Cera Sanitaryware Limited — Q3 FY26

Cera Sanitaryware Ltd Q3 FY2025-26 Earnings Conference Call https://www.youtube.com/watch?v=BSjoZZKXdow Published: 3 months ago

0:01 1 second Ladies and gentlemen, good morning and welcome to the Q3 FI26 earnings conference call of Sarah Sanitary Wear Limited. 0:10 10 seconds As a reminder, all participant lines will remain in the listenon only mode and there will be an opportunity for you to ask questions after the presentation 0:18 18 seconds concludes. Should you need assistance during the conference call, please signal the operator by pressing star then zero on your touchstone telephone. 0:27 27 seconds Please note that this conference is being recorded and the duration of the call is 45 minutes. I will now hand the 0:35 35 seconds conference over to Mr. Mayangaswani from CDL India for opening remarks. Thank you and over to you Mang. 0:43 43 seconds Thank you Ryan. Good morning everyone and thank you for joining us on the earnings call for Sarah Sanitary Limited 0:50 50 seconds for the Q4 uh sorry Q3 FI26 earnings which were announced yesterday. We have with us today the management team comprising Mr. Vikas Kotari CFO and Mr. 1:01 1 minute, 1 second Deepak Chri VP finance and investor relations at Sarah Sanitary. 1:07 1 minute, 7 seconds We will start with brief opening remarks from the management following which we will open the call for Q&A. A quick disclaimer before we begin. Some of the 1:14 1 minute, 14 seconds statements made in today's conference call may be forward-looking in nature and a detailed note in this regard is contained in the results documents that 1:22 1 minute, 22 seconds have been shared with all of you earlier. I would now like to turn the call over to the management for their opening remarks. Over to you Deep. 1:31 1 minute, 31 seconds Thank you Ma. Good morning everyone. 1:36 1 minute, 36 seconds On behalf of the management team of Sarah Sanqway Limited, I would like to warmly welcome you to our Q3 FI26 earnings conference call. 1:47 1 minute, 47 seconds I will begin by sharing a brief update on our operational and strategic progress following which our CFO Mr. 1:54 1 minute, 54 seconds Vikas Kotari will take you through the financial highlights for the quarter. 2:02 2 minutes, 2 seconds During the quarter the company delivered a healthy topline growth of 11.1%. 2:09 2 minutes, 9 seconds This follows the sequential recovery witnessed in the previous quarter where revenues grew in the range of 5 to 6%. 2:16 2 minutes, 16 seconds indicating a steady strengthening trend. 2:20 2 minutes, 20 seconds The improvement reflects a gradual revival in the market conditions as well as the company's improved market traction. 2:29 2 minutes, 29 seconds The current momentum provides confidence that the recovery is structural in nature and that the expectation is that this growth trajectory will remain 2:37 2 minutes, 37 seconds sustainable in the near term supported by improving demand conditions and continued operational focus. 2:46 2 minutes, 46 seconds The real estate sector continues to witness a healthy residential upcycle along with increasing minimization 2:54 2 minutes, 54 seconds driving demand for higher value building and lifestyle products. 3:00 3 minutes In parallel, rural demand has shown a meaningful recovery. 3:07 3 minutes, 7 seconds Encouragingly, we are seeing early signs of a modest improvement in underlying demand conditions across both faucet wear and sanitary wear. 3:17 3 minutes, 17 seconds While near-term consumption trends remain uneven, we continue to see green shoots across categories and channels 3:25 3 minutes, 25 seconds and our strategic initiatives over the past two years are helping us to navigate these space with greater agility. 3:35 3 minutes, 35 seconds As we have shared over the last few quarters, our focus has been on steadily strengthening the company strategic foundation. 3:44 3 minutes, 44 seconds This includes sharper brand positioning, more clearly defined channel strategies and a disciplined approach to innovation. 3:54 3 minutes, 54 seconds These efforts are improving our preparedness and execution capabilities. 3:58 3 minutes, 58 seconds And we believe that they place us in a stronger position to capture growth as demand conditions gradually improve. 4:04 4 minutes, 4 seconds Importantly, a strong brand equity, execution 4:12 4 minutes, 12 seconds reliability, and long-standing relationships with developers continue to enable participation in larger and 4:19 4 minutes, 19 seconds more complex projects, making this segment an important support pillar during the current demand cycle. 4:28 4 minutes, 28 seconds On the strategic front, Senator and Poly Plus continue to remain key levers to build out the next phase of our brand architecture. 4:37 4 minutes, 37 seconds During the quarter, our efforts remain centered on strengthening the organizational structure, manpower, and supporting infrastructure across both the initiatives. 4:50 4 minutes, 50 seconds For Senator, the team structure is now largely in place and the rollout of flagship stores is progressing steadily. 4:59 4 minutes, 59 seconds With 32 stores currently operational, the company is now adopting a more calibrated approach towards further expansion. 5:08 5 minutes, 8 seconds This is aimed at sharpening per store performance metrics and ensuring that the operating fundamentals are firmly established as the format scales. 5:19 5 minutes, 19 seconds The brand continues to be positioned around a differentiated retail format supported by a dedicated channel 5:26 5 minutes, 26 seconds strategy, a focused engagement model and an expanding product portfolio. 5:33 5 minutes, 33 seconds While the balance sheet provides ample growth capital, the company remains committed to disciplined execution as it scales this initiative. 