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Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Good evening, everyone. Welcome to Kajaria Ceramics Investor and Analyst Meet. On the dais we have Mr. Ashok Kajaria, the Chairman; Mr. Chetan Kajaria, the Managing Director; Mr. Sanjeev Agarwal, the CFO; and Ms. Pallavi Bhalla, GM Investor Relations function.
We will commence this forum with the opening comments from Mr. Ashok Kajaria, after which we will throw open the floor for questions and answers.
Please note that certain statements made by the management may be forward-looking within the meaning of applicable laws and regulations. Actual results might differ substantially from those expressed or implied. Kajaria Ceramics Limited will not be in any way responsible for any actions taken based on such statements.
Over to you, Kajariaji.
Very good evening, everybody. I'm delighted to welcome you to the quarter 4 F '23 and financial year '23 Analyst Meet of Kajaria Ceramics Limited. Today, I have with me my son, Chetan; our CFO, Sanjeev and Pallavi Bhalla from Investor Relations.
Good to be back for a physical meeting. The year '22, '23 was full of challenges, mainly due to high inflation and gas supply disturbance. Gas prices went up, gas was cut in our northern plants, and the spot prices more than double of the normal prices. However, things have come back to normal.
The tile market in '22, '23 is around -- this is important for you to know, the tile market in '22, '23 is around INR 42,400 crores for domestic and INR 17,500 crores of exports. So the total size of the tile industry now is INR 60,000 crores. I'm happy to inform you that in spite of difficult year, your company has sold 101 million square meters of tiles in the year '22, '23, a milestone for Kajaria, and it has taken almost 34 years to do it. We are going to double it in the next 5 to 6 years.
Exports from India, the Indian tile industry has demonstrated impressive performance in the international market. In the fiscal year '22, '23, the industry recorded a significant export value of INR 17,500 crores, as I said, and a notable increase from INR 12,700 crores in the last year -- previous year. It's been a quantum jump because India per se is a very, very competitive producer.
The largest export market for India has been U.S.A. as #1, followed by GCC countries such as Saudi Arabia and the UAE. The achievement highlights are the industry's strong presence in the international market. One of the most important Kajaria strength is a dealer network across India, and you'll be happy to know that we had dealers get together at Pattaya, Thailand from 4th to 6th of May, and Ranveer Singh was there with us, along with Akshay, he is also the new brand ambassador for tiles.
As of now, we have 1,840 dealers dealing directly with the company, and we are planning to add approximately 150 dealers every year for the next 3 years. These dealers will be mainly in semi-urban areas. Earlier, what happened, they used to buy from Morbi because of -- before GST, pay in cash and buy. But today, with GST coming in, all of them want to have good showrooms and make their presence felt in the market. Your company spent INR 108 crores in the brand promotion for the year '22, '23.
And this year, our vision is to spend about INR 135 crores to INR 140 crores for brand promotion. Our effort is to reach to any market possible in smaller towns, make dealers and make their showrooms.
[Foreign Language] And as I said many times that we want to cover every single Lok Sabha constituency. I'm happy to tell you that by September this year, we'll be covering 522 Lok Sabha constituencies out of 542, the other 20 can't be done because of various reasons.
Growth story in smaller towns. I would like to share some stories in smaller towns, states such as Bihar, Andhra and part of Kerala. People have grown phenomenal growth due to making state-of-art showrooms and the person behind the show. I will give you -- I will start with 4. This data is comprising of 4 people.
The one is -- first one is Anand Marble from Jhanjarpur, Bihar. If anybody is from Bihar, he would know where is Jhanjarpur is there, but most of the people won't know. This person met me in our dealers get together on 9th of May. [Foreign Language]. I knew he was from Bihar. I didn't know where he was. [Foreign Language]
He met me again in August, and he said [Foreign Language]. I went to open the showroom along with some of my colleagues from Calcutta and Delhi on 9th of December. He opened 15,000 square feet of showroom in a place which has a population of 70,000 in Jhanjarpur where you haven't heard. It is 1 hour from Darbhanga on a highway, and it was a 4-story showroom. First -- ground floor and first floor was exclusive Kajaria. Second floor, he made 2 bedrooms. I said, why? Why have you made bedrooms? [Foreign Language].
