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Ladies and gentlemen, good day, and welcome to the Asian Granito India Limited Q3 FY '21 Earnings Call hosted by Monarch Networth Capital Limited. This conference call may contain forward-looking statements about the company, which are based on beliefs, opinions and expectations of the company as on date of this call. The statements are not a guarantee of future performance and involve risks and uncertainties that are difficult to predict. [Operator Instructions] Please note that this conference is being recorded.I now hand the conference over to Mr. Vineet Gala, from Monarch Networth Capital Limited. Thank you, and over to you, sir.
Thank you, Melissa. Hello, everyone. On behalf of Monarch Networth Capital, I welcome you all to this Q3 FY '21 post-results conference call with the management of Asian Granito India Limited. It gives us great pleasure to welcome the senior management team of Asian Granito, represented by Mr. Praful Gatani, Executive Director; Mr. Himanshu Shah, Head of Finance; and Mr. Kalpesh Thanki, Investor Relations, on the call. I would now request Mr. Praful Gatani to give us his opening remarks on the business performance, post which we will open the floor for a Q&A session. Over to you, sir.
Good afternoon, everybody. And first of all, my very healthy wishes to all participants. I wish a wonderful year ahead because we have gone through a very, very traumatic year for all citizens of India and as well as the global citizens. I hope this year would be very healthy and healthy in terms of finance also or in terms of health also. So wish you all a very, very healthy and happy New Year because we are meeting for the first time in this year. As far as the year and the quarter Q3 is concerned, there has been a very significant improvement and contribution from all around segment of the company, which is -- which can be seen and verified from the presentation, which is already uploaded on the stock exchange. Company has done a remarkable growth, including growth in numbers in quantity also, volume also and as well as in profitability also. The Q3 has given us a significant contribution from all the segments, whether it is bathware segment. It is our parent segment, tile and ceramic tile and porcelain tile. Besides quartz, everything has done fantastically well. And moreover, this time, the sale has been quite [ expert ] all over India. All the 3 zones, important 3 zones, where company has got a major shareholding in the market has performed very well. In fact, the performance has been very equally distributed, around 30% in all the 3 zones. And all of these zones are 33 -- 30% approximately we have performed and that has given a significant support to the company in a way to think that, yes, we are on the right path with the highest capacity utilization. In last 12 months, we have touched around 95% capacity utilization, which is one of the best in the industry and which is also showing the path that the company will be growing much better in the coming times also. With the good capacity utilization, we have covered the export market and domestic market both very well, and export, we could grow very nicely. And from the year-on-year, if you see from 12.9%, we have done 14% sales and export and 86% in domestic market. It shows that our strength in the domestic market remains to continue, and we are still one of the leading brands in the domestic market. With our numbers, which is like in -- as I said, that export revenue has come this year, quite a significant from out of the INR 385 crore turnover, there's -- and the markets and the growth, both have significantly risen in all the ways. EBITDA margin has gone up by 151 bps. And all around growth, we see it's around 29% on year-on-year growth, we have seen it. If I speak something about the global market and trading domestic market, I can say that the time has come to again flat. Enough taxiing work has already been done. We are based in Gujarat, which is again a good pathway or a driveway to fly again. And Gujarat has given a significant support to the industry and to the business segment itself. Particularly when we talk about the business segment we are into is construction and related allied materials. The business is going back to the national phenomena. I can see that the business, especially in Northern, Western and Southern India, has already risen up to the normalcy. And it looks like that there will be a significant growth as expected in the budget of 2021 also. There is an expectation of GDP to touch around 11%, which have got a significant contribution from the construction and building materials segment also. So I see the business will grow in this year. And we will recover from the past years -- last year's losses or damages, and we will grow furthermore on this part. Company has done significantly good in terms of performance also. Our debt-to-equity ratio has gone down to 0.53. And working capital cycle also has gone much better than previous times. Before, normally the average industry ratio, as we have seen it in other companies, is around 90 days. We were having at around 85 days, and we have gone down from 85 days to 75 days in this quarter. It means the business is quite in control. The response from the market is good. And it looks that the sales would be continuously coming in the coming quarter also. So we are anticipating that in terms of exports and in domestic market, we will have a much better and final number. Last year, we see that we have done an export of approximately INR 140 crore against of which we have already touched around INR 165 crores in 9 months, and it is anticipated that the next coming quarter, we would have another INR 40 crores from exports. So we will cross something around INR 212 crore from the only export market. With this, we become #1 company in the whole of India, which is going to be the largest company to export in listed entities. So that also shows that Asian AGL brand is not only is the leading brand in India, but also leading brand globally also because we are the one who are exporting the largest quantity from the listed entities. We have the benefit of being present in Gujarat. Our associates are also in Gujarat. So it becomes good