5:43 5 minutes, 43 seconds Poly plus also continues to be in the investment and buildup phase. The team buildup is now largely complete and we are focused on strengthening 5:51 5 minutes, 51 seconds distribution on ground execution and market presence across select value focused markets. 5:59 5 minutes, 59 seconds At this stage our priority remains on establishing the operating framework and execution capabilities rather than near-term scale. 6:08 6 minutes, 8 seconds At present, Poly Plus is being distributed through 65 distributors and 750 dealers. 6:17 6 minutes, 17 seconds Over the past few years, we have continued to sharpen our brand segmentation and align product propositions and channel strategies with distinct customer segments. 6:26 6 minutes, 26 seconds This portfolio-led approach enables us to address a wide range of price points and regional demand patterns while retaining flexibility to manage 6:35 6 minutes, 35 seconds near-term volatility without diluting long-term grand positioning. 6:41 6 minutes, 41 seconds While near-term retail demand continues to remain uneven, the long-term fundamentals of this category remain intact. 6:48 6 minutes, 48 seconds Structural factors such as improving housing quality, urban redevelopment, rising consumer aspiration, and 6:56 6 minutes, 56 seconds increasing formalization continue to support the long-term demand outlook for banded bathroom solutions. We also expect broader policy measures aimed at 7:05 7 minutes, 5 seconds supporting consumption and housing activity to remain helpful for category sentiment over time. 7:11 7 minutes, 11 seconds When combined with our established brands, extensive distribution network and execution capabilities, these trends provide us with confidence in the near to long-term opportunities. 7:25 7 minutes, 25 seconds As highlighted earlier, the rollout of our dealer management program remains an important ongoing initiative and is progressing steadily. 7:34 7 minutes, 34 seconds Going forward, the system will help improve visibility into secondary sales and channel inventory over time, enabling more informed decision making and sites citer channel management. 7:47 7 minutes, 47 seconds The company's retailer loyalty program with over 28,000 enrolled retailers is planned to transition from the current manual invoice upload and verification 7:56 7 minutes, 56 seconds process to a fully automated system once the dealer management system stabilizes. 8:03 8 minutes, 3 seconds Going forward, purchases made through DMS enabled dealers are expected to be captured automatically with loyalty 8:11 8 minutes, 11 seconds points credited without retailer intervention. 8:15 8 minutes, 15 seconds This digital digital shift is intended to enhance efficiency, improve accuracy and deliver a faster, more seamless experience for the retailer ecosystem. 8:29 8 minutes, 29 seconds During the quarter, capacity utilization stood at 102% for faucet wear and 82% for sanitary wear. 8:38 8 minutes, 38 seconds We continue to focus on discipline cost management and operational efficiency across the supply chain, operations and distribution 8:46 8 minutes, 46 seconds aimed at protecting margins and strengthening the resilience of the business amid input cost pressures and a mixed demand environment. 8:56 8 minutes, 56 seconds To summarize, while demand conditions may take some additional time to normalize, our focus continues to be on disciplined execution, 9:05 9 minutes, 5 seconds strengthening our operating fundamentals, and preparing the organization for the next phase of growth. 9:12 9 minutes, 12 seconds With a strong balance sheet, a diversified portfolio and sustained investment across brands, channels and systems, 9:20 9 minutes, 20 seconds we believe that we are well positioned to navigate the current environment and capture opportunities as demand conditions improve over time. 9:30 9 minutes, 30 seconds With this, I would like to hand over to Mr. Vikas Kutari, our CFO, who will present the operational and financial highlights for the quarter ended 31st of December 2025. 9:41 9 minutes, 41 seconds Thank you and over to you Mr. Utari. 9:47 9 minutes, 47 seconds Yeah, thank you Deepak and a very good morning to everyone. I will now take you through a brief overview of the 9:54 9 minutes, 54 seconds company's financial performance for the quarter and 9 months ended 31st December 25. 10:02 10 minutes, 2 seconds Revenue from operations for the quarter stood at rupees 499 crores as compared 10:09 10 minutes, 9 seconds to rupees 449 crores in future fy 25. 10:16 10 minutes, 16 seconds Aida without other income for the quarter was at rupees 51 crores as compared to rups 59 crores in the 10:24 10 minutes, 24 seconds corresponding quarter of the previous year. 10:28 10 minutes, 28 seconds Aida margin stood at 10.2 2% in Q3 FY26 as compared to 13.2 in Q3 FY25. 10:41 10 minutes, 41 seconds This decline was primarily driven by an increase in trade discounts and elevated 10:48 10 minutes, 48 seconds brass input costs impacting impacting both manufacturing and procurement. 10:55 10 minutes, 55 seconds Margins were also weighed down by higher publicity spends which was a phasing impact and pre-operative expenses 11:03 11 minutes, 3 seconds associated with poly and senator senator brand launches. 11:10 11 minutes, 10 seconds Gas cost during the quarter increased with the weighted average cost at rupees 11:17 11 minutes, 17 seconds 35.70 per cubic meter in Q3 FY26 as compared 11:24 11 minutes, 24 seconds to rupees 33.53 per cubic meter in Q3 FY25. 11:32 11 minutes, 32 seconds During the quarter, gas consumption was sourced 69% from Yale and 31% from Sabarmati. 11:42 11 minutes, 42 seconds Overall, gas cost as a percentage of revenue stood at 3.8%. 