding machines. So that could be the only thing that will be added and with that we'll come up with a capex that will be needed for at least a year in the writing instrument. 48:49 48 minutes, 49 seconds Great. Great. Thank you so much and all the very best. Great. Thank you. 48:54 48 minutes, 54 seconds Thank you very much. A reminder for participants to press star in one in order to ask a question. 49:07 49 minutes, 7 seconds As there are no further questions, I would now like to hand the conference over to management for closing comments. 49:17 49 minutes, 17 seconds Right. Uh thank you very much for all your participation. If there are any further questions, you can please reach 49:25 49 minutes, 25 seconds out to our IR advisers SGA and uh we're very excited uh you know to bring the cello brand back. Uh and I think it's a 49:34 49 minutes, 34 seconds great journey and I think uh you know we'll do our best to achieve you know the number that our shareholders wish uh 49:43 49 minutes, 43 seconds you know and hopefully we'll be able to do a good job. Thank you so much. 49:49 49 minutes, 49 seconds Thank you very much on behalf of Cello World Limited. That concludes this conference. Thank you for joining us and you may now disconnect your lines. Thank you. 50:00 50 minutes Ankus