for us to have a better logistics. Quicker logistics and cheaper logistics have become very competitive in a global market for exports also. Besides that also, in terms of performance, we have reduced our manpower cost. We have reduced our cost of finance also this year. And also, our debt has gone down from -- and consolidated debt has gone down by INR 8 crores. And in stand-alone, we have gone down by INR 22 crores. So overall, if you see that we are trimming the size of debt, interest, and we are enlarging our size of performance in terms of top and bottom line growth. So bottom line, as you see that Q3 has given a fantastic number of INR 25 crore PAT, which is one of the best in the industry. And Asian Granito is leading towards or high -- or heading towards one of the best performance and one of the best year in the history for all of us. Although we had a legacy of COVID, but we are one of the company who has recovered very quickly, very fast from the damage of COVID and recaptured the market. I'm sure the way our associate -- business associates, our dealers, our distributors, our staff and our support system management has responded back, the company will have a much better performance in Q4. That is what I foresee. With the orders in hand for international market, I see that globally we are continuously growing. Our strength in that global market is growing. And whatever the losses we had because of COVID, we could reachieve. We could do something fantastic from the international market. We have grown in international market. Whatever we lost from the domestic market, we could -- we were having -- we recaptured it from the international market. And at that same time, our domestic team also remained quite good, very nice, they have -- very nicely they have performed in Q3. So the numbers there are visible and is seeing that in the West, North and South India, we have become, again, a very leading and very promising brand with almost 30%, 30%, 30% share from all the 3 markets. Only the Eastern part we have, which is like -- is not our major market and not our focus market, we are getting a contribution from 10%. All the segments of the business, as I said, have performed very well, and they have contributed positively and has remained a good contributor in the whole financial statement. I have with me Mr. Himanshu Shah, who can also give you some more detail about the financial data, and then we can lead to anything related to question and answer. I pass it to Mr. Himanshu Shah.
Good afternoon and happy New Year to all of you. During this quarter 3, our top line in the consolidated level, which reached to INR 384 crores, which shows a 29.1% return on the top line growth on Y-o-Y basis. And our EBITDA margin stood at INR 49.5 crores, which has been increased on Y-o-Y basis by 160 bps. Net profit margin, which is at INR 25 crores, which is 6.5% of our top line, will increase by 280 basis points. On financials, on the stand-alone basis, the top line has also grown by the 13.5%, which reached to INR 289 crores in this quarter 3. And our net profit margin, which also stood at INR 21 crores on a stand-alone basis in Q3, which is at 7.3 percentage of our top line and increased by 380 basis points. As Praful has already told, that there are 3 to more major points, which are contributing our bottom line, and our EBITDA margin is improved. There is a little bit improvement also in the tiles segment, ending our overall growth in 29% to the top line growth. There is a major contribution of tiles growth, which is at 31% is the volume growth and 36% is value. So it has been raised by 4% of value growth. As far as the bottom line is increased, other points contributing factor is all other expenditures served towards advertisement and selling and distribution is also considerably reduced. And interest cost is also reduced by reducing our overall debt in the stand-alone and consolidated basis as well as our overall average interest cost is also reduced, which is around 9.25% now. And there are other -- product mix has also changed in our factory, which is being overall the factory plants are running at 95% capacity utilization nowadays. So with this full capacity, certain product mix is also changing our product line. And because of that, we are able to get a very good margin and a price rise increase in the tiles sectors. So in export front, also as Praful said, we are contributing our total top line. 40% is export revenue. And we are driven by this 41% in the export during this quarter on a Y-o-Y basis. So hopefully -- if this trend will continue, we are hopefully -- we are confident that in the next quarter 4, the export revenue, we will cross definitely the INR 200 crores, which was at INR 155 crore in the last financial year.So at this outset, now I conclude by these earnings on financial highlights.
I think, first, we can take the question-and-answer. So if anything is there, we can go ahead.
[Operator Instructions] We have the first question from the line of Achal Lohade from JM Financials.
Yes. Thank you for the opportunity. Just wanted to ask, in terms of the total exports from India, what would be the -- in terms of the million square meters, what would be the volume? And what would be our market share?
The exact number of quantity of square meter, I would have to check and get back to you. So I have noted your question. The exact number of square meter, normally, we do not keep it in record handy, but I will get back to you on this thing. I have to written down your name, and I will send back this information to you.
Overall, in tiles sector, I would say that 12 million square meter that our volume is there in the tiles sector. Total, yes. Export from India.
No, I'm talking about...
Right. In terms of value, what has been the monthly run rate for last 3 months? Do you have that, sir, for November, December and January?
I have now our Chairman, Mr. Kamlesh Patel also, he just joined with us. So some questions you have, maybe he can reply. I would request Kamlesh bhai to reply some of the questions. He just joined in. So I welcome Mr. Kamlesh Patel, Chairman of Asian AGL. Kamlesh bhai?
[Foreign Language]
[Foreign Language] Is it INR 1,400 crores, INR 1,500 crores? Is it INR 800 crores, INR 900 crores carry...