11:51 11 minutes, 51 seconds Prices remained unchanged during the period. At the same time, input costs, particularly brass, clay, have moved meaningfully in the recent periods. 12:04 12 minutes, 4 seconds Given the sustained nature of these cost pressures, we have recently announced a calibrated price increase 12:13 12 minutes, 13 seconds both in fosetware as well as sanitaryware. 12:17 12 minutes, 17 seconds This approach is intended to balance margin protection with market competitiveness. 12:26 12 minutes, 26 seconds For the quarter under review, revenue contributions by segment was broadly as follows. Sanitative wear at 48%, 12:35 12 minutes, 35 seconds faucet wear at 40%, tiles at 10% and wellness at 2%. 12:42 12 minutes, 42 seconds On a Y basis, sanitary revenue grew by 6.4%, 12:48 12 minutes, 48 seconds faucets wear by 18.2%, 2% ties by 5.7% and wellness by 29.4%. 12:57 12 minutes, 57 seconds Our core categories sanitaryware and faucet wear together accounted for 88% of the total revenues. 13:07 13 minutes, 7 seconds Capacity utilization during the quarter is stood at 82% for sanitary wear and 102% for faucet wear. 13:17 13 minutes, 17 seconds From a product mix perspective, 44% of sales were from premium segment, 35% 13:25 13 minutes, 25 seconds from mid segment, and 21% from entry-level products. Geographically, 13:32 13 minutes, 32 seconds tiers three cities accounted for 41% of sales, followed by tier 1 at 36% and tier 2 at 23%. 13:44 13 minutes, 44 seconds Profit after tax stood at rupees 24 crores as compared to previous year's quarter at rupees 46 13:53 13 minutes, 53 seconds kores. During the quarter we recorded a one-time impact under exceptional items following the implementation of the new wage code. 14:04 14 minutes, 4 seconds The revised wage structure has resulted in an increase in long-term employee benefit liabilities. 14:12 14 minutes, 12 seconds We rec we have recognized an incremental impact of 12.2 KS towards graduity and 14:19 14 minutes, 19 seconds rupees 6.26 Kores towards lease salary liability under exceptional items in the statement of profit and loss. 14:30 14 minutes, 30 seconds Earnings per share for the quarter was at rupees 18.35 compared to rupees 35.56 in Q3 FY25. 14:44 14 minutes, 44 seconds On the working capital front, inventory days decreased from 85 days to 84 days. 14:51 14 minutes, 51 seconds Receivables decreased from 34 days to 33 days while payables remain stable at 38 14:58 14 minutes, 58 seconds days leading to a YI decrease in net working capital from 81 days to 79 days. 15:07 15 minutes, 7 seconds As of 31st December 25, our cash and cash equivalents stood at rupees 757 Kors. 15:16 15 minutes, 16 seconds Our capital expenditure plan for financial year 26 remains measured with an outlay of around rupees 13.2 crores by end of December 25. 15:29 15 minutes, 29 seconds This was largely directed towards routine maintenance along with selective investments to strengthen brand presence and retail initiatives. 15:41 15 minutes, 41 seconds Capital allocation continues to be guided by discipline, return visibility and a strong focus on maintaining balance sheet strength. 15:52 15 minutes, 52 seconds Overall, our financial positions remains healthy supported by a strong balance sheet. disciplined cost management and prudent working capital practices. 16:03 16 minutes, 3 seconds This provides us with the flexibility to navigate the current operating environment while continuing to invest in selectively in strategic initiatives. 16:14 16 minutes, 14 seconds We believe this balanced approach positions the company well to deliver sustainable performance and create 16:22 16 minutes, 22 seconds long-term value as demand condition improves over time. 16:27 16 minutes, 27 seconds With this, I would now request the moderator to open the lines of for Q&A. Thank you very much. 16:37 16 minutes, 37 seconds Thank you. Ladies and gentlemen, we will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the 16:45 16 minutes, 45 seconds touchstone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants 16:53 16 minutes, 53 seconds are requested to use their handsets while asking a question. 16:58 16 minutes, 58 seconds Ladies and gentlemen, in the interest of time and fairness to others, we request you to restrict to two questions per participant and rejoin the question 17:06 17 minutes, 6 seconds queue. One moment, please, while we poll for questions. 17:13 17 minutes, 13 seconds We take the first question from the line of Jasp Singh from Equinis PMS. Please go ahead. 17:20 17 minutes, 20 seconds Yeah. Hi, good morning everyone. Uh my question is related to the AITA margin drop. So the 300 uh basis point drop in 17:28 17 minutes, 28 seconds a bit margin and gross margin uh just trying to confirm it's largely coming from faucets and largely because of the brass price increase. Can you confirm? 17:38 17 minutes, 38 seconds So uh as we have told in our brie 17:46 17 minutes, 46 seconds uh beta margins by 3% this was primarily driven by uh the increase in the trade discounts. So discounts largely 17:55 17 minutes, 55 seconds increased on account of uh uh the participation higher participation in our projects. Uh if you see our project 18:03 18 minutes, 3 seconds banks have increased by 12%. Uh uh if you compare the y comparison uh retail 18:11 18 minutes, 11 seconds uh in case of retail segment discounts were largely broad uh broadly stable. 18:16 18 minutes, 16 seconds Additionally the cogs increased mainly due to uh the uh increase in the input cost. So brass prices uh have increased by roughly 12%. 18:28 18 minutes, 28 seconds And this elevated brass prices have impacted both in uh manufacturing as well as uh the external procurement cost 18:37 18 minutes, 37 seconds and apart from that we have some higher spend in Q3 with respect to publicity 18:43 18 minutes, 43 seconds which was the phasing impact and uh some pre-operative cost related to senators. 18:49 18 minutes, 49 seconds So overall if we see uh to mitigate this impact of increased brass prices we have 18:56 18 minutes, 56 seconds recently uh announced the price increase both in case of faucet wear as well as salary. I hope I have answered your question. 19:06 19 minutes, 6 seconds Yes. Yes. You are beautifully explained. 19:07 19 minutes, 7 seconds Thank you so much. So uh just related to that uh you know I I haven't seen 10% kind of a beta margin in the last decade or so. 19:23 19 minutes, 23 seconds basis. 19:25 19 minutes, 25 seconds So I'm just surprised and confused and you know disappointed the same time that a quarterback or let's say we were 19:32 19 minutes, 32 seconds riding a 14 to 15% kind of a margin and suddenly the trajectory shifted to 10% 19:42 19 minutes, 42 seconds and even there we are now talking of calibration calibrated price increases. 19:47 19 minutes, 47 seconds So what has so drastically changed in the world of building materials and terra given it's a branded product that 19:53 19 minutes, 53 seconds we see a 10% margin multi-deade low and I don't know so your views on that 20:03 20 minutes, 3 seconds see what is happening is we are looking at one quarter and we are trying to extrapolate it that it is going to be there for the future also so uh we don't 20:11 20 minutes, 11 seconds anticipate that this is going to be the trend uh going forward uh once we go into go Q4 you'll find that the top line 20:19 20 minutes, 19 seconds even otherwise in Q4 is much larger which leads to a better absorption in pits cost. So it has been due to some of the phasing impacts that the some costs 20:28 20 minutes, 28 seconds in Q3 had been higher. Uh for example as Mr. Vicas mentioned the publicity costs had been uh in a phased manner been 20:37 20 minutes, 37 seconds higher in Q3. uh like the total budget for the year remains uh the same but for Q3 the expenditure had uh gone up. Same 20:46 20 minutes, 46 seconds way for CSR activities also the bulk of the expenditure happened in Q3. Uh so it is higher uh during uh this particular 20:54 20 minutes, 54 seconds quarter also as we have embarked on that new ventures of senator and poly plus. 21:00 21 minutes So this is a kind of uh impact which has started happening from Q3 and once the top line also starts coming in senator 21:08 21 minutes, 8 seconds and poly plus we'll find that it'll be able to absorb and account for better margins. So this is a one-off kind of a thing and not something which is 21:15 21 minutes, 15 seconds expected to remain uh on a steady basis for the future. Uh going forward in Q4 by itself you'll find that we are going to be returning back to the margins of 21:23 21 minutes, 23 seconds at least 13 14% that we had be having in the last few quarters. So uh to summarize I will say it's a one-off kind 21:31 21 minutes, 31 seconds of a thing and we not expected to continue as a trend. 21:37 21 minutes, 37 seconds Thank you. We take the next question from the line of Karan Batalia who is an individual investor. Please go ahead. 21:52 21 minutes, 52 seconds Colin, please unmute your line and proceed with your question. 21:59 21 minutes, 59 seconds Since there is no response, we'll move on to the next question which is from the line of Sunny who is an individual investor. Please go ahead. 22:08 22 minutes, 8 seconds Uh hello sir, am I audible? Yeah, we can hear you. 22:12 22 minutes, 12 seconds Yeah. So I just wanted to know key uh we were uh uh earlier one or a couple of years back projecting a 17% revenue 22:20 22 minutes, 20 seconds growth over the next 2 three years. So uh what is it happening that even though the real estate sales from 2022 or 21 22:27 22 minutes, 27 seconds onwards were very good uh that this uh our sales has been highly stagnant over the last three or four years uh and we 22:36 22 minutes, 36 seconds are unable to even grow our market share or our sales even though we are holding on to our margins barring our increase in brass prices or whatever but uh so 22:45 22 minutes, 45 seconds when do you expect this u above 15% revenue growth in the future given that uh real estate cycle had started some 22:53 22 minutes, 53 seconds time back and the construction companies were doing well. So if you can throw some light on that 23:07 23 minutes, 7 seconds because I'm sorry to interrupt you there uh but your audio is not clear. 23:18 23 minutes, 18 seconds So it's still not clear. Just give me one moment, please. 24:05 24 minutes, 5 seconds That's going to be yucky. 24:14 24 minutes, 14 seconds Ladies and gentlemen, we have the management line reconnected. Sir, you may proceed. Yeah. Sorry, the line uh was not clear. 24:24 24 minutes, 24 seconds Am I audible right now? Yes, sir. Yes. Yes, sir. 24:29 24 minutes, 29 seconds Yeah. So, just to answer your question like uh you're right that for the last two years there had been stagnancy in the growth. But if you have been 24:38 24 minutes, 38 seconds listening to our calls, you'll find that we have been projecting that H2 uh we expect the revival to happen and in fact 24:44 24 minutes, 44 seconds Q3 uh we see that it has been grown by 11.1% and Q2 also we had grown by in the range of uh 5 to 6%. So the growth uh 24:54 24 minutes, 54 seconds trajectory has already started happening and we are confident that even Q4 uh we should be able to maintain uh this kind of growth and uh we should be ending the 25:02 25 minutes, 2 seconds year as we projected in the earlier conall by roughly 7 to 8% on an overall uh full year basis. So uh now we find 25:11 25 minutes, 11 seconds that uh the kind of stagnancy which had come in the retail market has started improving and going forward we expect it to be much better. 