Total industry?
Total industry exports.
Last year [Foreign Language]
It should cost something around INR 15,000 crores with the run rate, but provided that containers and shipping logistics are available. And we have done -- I just got the figure. Now we have done 2 million square meter exports so far.
In 9 months' FY '21?
Yes, Q3, Q3, not 9 months.
Q3, okay. 3Q. Okay, okay.
Okay. And total 9 months also, I'll get it and I'll just -- I think 4.88 million, around 5 million, we have done in 9 months.
Right. And for the month of November, December, January, industry exports over, sir?
See, we have already crossed around INR 8,000 crores -- see, the last figure what we have received, it is said that the industry has already crossed around INR 8,000 crores, it is scheduled to touch around INR 14,000 crore. Exact numbers are not available. Because there are a lot of unorganized sector players also there in Morbi. So exact number, but I'm sure it has cost more than INR 8,000 crores to INR 9,000 crores.
Right. And which are the key countries here?
Which is higher than the last year's total export.
Exactly, exactly. So which are the key countries which have seen significant jump in the exports, sir? And what is driving that? Is it the antidumping duties imposed by those countries on China? Or is it purely the pricing which is playing out of China plus one strategy of those countries?
This is excellent question you have raised. In fact, this reply is not just for the ceramic tile industry. I would reply on behalf of all industries in India, which are export driven and which has performed very well. First of all, there is a negative sentiment world over about the Chinese product and Chinese product work, leading product in ceramic tile segment and construction segment, basically. So most of the country is in western part, okay? They have become quite negative about buying anything from China, and they have restricted their products either way of putting some kind of a restriction or by way of putting some kind of a mental block to buy anything from China. So that directly effects all the support for -- all the transfer of the sales has come to India, Turkey, Mexico, Brazil, these are the countries which are -- which have become leading exporters to -- leading exporter -- alternative exporter to China. And as far as ceramic tile is concerned, or a quartz stone tile is concerned, there are 3 major suppliers to the world after China is Italy, is Spain and India. India has become #1 supplier to the world now because of 2 reasons. One is very easy availability of the material; two, very competitive price to the China itself. So this is the reason but basically why Indian products are very well acceptable. Now when we talk about Asian Granito, Asian Granito, I very proudly proclaim that we are exporting more than 100 countries. Almost half of the world we are covering for our export. It is one of the largest coverage anybody can have from India or from the world also. So we are continuously having repeat orders from all our buyers, plus the good part is our export is widely spread over export. We are not concentrated on 1 or 2 segments or 1 or 2 countries. That one very, very important thing is there. We are also supplying to the home market of China, which is like Taiwan, Philippines, Thailand or Indonesia, et cetera. This used to be a niche market for the home market of China. We have made a major entry and dent into those markets, and we are regularly supplying to those people also. I think, Kamlesh bhai, also export market environment [indiscernible] I would request Kamlesh bhai.
[Foreign Language]
Right. So if you -- the increase, what we have seen going up to INR 15,000 crores in FY '21, how do you see for next 3 years? Are you getting the sense that this is going to grow multifold? Is it going to stay at this current level? And we hear that there is a lot of capacity which is being added in Morbi. So if you could give some color on how many number of plants, what kind of capacity Morbi will see an increase in.
See, one thing is this phenomenon will continue for a long time now because we -- this was anticipated, not today. This was anticipated from last 5 to 6 years that India is going to be a global player in ceramic and vitrified tiles. So this was already there. We were one of the major suppliers to Middle East and to the Central Asia also. Now we have become a supplier to the whole world. So that is the change only has happened. The distance, which was a little longer to cover the world, has shrink because of this COVID. So that is the only advantage where we have got it. But as far as certain products are concerned, some products are very, very competitive. We are even sometimes cheaper than China to the world, including freight. So that is why I foresee that this will continue for a long time. There is no -- this is not any short-term phenomena.
Right. And Morbi, capacity addition in Morbi, sir?
Marble, we are not getting any capacity...
Morbi, Morbi. Morbi, sir, Morbi, any capacity addition to Morbi?
Morbi also put [indiscernible] plant. So we are tentatively something around 8% to 10%. Around 8% or 7% capacity increase is anticipated in the next 14 to 15 months.
We have the next question from the line of Prashant Kutty from Sundaram Mutual Fund.
So first question I wanted to ask, what is the realization that we get in exports? And what are the realization that we get in domestic markets for tile?
I would request Himanshu bhai to cover it, if exact figures are available. Otherwise...
Prashant, in export market, we knew volume is there. But as far as the realization is concerned, is almost similar to our domestic line. So currently, in the tiles, we have around 250 or 260 in the range. The same is continuing in the export also. But the major advantage is to get -- reducing the working capital, and at the same time, our volume is very good compared to our the export. Export in the quarter -- in the 9 months, we will say that looking to our volume, realization value per square meter is 281, which is 281.
Prashant, actually, if you see our international market, we talk about international market, Prashant, normally, export market realization is always around 5% to 7% lower than domestic market. But in Asia, if you see, this is very positive. We are almost same. Not same, in fact, maybe INR 1 extra than domestic market. This is very, very rare to quantify it. Because normally, export market is always more competitive and you are directly fighting with the global best player. So it's a realization on all [ days less ].
Okay. So you're saying that see the realization in export and domestic is almost similar.
This is a fantastic time. We have the same thing. Yes, exactly, right, Prashant.
Okay. Okay. Sir, second question is on the cost side. So we are seeing this quarter also this kind of -- our employee costs have further reduced. Our other expenses are also pretty much on track, and we've seen a higher level of sales growth, at the same level of employee cost and other expenses. Wanted to ask, what is your normal level of employee cost and other expenses number for the next year? Because I believe some of these costs should come back [indiscernible]
Prashant, during the COVID time our Chairman, Mr. Kamlesh Patel, he was working very vigorously on one part, which is called digitalization, okay? And he was personally involved in so many activities. He has very vigorously converted a lot of activities from physical to digital. So this -- I think this change was needed. And after this change, these benefits are going to remain. Maybe a small part will come back. Maybe a small part will come back, but major part will remain like this only. Because our activities like tempered distribution, for example, if I say catalog distribution, if I say some kind of a meeting physically, so these were done by our top management, and that has been already converted and the benefits are physically seen.
[Foreign Language]
Okay, okay. [Foreign Language]
There will be -- see, we are a growing company. So there would be little entry. It will not be a stagnated one because the kind of plans, what we have for coming quarters, the very aggressive plan we have. So I cannot say that it would be stagnated like this. It will definitely will go a little bit higher.
[Foreign Language]
[Foreign Language]
Yes, this quarter will be a very good quarter because winters are almost [Foreign Language] is already doing very well. So that will come back later.
Okay, okay, okay. Sure. Got that one. And last one from my end, sir, you are talking about interest cost coming down. Could I know what is the debt level on the books at this point of time, sir? And also, if you could comment a little bit on the working capital side in terms of how is the overall receivable and inventory position at this point of time?
I would request Himanshu bhai to reply on this part.
Prashant, see, overall on a consolidated basis, our gross level on the total debt is around INR 300 crores, out of which INR 250 crores is on working capital side and INR 50 crores is a long-term debt. We have reduced during the last 4 months almost INR 38 crores on a consolidated level. And there is a significant reduction in our stand-alone basis by INR 22 crores in the working capital itself. Overall, at the same time, simultaneously, we have also reduced the interest cost also. High-cost debt is being replaced by the low cost. And by this overall product mix with our bankers, my average cost is also around 9.25%, which was earlier at above 11%. So combine these 2 effect, gradually, we are also in the -- end up reducing further than my working capital debt. So we are targeting both to reduce the finance cost by replacing the high-cost debt further. And overall, whatever any internal cash accruals will be there reducing further the debt, working capital debt.
And what is working capital as of now, sir, in terms of receivables and inventory?
Receivables is 100 days, which was at 118 days -- or 111 days. And our inventory days is also reduced from 87 days to 70 days. So my net working capital day is from 85 days to, I think now, 75 days.
Sorry, you said receivables is how much?
111 to 100 days. Now it is 100 days.
111 days to 100 days?
It was 111, now it has gone down to 100 days. So we have reduced by 11 days.
Got it, got it, got it. Sure, sir. And lastly, sir, any targets for the next year in terms of our top line and margins? If you could kind of -- is there any guidance that you have for the next year?
See, we will maintain our growth part, and I expect that Q3, we will experience at Q4. And I think in the Q4, we will be able to comment something about it. I foresee that everything is good. Vaccine has already come in, and I hope that everything will be normalized very soon. So growth should be better than this year. As for an exact figure, I would not be able to comment right now.
We have the next question from the line of Chirag Lodaya from Valuequest.
I have first question on tiles margin, if you can help us understand what was the tiles margin in this quarter versus last year?
Chirag, your voice is very unclear. I mean, we are not able to hear you clearly. Can you just repeat your question, please?
Yes, sure. Can you help me with tiles margin in this quarter versus last quarter same time?
See, as far as -- I want to give it to Mr. Kalpesh. He is our analyst, and he will give you some figures.
Yes. Actually, the breakup of tiles, marble and quartz, which generally don't give to anyone. So it will be difficult to share.
Okay. And recently, there have been sharp uptick in gas prices. So how margins will get impacted in tile segment for coming quarters, if you can help us understand that?
In the Q2, there was a reduction in the gas prices, and which has already been, I think, either taken back in some parts. So exactly, it is not very high rise. It is almost -- which has come to a normalcy level, a little bit on a higher side. And price, basically, the gas prices is not something which is like we bear it. It goes in to the market and we pass it to the market. So it should not affect in any way the bottom line of our numbers.