25:22 25 minutes, 22 seconds Thank you. We take the next question from the line of Valun Jalastria from 361 Capital. Please go ahead. 25:30 25 minutes, 30 seconds Yeah. Hi sir. Thank you for the opportunity. I just wanted to know sir if this growth uh for the current quarter was uh due to pre- buying uh 25:38 25 minutes, 38 seconds before the price hike or was there actual improvement in demand? 25:43 25 minutes, 43 seconds So there there's an actual improvement in demand. And if you look at our uh growth in even in Q2, we have grown by 5 to 6%. In fact, the price increase has 25:52 25 minutes, 52 seconds happened only uh yesterday. The announcement has been made only yesterday. So Q3 there was no talk about any price increase. Uh it is only in Q 26:01 26 minutes, 1 second four. Yesterday that the price hike has been announced. So there would be some traction in Q4 on account of this. But Q3 is purely on account of the 26:10 26 minutes, 10 seconds improvement in the uh demand and the initiative which has been taken by the company. 26:16 26 minutes, 16 seconds And so how much was the price hike which we took and how much was the increase in raw material uh cost uh that has has come 26:25 26 minutes, 25 seconds uh the brass prices uh have fluctuated widely over the last you can say the entire year in Q3 it has risen by 26:32 26 minutes, 32 seconds something like 12%. In January again it has gone up significantly. uh if you look at the entire purchase of uh the 9 26:41 26 minutes, 41 seconds months of uh the financial year from March April to December, you'll find that the average price was something 26:48 26 minutes, 48 seconds like 640 for brass per kg uh which has gone up to something like 800 in January over the last few days. So it's a sharp 26:57 26 minutes, 57 seconds increase which has happened in particularly in January. uh and also uh there was a 12% rise in the month of uh 27:06 27 minutes, 6 seconds uh sorry in the quarter of uh Q3. 27:12 27 minutes, 12 seconds Thank you. We take the next question from the line of Arun B from ICIA securities. Please go ahead. 27:20 27 minutes, 20 seconds Hi sir. Uh just a few a few point data points. You mentioned that publicity cost was higher in Q3. Can you share 27:27 27 minutes, 27 seconds that number? also the spend done on uh satan and polyl plus in the last 9 months and particularly in Q3 27:35 27 minutes, 35 seconds uh at the same time uh what you announced is about 11% plus price increase in case of faucet and 4% plus 27:44 27 minutes, 44 seconds in case of sanitary well is that sufficient to cover whatever increase has happened 27:51 27 minutes, 51 seconds I'll just take your questions one by one first you asked was in respect of the publicity spent uh how how much it has 27:59 27 minutes, 59 seconds happened in absolute numbers in the current quarter. In current quarter the publicity spend was 17.27 crores as 28:07 28 minutes, 7 seconds opposed to 13.87 crores in the corresponding quarter of the previous year. So there's an increase of something like uh 3 and a half crores to 4 crores in publicity spend. 28:17 28 minutes, 17 seconds Uh second question was in respect of uh if you can repeat the question again. So the spend we have the ad spend even for 28:25 28 minutes, 25 seconds 9 months if you give that would be helpful and senator and poly plus cost incurred in the first 9 months and also in Q3. 28:33 28 minutes, 33 seconds In Q3 we spent something like 6 crores in poly plus and senator this was including for uh salaries which was in 28:40 28 minutes, 40 seconds the region of 3.6 crores and promotional traveling and other expenses in relation to senator and polypus which accounted 28:48 28 minutes, 48 seconds for the rest. uh the publicity spend for the entire uh year for 9 months has been 28:55 28 minutes, 55 seconds something like 35.58 crores uh uh for the entire 9 months of the current fiscal year 29:02 29 minutes, 2 seconds versus how much last year 9 months 9 months last year was 40.89 89 crores and so one more question which I had 29:10 29 minutes, 10 seconds with regards to this was that and poly there are no sales right we haven't booked anything sales wise 29:16 29 minutes, 16 seconds no in Q3 the total sales up to the end of 9 months the total sales was in the region of 7 to 8 crores for senator and 29:24 29 minutes, 24 seconds polip taken together and uh we had earlier projected something like 40 crores for the full year uh but we'd 29:32 29 minutes, 32 seconds like to revise that we should be ending by more like uh 20 crores for the current year because the stores have been taken some time to get ready. 29:41 29 minutes, 41 seconds Uh so we expect uh to do something like uh uh more like 20 crores and not 40 45 crores which we have projected earlier 29:49 29 minutes, 49 seconds in respect of these two brands and uh so you did not mention the numbers spend on sanit and polyas for 9 months you mentioned for uh uh this this 29:58 29 minutes, 58 seconds quarter six crores was for this quarter for the whole year it would be in the region of because u the most of the spending has started 30:06 30 minutes, 6 seconds coming in Q3 only the other promotional spending etc. uh before that the team building spends were there. So for the full year it would be in the region of 30:15 30 minutes, 15 seconds uh you can say 8 to 9 crores and uh you had projected 150 crores from 30:23 30 minutes, 23 seconds this uh board brands next year that's in place right? 30:28 30 minutes, 28 seconds Uh that should be in the region now because uh we are projecting something like uh you can say 8 to 9 crores in the 30:34 30 minutes, 34 seconds current uh uh quarter also. So uh next year uh we should be able to do once the scale up is complete more in the region of I can say 100 to 120 crores. 