So there is -- as I understand, gas is 20% of your cost, 20% of the sales. And if there is a 10% movement on cash prices, you are saying that it will not impact your margins. We'll be able to pass on completely, right?
The price increase is universal to everybody, in all the peers, not specifically to Asian. So when it comes to industry, industry itself reacted to it, and then everybody increases the price and pass it to the market, not keep changes to the margin.
Okay, okay. So is it fair to assume whatever margins we did in this quarter, we'll be able to maintain those margin in coming quarters as well? There is no impact of gas prices?
Definitely. I'm very, very sure about it. We will have better numbers.
Got it, got it. Helpful. And can you help us understand what is our CapEx plan? As you mentioned, you are already at 95% utilization now. So how one should look at capacity addition in tile segment?
See, immediately for the year 2021, we do not have CapEx, anything besides the quartz line, which is being added. And we -- what we are doing is basically modifying the technology with the resources, what we have, bringing our technology. We believe in more on asset-light model. So basically, there is nothing more we are spending on, on CapEx right now besides the line which is being added for the quartz.
Okay. And so anything incremental will be through outsourcing? Is it understanding right?
You're right, you're right.
Yes. And just lastly, sir, the quartz segment has not done well in this quarter. Any particular reason for that?
Yes, yes. See, one, you have to see the situation, geographical and social situation right now. The quartz is basically the product which is being used by the upper class, okay? And all the metros remain closed, all the top cities in the world remain closed, all the places like -- which we have a larger distributor or the display centers, they remain closed. So that is why quartz could not perform the way it should have done. But I am anticipating in this year, this will again resume back. It's a premium product. So premium market is still a little bit lagging right now.
Right, right. Got it, got it. There is some [ DT ] advantage, which India was enjoying because of that. There was an expectation that quartz export from India would go up substantially. So that thing is not panning out the numbers. So how one should read that?
You are right, that advantage is there, but the buyers are not in line right now. If you see the situation of Europe and America, most of the buyers are not in an active form right now. But it will happen now because the vaccine has already come in and the business will resume to the normality. Our major market for quartz is U.S. U.S. still is in a very broken situation right now.
Okay, okay. And is there any other signs of pickup or it will be more 1 or 2 quarters before we see some growth?
No, I think this quarter we will recover a lot. So all the bleeding will be stopped, I think, in this quarter.
[Operator Instructions] We have the next question from the line of [ Ayush Agarwal ] from Mittal Analytics.
Congratulations on a good set of numbers. Sir, my question is related to the quartz business itself. You mentioned to the last participant that the quartz business has been on a downside because of the lockdown and it has been the higher -- which is a premium product. But from the export data that we can see, India is still exporting north of INR 500 crores in Q3. So where do you think like this market share is going to? Because -- do you think the capacity is not much or what has happened because [indiscernible] exporting more than INR 500 crores of quartz in Q3?
Actually, global market of quartz is more than around INR 30,000 crore. And out of it, the U.S., it just is around 60% of the global market, okay? And from U.S. market, the 60% share in U.S. market was from China. So what is happening right now, the -- there is a substantial increase from quartz export segment to EU, U.S. and other part of the countries because the China has been blocked by slapping antidumping duty,on their products. So exports are -- export is increasing. It is growing, okay, from the country. But AGL, as part of what we said, it will grow more in this quarter itself, the Q4.
No, no. Sir, the figure that I'm talking about, INR 500 crores India is exporting to U.S. itself, like just INR 500 crores to U.S.
So Indian market -- India, like 90% market is U.S. only.
Correct.
Yes.
So where do you think like the additional capacity is coming from? Because like the large estates there that -- there are on the exchange, we don't have that capacity. So like I would say quarterly INR 150 crores, INR 200 crores. So the last INR 300 crores that these unorganized or small players are doing, how has this capacity come up in such a short time?
No, no, there are a lot of players. There are around 6, 7 players who are contributing equally like around INR 50 crores to, say, INR 100 crores in the northern part of India. And some are -- 1 or 2 are in only on southern part of India, rest or all of them are in Rajasthan and northern part of India. They are contributing and they are doing it. And they all are focusing to U.S. market. They are 90% exported to the U.S. only.
Right. And how specialized are these, sir, I mean, like in terms of technology or quality?
Technology, see, our plant is coming in right now in 2021, March, we will be completing our plant. And I think, hopefully, we will be in operation by April or May. Something like this in trials, and we will finish Q2 or Q3. We will have our final runs of this system. This technology is one of the best and finest technology in the world today, very updated, very -- better technology. We will be ahead of other competitors with the new line coming in. So net, we should have a very significant number on the part itself. I think we would have something around INR 80 crores to INR 90 crores from the [ quartz ] itself.
Sir, what I was asking was that these players that you were talking about that not -- that have capacities to cater to the U.S. market, do they also have the good technology? Do they also have the quality products? Or are these just like Chinese machines that they are using and supplying to the U.S.?
See, I would not be in a position to comment on this official call for the other technology, okay? I can only speak about AGL's technology. I cannot speak something about others, okay?
No, no, I mean -- okay. Fair enough. I'll try to connect with you off-line. Sir, I'll try to connect with you.
Yes, yes. Off-line, anything is okay.
We have the next question from the line of [ Vikesh Parikh ] from Barclays.
Sir, I'd like to understand, initially, we used to have some hurdle on the export front because of the shipment being not able to go through. Is that being eased now?
Not exactly. The way shipment and logistics should be freely moving is not there, there is still a huge shortage of containers for some specific part of the world, and it is taking some time because suddenly, the export for [ various ] was not only just ceramic tiles had increased from India because people have chosen as the alternative partner now to India, that is why. So I think it's still normal.
And just overall turnover for this 9 months, sir, we can see there is a dip of at least 11%. Will it be safe to say that we can be looking at the third quarter -- we will be able to make up in the fourth quarter and we'll be ending somewhere around 10% kind of a growth in terms of top line?
Yes, yes, yes, 100%, right? I think 10% is sure, sure, 10% is sure, sure, we'll have.
Okay. And lastly, on the cost front, with looking at the gas prices moving up, do we envisage any -- we'll be able to comfortably pass on the price increase?
For the gas you are talking about? Or in general, you were talking about?
Gas in particular and an overall cost moving up?
Yes, yes. Of course, it will be passed to -- in fact, we have increased price in the 1st of January. We have increased our price.
Even the same trend of increase in the price due to the gas price, which has been already started from the 1st February of this month. So this trend will continue. Whatever any price increase in the gas part or other, it will be passed on to the customers.
We have the next question from the line of Dixit Doshi from Whitestone Financial.
Yes. I'm attending this call for the first time, a few basic questions. Firstly, in terms of tiles, can you give us a breakup of retail and institutional sales?
Dixit, first of all, a warm welcome to you to AGL meet. And I hope you will continue, and we will keep meeting here and then coming quarters also. As far as breakup is concerned, right now, breakup is not available with me. I would be able to send it to you.
45% is almost over 8 years. So we are targeting to 50% in the next.
See, historically, I can give you -- historically, what we were like, we were 60% and 40%, it was there. Around 40% was coming from retail and 60% was coming from institutions. Now AGL has become a very household brand. So we are converting it like this 40% is going to increase to 50% to 55%, and our institutional is going to be around 50% to 45%. That is what we are targeting. Exact numbers, we can pass it to you, but it's something around 50-50 right now.
Okay. And secondly, in terms of quartz, you mentioned that new plant is coming up. So how much is the CapEx we are doing? And what kind of revenue that CapEx can generate? And since this is the new plant, so whatever currently we are selling, that is outsourced from somewhere or did we already have an existing plant?
We have Kamlesh bhai with us. I would request Kamlesh bhai to reply on this.
[Foreign Language]
Okay. [Foreign Language]
[Foreign Language]
In fact, we are not outsourcing any quartz material. We are only manufacturing capacity. So from that, we are doing our -- this quarter.
Okay. [Foreign Language]
[Foreign Language] Because majority part is on the land and these buildings, that we all completed it, is our own factory. So the major portion is, again, is for the plant and machinery, core plant and machinery. [Foreign Language]
[Foreign Language]
[Foreign Language]
From the new plant only?
New plant only.
We have the next question from the line of Smitesh Sheth from Raedan Securities.
Sir, could you throw some light on the -- how is the domestic demand looking?
Domestic demand in this quarter has resumed back and the quarter demand, fantastically well for all the players. If you see, we could sell around 86% of our total sales has come from the domestic sale itself. It shows that the domestic market has resumed back, and there is a good demand in the market itself. Plus, if you see our numbers from all the 4 zones, we are almost 30%, as I said, from the -- each quarter of India, like Northwest and South. These 3 have done almost equal sales, 30%, 30%. It means all the sector -- all the segment -- geographical segment of the country is doing pretty well. Plus another one major thing is that all the macros are not still 100% resumed back to the business, okay? Recently, as I understand that the Mumbai as has opened its railways. Now some other part will be also funding some [ North ] part also. So considering that, the domestic sales will further increase in the coming quarter, and business is good, right? Now businesses have no issues with the sale.
Okay. So sir, my next following question will be...
I'm sorry to interrupt, Mr. Sheth, but the audio from your line is breaking.
Yes.
Yes. So am I audible right now?
Now it's better. Now better.
Yes, sorry. So following to the answer, next year, if we are able to grow at 25%, 30% and we have a limited capacity in terms of like we are working at 95% utilization, then that entire incremental growth we intend to outsource, sir?