30:46 30 minutes, 46 seconds So uh largely uh once this uh Q4 will be ended so we are we will be preparing our 30:53 30 minutes, 53 seconds detailed uh uh budget exercise uh taking into consideration market uh uh feedback 31:00 31 minutes and all. So uh we will come out with the uh numbers uh as part of the uh uh the 31:08 31 minutes, 8 seconds next year uh uh achievements uh to the achievements uh for for both these uh newly uh launched brands. 31:18 31 minutes, 18 seconds And so regarding my question about uh that price increase which you have taken is that sufficient to cover uh whatever cost increase you have seen till date? 31:28 31 minutes, 28 seconds Yeah, the price increase would be sufficient to cover the kind of uh increases which have happened till date. 31:34 31 minutes, 34 seconds Uh obviously if it keeps on increasing at the current trend uh then uh again we'll have to revisit the position but as of now the kind of increases which 31:42 31 minutes, 42 seconds have happened the price increase will be able to adequately cover it. 31:46 31 minutes, 46 seconds One more uh feedback which we have from dealers is you were the last guys to announce the price hike. You know the leader in faucetware had taken a price 31:54 31 minutes, 54 seconds hike somewhere in January. uh any reason why we are delaying it till 1st of March that's a data given to dealers right 32:03 32 minutes, 3 seconds see it's a matter of what how we perceive the price rise and how our total cost dynamics are working uh you find that the market leader had not 32:11 32 minutes, 11 seconds taken a price rise since quite some time whereas we had in September 24 taken a substantial price increase in uh faucetware so that price increase was 32:20 32 minutes, 20 seconds kind of helping us to maintain our margins also the fact that our operational capability in faucetware has improved significantly and even with the 32:28 32 minutes, 28 seconds cost increase in the brass uh because of other operational parameters the overall cost uh we were able to manage quite well and the margins were being 32:36 32 minutes, 36 seconds maintained. So that is why the need for uh that price increase in between did not arise. Uh but uh it you cannot uh 32:45 32 minutes, 45 seconds expect uh everything to be like like a total aligned movement in case of prices from the all the uh players. So it is 32:53 32 minutes, 53 seconds totally based on the kind of margin pressures which are being put within the company and that also based on that that we taken in September 24 and we're taking it right now. 33:03 33 minutes, 3 seconds So so after this price increase uh if I get it right in FI27 you will go back to assuming there are no more cost increases you'll go back to 33:12 33 minutes, 12 seconds your margin rate of 15 16% which you used to look at earlier. Is that correct? 33:16 33 minutes, 16 seconds Correct. Correct. Correct. A and uh I would request you to please join back the queue for follow-up questions. 33:25 33 minutes, 25 seconds Thank you. 33:27 33 minutes, 27 seconds Thank you. We take the next question from the line of Nicl Gandhi from Bajage Life Insurance. Please go ahead. 33:35 33 minutes, 35 seconds Yeah. Uh this is Sujit from Bajage Life. 33:38 33 minutes, 38 seconds Thank you for the opportunity. I just wanted to check with you in the previous cycle during COVID years when the prices rose in sanitary wear and faucet wear. 33:47 33 minutes, 47 seconds Did you benefit players like you who are large? Do they benefit typically in cycles like that in terms of market share gain um from the smaller players? 34:00 34 minutes Um sorry your question is not correct. Can I repeat it again? 34:04 34 minutes, 4 seconds Okay. So do you benefit in a rising prices scenario when raw metal prices 34:10 34 minutes, 10 seconds rise the industry takes a price hike large players like you in faucetware and sanitary where do they benefit in the 34:19 34 minutes, 19 seconds previous cycle when this happened in COVID did you gain market share 34:26 34 minutes, 26 seconds uh you'll find that whenever there is a input costs rise uh that is something which is affecting the industry as a whole and you'll find that sooner or 34:35 34 minutes, 35 seconds later uh that will be uh leading to a price increase by not only the larger players but also by the smaller players also. So on an overall basis a price uh 34:45 34 minutes, 45 seconds a cost increase led price increase uh is not something which is going to affect the market share of individual players 34:52 34 minutes, 52 seconds uh you find that on an over a period of time once everybody takes a price increase that market share stabilizes. 34:58 34 minutes, 58 seconds It is not that uh on a rising cost scenario larger players are able to take in higher price increases and are able to garner higher market shares. 35:09 35 minutes, 9 seconds Okay. Secondly, in the uh in the con call today you've already explained that uh for projects you had to give higher discounts right? 35:18 35 minutes, 18 seconds Correct. Yeah. 35:20 35 minutes, 20 seconds So uh can we say that currently the demand remains muted? 35:26 35 minutes, 26 seconds So the demand has started going up. If you see that uh we have grown by 6% and 11.2% over the last few quarters. The 35:34 35 minutes, 34 seconds total share of projects within the business has remained constant at the same 38 39% which has been not only 35:41 35 minutes, 41 seconds there in Q2 and Q3 but also there in uh you can say previous year Q2 Q3 and Q4 as well as currently Q1. We have been 35:49 35 minutes, 49 seconds towards that number for quite some time now. uh typically our project share used to be 30%, but that was something like 2 35:56 35 minutes, 56 seconds and a half to three years back and we have steadily risen from uh you can say mid of uh uh 2022 23 to a number of uh 36:07 36 minutes, 7 seconds 35% and now to 37 38% which is holding steady. So it is not that in this particular quarter by itself the project 36:14 36 minutes, 14 seconds numbers have gone up. uh the numbers have been going over the period of time where because of the fact that retail had been kind of uh sluggish now with 36:24 36 minutes, 24 seconds the retail also picking up you'll find that this number would either remain constant or will start going down going forward. 