See, practically, what numbers you are talking is not possible. 20% to 25%, if it is a small company, I think just one production line, they can grow. But the kind of large company, we are talking about AGL, which is a very large company, having 10 plants utilizing 95% capacity, having a 6,500 touch base points, it is very difficult to grow at 20% to 25% immediately. So I think it is not technically possible. We are very well structured right now. We are very, very structured right now. And we will grow the way we have been growing in the year toward 2021, maybe a little bit better than this next year. And accordingly, we will have our associates with us who will provide us enough materials to sell.
[Operator Instructions] We have the next question from the line of [ Rasha Saviri ] from -- an individual investor.
Am I audible?
Mr. Saviri, there is slight disturbance, background disturbance from your line.
Sure. Is it better now?
Yes, sir.
Yes, yes.
Congratulations on a good set of numbers. I would just like to ask for a clarification on a previous question. We first stated that it will be nearly 10% growth this year than last year. So that means we'll make a turnover around INR 1,300 crores. And for that, we need to do around INR 500 crores sale this year -- this quarter, sorry. Is that possible?
See, we have only just INR 385 crores in Q3, which was like partially open market. Q4 is going to be a completely open market. Q4 is going to be much better than Q3. So we are working. We are working hard to achieve those kind of numbers. But exactly, I cannot say what would be the last figure because it depends a lot on the political situation, social situation right now and a health situation. But I think the numbers would be much better than this thing, this Q3.
Okay. And one more question. In our investor presentation, there was a line about inorganic growth, are we planning to acquire some company?
See, inorganic growth is not necessarily to be done by acquiring a company. We have another way of growing inorganically. It's like getting more associates and outsourcing our product. So white labeling is being done already by AGL. We have the huge resources available in Morbi, and we are outsourcing with them. So that is the way we are going in, obviously.
We have the next question from the line of [ Manoj Shroff ] from MS Investments.
I just want to ask, what is the difference between the outsourced margins and our own company hold?
I would request Mr. Himanshu Shah to revert on this thing. Margins on outsource and our own, if you want to share?
Yes. Overall, in this -- in quarter 3, our major growth is also there in the tiles segments. So our own manufacturing and in the outsourced were to combine, there is a good margin we are able to achieve in this quarter. But actual number right now, not having about what are the percentage in outsourcing and what are the manufacturing. So if you can ask me later on, then I will definitely provide you with the actual numbers.
I just want to know the EBITDA margin difference. Is it very marginal difference or...
EBITDA margin in tiles?
Yes, in between of the outsourced associates and our own?
See, outsourced activity is probably -- and when we talk about the outsourced activity, then we should -- I think should go for the EBIT margin because there are -- we are not utilizing our own manufacturing capacity so the present also not there. So as far as the output is concerned, almost around 20% is the gross margins that is being there, but which product to product is different, in a high premium product, high side, the margin is very good compared to the [indiscernible] material. So which depends on the size and in which quality that you are dealing with.
Okay. I was trying to figure what is the difference between our own EBIT margin when we manufacture in our own plants versus our associates?
We'll get back to you on this thing. Right now, the figures are not in handy. So we'll get back to you.
We have the next question from the line of [ Keshav Anand ], an individual investor.
Yes. Congrats for the good set of numbers. This is the first meeting that I'm attending for the Asian Granito. I just want to understand a couple of things. The first point is whether all of your gas -- I mean, all of your factories are enabled with the gas. If not, what is the plan to move from the pet coke or coal to gas? And how the raw material pricing is going to impact your margins?
Mr. Keshav, there was an order from Supreme Court in 2018, which has stopped all the pet coke or coal gas activities in Gujarat specifically. So as of now, just for your permission, there is no company which is running on pet coke or coal gas right now. Everybody mandatorily has to use natural gas, PNG, CNG, et cetera. So those kind of gases are being used. All the companies using right now the natural gas only. In some places, we have the gas on the marketable companies, which are like some of the semi-government and private companies and some where we have get it directly from the government company, government on PSUs also.
Okay, okay. That's a great thing. And the other question was regarding -- there were some shares which were pledged, right? I think it was pledged and -- in the name of the -- I mean, pledged with the stock broker. So is there any specific reason for that? Because as per the filing given in NSE and BSE, it has been mentioned that the reason is for the personnel.
I would not be able to comment because I am from the management side, basically, and I can only speak about the operational issues. This issue, we have noted down your find, and if possible, we'll get back to you on this matter.
We have the next question from the line of Devanshu Sampat from Yes Securities.
Even I'm attending a call for the first time. So just wanted to...
Pleasure to have you here for the first time, and I hope we will meet continuously from Yes Securities.
Yes, sir, yes, sir. Sure. So just one question. So on hearing a call of one of your peers, they had mentioned that exports is not an area that they are already keen on because it is not as lucrative as compared to the domestic market, where you can create a brand and you can sort of own better margins. And usually, exports are generally rebranded or something of that sort when people sell abroad. So -- but what you are saying seems to be a little different. So can you give your view on this? And is there any breakup in terms of like how much of whatever you're exporting, is it all of it branded? Or is it even the non-branded products also you've been selling?
See, your question is very valid. And whatever the comments have been made by the peer companies must be valid also for them. As far as AGL is concerned, we are a Gujarat-based company, and we are very, very close to coastal area. Okay, all the production activities, which are being taken is mostly in Morbi or Himmatnagar, which are like very, very close. So our logistic cost per square meter is comparatively 1/3 or 50% of the companies which are having their activities in the northern part of India, near Delhi or New Delhi or something like that. So we become first primarily very competitive as far as export market is concerned. That is why our export is very good.And second, when it comes to branding, see, it's a leadership. Somebody can be a leader in micro cities or somebody can be in like a Tier two, Tier 3 cities, we are the largest brand right now. And similarly, in export market, AGL is a very well recognized brand, okay? And the people, they come back to us repeatedly. Their orders are being placed by them. It means our brand is very well accepted, and they are aware of AGL brand. And second, if we see the basket, what we have, the number of countries, we are exporting more than 100 countries right now. Until last year, we were exporting to 70 countries, and this year, we have entered another 30 countries, which is a significant growth in the market size or the geographical size, I would say. It shows that AGL brand is a very strongly recognized and accepted brand globally.
We have the next question from the line of Dixit Doshi from Whitestone Financial.
Yes, first question is regarding -- since you mentioned that we are running at 95% capacity so going forward, let's say, even if we grow 10% next year, post that, we will require a fresh capacity. So are we planning for any greenfield or brownfield or we will go JV model?
See, we are open for any idea. But definitely, there is nothing on the card right now for brownfield. But anything for JV models or anything for outsourcing and adding more associates, we are open. And we will be adding definitely more associates in coming years. And our team, we have a dedicated team for outsourcing. In fact, a very huge team we have for outsourcing. And they are continuously working on getting new products, new partners for this kind of a thing and adding larger associations basically.
Okay. And sir, in quartz, what would be our realization per square feet or per square meter?
I would request Kamlesh bhai respond to this, please.
Normal domestic market is 15 mm. And the realization is 150 to 200. And the international market, 13 mm thickening is about 300.
This is the operator. Management, that participant has just got disconnected. Should we move to the next question?
Yes, please go ahead.
We have the next question from the line of Anish Jobalia from Banyan Capital.
Hope I'm audible to you.
Mr. Jobalia, you're sounding distant from the instrument.
No, I'm -- is this better now?
One moment.
Yes, is this okay, my voice?
Yes, please go ahead.
Yes, yes. So sir, I just wanted to check in the last call, for the quartz business, you had mentioned that we are looking at some INR 150 crores of sales in the next year. So I just want to understand, this time, you mentioned some INR 80 crores to INR 90 crores in the next year. So what is missing? Like, are we looking at INR 80 crores to INR 90 crores on the new plan and total INR 150 crores? or I mean, we are just looking INR 80 crores to INR 90 crores of revenues from the quartz in the next year?
Sir, you rightly understood. It's the total sale we are talking about.
So total sales is INR 150 crores, right, which was mentioned in the last call?
Yes. We're adding a line, which, like our Chairman just mentioned, that we are adding a line and we are investing around INR 35 crores. That will contribute. And in total, sales would be approximately INR 150 crores.
Okay, okay. And sir, what the long-term plan [indiscernible]? How lucrative is this business for us to keep scaling this out, invest in this business in terms of market opportunity, given the antidumping tailwinds that [indiscernible]?
Anish, I would insist, first of all, that we are a ceramic tile company. And our parent business is basically ceramic tile and polished tile. We are a manufacturer of ceramic and polished tile. But we would like to carry a large product market because we are as of now in India having largest product market. And quartz is one of them. Quartz is an ingredients in carrying the basket. So we have added quartz. But our main focus is on our business, basically, which is ceramic and polished tile manufacturing and trading and exporting. So yes, it is important for us, and it gives us a very good margin. It balances our margins impact also. So we will continue. We will increase our capacities in quartz also. But definitely, our focus is on our core business.
Ladies and gentlemen, that was the last question, and we will now close the question queue. I would like to hand the conference over to the management for closing comments. Please go ahead, sir.
Thank you very much, Melissa, for hosting us. I thank, Vineet and the whole team. And thank you very much for all the participants from my side and from our Chairman and Managing Director; Mr. Mukesh Patel and Mr. Kamlesh Patel, who were present in the call. I thank, first of all, to all the people, those who have been continuously participating in this call and the newcomers also. Welcome, and thank you again to all of you.
Thank you, gentlemen. Ladies and gentlemen, on behalf of Monarch Networth Capital Limited, that concludes Asian Granito India's Q3 FY '21 earnings call. Thank you for joining us, and you may now disconnect your lines. Thank you.
Thank you.
Thank you.
Thank you.