36:31 36 minutes, 31 seconds So just to get this right in periods when the overall div is sluggish because retail is still the higher portion close 36:38 36 minutes, 38 seconds to 62 63%. Correct in those periods what is your game plan to basically till 36:46 36 minutes, 46 seconds the time the demand remains muted to kind of accelerate sales growth when you don't have tailwind from the industry. 36:56 36 minutes, 56 seconds The whenever there is an outside pressure the what we typically try to do is that we try to improve our operations 37:04 37 minutes, 4 seconds look inwards uh try to improve operations uh try to improve our product line uh that is what we have been doing over the last couple of years when the 37:12 37 minutes, 12 seconds demand had been muted. We have introduced a a slew of products. We have introduced uh brands uh where we felt that there was a market growth and we 37:22 37 minutes, 22 seconds were not present and we have undertaken lot of operational efficiencies to improve and maintain margins in spite of the kind of external pressures which are 37:30 37 minutes, 30 seconds there. Uh so the idea is that uh the periods when the retail is not doing well or the external pressures are there 37:37 37 minutes, 37 seconds try to uh be prudent uh inward uh try to uh do more of uh you know uh operational 37:45 37 minutes, 45 seconds efficiencies and uh product uh kind of expansion. 37:52 37 minutes, 52 seconds So one last question is then do you actually get higher sales growth because of the product interventions and product introductions? 38:01 38 minutes, 1 second Now we are anticipating that uh we are well positioned because we have introduced a slew of products in the last couple of years. The market has 38:08 38 minutes, 8 seconds already started uh showing signs of improvement. Both project had been doing uh quite decent in the recent past and retail also started showing green 38:17 38 minutes, 17 seconds shoots. So we now anticipate that going forward uh we should be able to maintain this momentum of doubledigit growth in Q4 as well as in the coming uh financial year. 38:28 38 minutes, 28 seconds Thank you. 38:30 38 minutes, 30 seconds Ladies and gentlemen, we request you to restrict to two questions per participant. 38:35 38 minutes, 35 seconds We take the next question from the line of Bavin Rupani from Invest. Please go ahead. 38:41 38 minutes, 41 seconds Yeah. Hi sir, thanks for the opportunity. Uh so my first question is related to price hike. Sorry if I missed that. Uh what is the price hike that we 38:48 38 minutes, 48 seconds have taken uh yesterday for sorry? 38:55 38 minutes, 55 seconds uh the kind of indication that they've given to the market is uh on an average it will be 4% for sanitary wear and 11% for fosetware. 39:06 39 minutes, 6 seconds Got it. So couple of data points. Uh what is our outsourcing proportion for sanitaryware and faucetware? 39:13 39 minutes, 13 seconds I'll just give you the number for uh Q3. In Sanware the outsourcing was uh 61%. 39:21 39 minutes, 21 seconds And in foset where the outsourcing was 47%. 39:26 39 minutes, 26 seconds Perfect. And one last question on capeex. So faucet where we are running at almost 102%. Any capeex plans for your 39:35 39 minutes, 35 seconds uh like we had already taken the brownfield expansion where we had gone up from three lakh to four lakhs and we had under taken civil facilities uh 39:43 39 minutes, 43 seconds which have been completed to take it from four lakhs to six lakhs. So uh with the whenever we feel that uh the demand 39:51 39 minutes, 51 seconds is sustained and that we'll be able to uh keep on uh having a s uh kind of sustained production requirement uh we 39:59 39 minutes, 59 seconds can go from four lakhs to six lakhs within a span of you can say 3 to four months because only balancing equipment needs to be done otherwise the plant is ready. 40:09 40 minutes, 9 seconds Thank you. We take the next question from the line of Mitun Ashwad from Ka Advisers. Please go ahead. 40:18 40 minutes, 18 seconds Hi sir. Um there was a plan to put up a new sanitary facility. Can you speak a little louder? 40:26 40 minutes, 26 seconds Yeah. Hi. There was a there was a plan to put up a new sanitary facility. I think the land was purchased for the 40:34 40 minutes, 34 seconds same. Just wanted to know what is the status of that. Uh you're right. The land is already 40:42 40 minutes, 42 seconds purchased but we had not uh commenced the construction activity for the plant. 40:47 40 minutes, 47 seconds Uh that uh we going to take a view at the end of Q4. Uh depending upon the market situation at that point of time we'll take a view whether we need to 40:55 40 minutes, 55 seconds start construction uh immediately or uh defer it even further. 41:02 41 minutes, 2 seconds That that definitely doesn't sound good as a prognosis, right? To wait for the market to grow and then you will put up 41:09 41 minutes, 9 seconds the plant or you don't want to put up the plant ahead of demand actually picking up. No, it is a the total kind 41:17 41 minutes, 17 seconds of scenario relation to the demand and the production capabilities. uh what has happened within the last couple of years 41:24 41 minutes, 24 seconds as I keep on mentioning again earlier also that the facilities within the plant itself has undergone a lot of 41:31 41 minutes, 31 seconds change the kind of efficiencies that we were able to achieve earlier uh we are able to do much better than that so we have been able to without putting up a 41:40 41 minutes, 40 seconds new green field project create a plant within a plant a new plant within the plant because our manufacturing capabilities and the production output 41:48 41 minutes, 48 seconds that we are able to achieve within the plant has gone up significantly Also what has happened during this last you can say couple of years is that the 41:56 41 minutes, 56 seconds mix has changed. Earlier uh the idea was that most of the complex pieces used to be produced within the plant and the simpler ones the lower low value added 42:05 42 minutes, 5 seconds products used to be purchased from outside. Now with the kind of uh muted demand which was there in the last couple of years this shift has also 42:13 42 minutes, 13 seconds happened in the production uh which is being done currently in the plant. So few of the outsourced items which were uh have been taken in in-house uh and 42:22 42 minutes, 22 seconds once we find that the demand is improving uh we can uh take again these products to the outsourced partners uh 42:31 42 minutes, 31 seconds put increase the capacity within the plant take the plant to full uh manufacturing capability. So we have lot of scope uh in the next couple of years 42:39 42 minutes, 39 seconds to be able to manage from the current plant by itself. So it's not a function of uh you trying to follow the demand. 42:45 42 minutes, 45 seconds It is a function of being able to understand the exact production capability with the VD demand. 42:52 42 minutes, 52 seconds Thank you. We take the next question from the line of Arjana Gur from IDBI Capital. Please go ahead. 43:00 43 minutes Hi sir, thank you for the opportunity. 43:02 43 minutes, 2 seconds You spoke about margin getting back to 15 16% going forward. Can you help us understand what kind of net growth you 43:09 43 minutes, 9 seconds have placed in there? Essentially as I mentioned this was a one-off kind of a quarter wherein a large amount of 43:18 43 minutes, 18 seconds phasing impact has happened which has led to a uh reduction in the uh bida margins. So typically we have been maintaining margins in the region of 13 43:26 43 minutes, 26 seconds to 14% which uh even otherwise is the norm and we expect to be back to those margins margin levels uh in Q4 itself. 43:34 43 minutes, 34 seconds uh and that should be that is something which is sustainable uh across going forward and coming back to that uh from 43:41 43 minutes, 41 seconds 134 to that range of you can say 15 to 17%. Uh because we have already started growing uh and we have started seeing 43:49 43 minutes, 49 seconds the top line increasing you'll find that uh as this number sustain and the top line continues to grow uh the and these 43:58 43 minutes, 58 seconds oneoff kind of things are not there. you find that uh those margins of 16 17% should be looking very likely in the uh 44:06 44 minutes, 6 seconds second half of next financial year but we should be back to that uh 13 14% level uh in Q4 itself. 44:15 44 minutes, 15 seconds Sure sir. Uh sir also if you can talk about the micro markets uh you know you spoke that there is some green shoots 44:22 44 minutes, 22 seconds maybe you know going forward. So any market would like to talk about where they're seeing that the the demand is taking up uh baring the project sales. 44:34 44 minutes, 34 seconds I think as I mentioned in earlier questions also that the company has been taking a lot of initiative in respect of the product profile and also the kind of uh market where it is not uh too strong. 44:47 44 minutes, 47 seconds So we have been looking at in the last uh you can say six four quart three four five quarters as to which markets we are not really doing well and have been 44:55 44 minutes, 55 seconds concentrating uh a lot on those markets and it is these markets which have now started 45:02 45 minutes, 2 seconds showing results uh wherein uh earlier if you see the total distribution profile of uh SAR that most of the sales used to 45:10 45 minutes, 10 seconds come in from south wherein Kerala used to lead now the trend has been reversed we'll find that uh the UP Pu 45:18 45 minutes, 18 seconds is the leading uh in the entire uh zones and the zone of Bihar, Jaratan which 45:27 45 minutes, 27 seconds used to be extremely poor has also started showing a reversal. So uh it is these kind of small small initiatives uh 45:35 45 minutes, 35 seconds which have started leading to uh kind of improvement in the overall kind of sales and going forward uh the uh you'll find 45:44 45 minutes, 44 seconds that uh the initiatives which we had taken earlier will sustain the kind of growth that we have been able to achieve in the last two quarters. 45:53 45 minutes, 53 seconds Sure sir. So that was so thank you so much and all the best for coming quarters. Thank you. 46:00 46 minutes Thank you ladies and gentlemen. Due to time constraint we take that as the last question and we conclude the question and answer session. I now hand the 46:09 46 minutes, 9 seconds conference over to the management for their closing comments. 46:14 46 minutes, 14 seconds Thank you everyone for attending this call and for showing interest in Sarah Sanitary Limited. Should you need any further clarification or would like to 46:23 46 minutes, 23 seconds know more about the company, please feel uh free to reach out to me or to CDR India. Thank you once again for taking the time to call join the call. 46:33 46 minutes, 33 seconds Thank you on behalf of Sarah Sanitary where in limited that concludes this conference call. Thank you for joining us.