This is a village. They don't have any place to stay. Then they put 12 desktop computers. And I said, why you have put computer? [Foreign Language]. And third floor is empty. So this is the kind of progress. If you see the numbers, I think it is on the screen. From INR 573 lakhs he has rode to INR 793 lakhs, INR 1,359 lakhs. And this year, he will do a sale of INR 20 crores. That's what he has committed.
From there, we went to a place called Madhubani in Bihar where some of you might have heard because it is famous for paintings. There this guy, if you see, again, a small town of Bihar -- INR 485 lakhs, INR 999 lakhs, INR 1,884 lakhs. And this year, he will do about INR 24 crores.
Third is George Kaitharan, this is in Kerala. If you see the numbers, 2021, he was at INR 248 lakhs, INR 1,466 lakhs, INR 3,658, INR 36.58 crores. He is now on #5 in Kajaria. He just got an award recently.
And the last one -- this associate. This is because of our south plant at Kalahasti. It is between Tirupati and Kalahasti, and he has about a 4,000 square feet showroom. 2021, INR 1,073 lakhs, INR 1,356 lakhs and then he has doubled to INR 2,561 lakhs and the growth is there.
So this is where the action is happening in smaller towns. This is where we are going to reach. This is our target is because earlier, all these people, most of these people used to buy tiles from Morbi paying cash, and that scenario has changed and they want to join a brand, be it Kajaria, be it Somany, be it Johnson. They want to join a brand and deal directly with the brand because the concept of wholesale is finished in the concept of retail.
As of -- our vision for '23, '24, volume growth of 13% to 15%, revenue growth of 14% to 16%. EBITDA growth, EBITDA of 14% to 16%. Introduction of GST and effective implementation of e-Bill help in curbing tax evasion, and this applies to all branded players in the country. The recent GST collection of INR 1.87 lakh crores for March received [Foreign Language] -- data came out on 30th of April is a proof of this. This will benefit the organized sector.
As we all know, general elections are in 2024, that's time for Central and State governments to infuse more funds for infrastructure, development like airports, hospitals, educational institutions, upgradation, innovation of various government properties. These factors will further drive business for this industry and probably it should start from October this year.
With untiring efforts of our channel partners and employees today, Kajaria is placed at #1 in India and 7th largest in the world. We are committed to our growth strategy, which includes expanding the market share, increasing the number of dealers across India, especially in areas where we are currently not represented.
Once again, thank you all for your attention and support. We look forward to an exciting and successful year ahead. Thank you, and [Foreign Language].
Thank you, Kajariaji. We will now be happy to take questions. [Operator Instructions].
This is Chetan Shah from Jeet Capital. Thank you for a very brief and wonderful presentation. Just 2 quick questions. Sir, you mentioned that you want to double your sales from 101 million square feet to about 200 plus in about 5 to 7 years.
5 to 6 years.
5 to 6 years. So can you just guide us in terms of your capital expenditure? And how do you want to increase your capacity in that?
And sir, second question you very briefly answered about domestic market and domestic opportunity. Can you tell us how we can be the global or export opportunity for India in terms of the tile industry and also Kajaria in specific?
As far as doubling -- as far as doubling of the capacity is concerned, in 5 to 6 years, as I just said, our vision is to grow at 13% to 15% in volume every year. It's as simple arithmetic. The capacity has to expand and depending on which market we are feeding. If it is a North and East, we put our greenfield plant because all our existing plants are full of capacity.
If it's West and South, then South we will expand because both the current plants in South at Kalahasti and Southeast Asia, we have a room to grow and if it is West, we'll do some outsourcing, something like it. So as far as that is concerned. Every year, I think the CapEx will be of the order of INR 250 crores plus because you have to add additional capacity of anywhere between 14 million, 15 million, 16 million square meters, some by way of outsourcing, some by way of our internal capacity. As far as export market is concerned -- I'm clear? My message is going -- as far as export markets are concerned, let me tell you that India is the most competitive producer along with China and the world today. Our export last year, if you recall, I had said that it will be between INR 17,000 crore to INR 18,000 crores in the very beginning. It has touched INR 17,500 crores. I'm sure my personal perception is, this year it will be more than INR 20,000 crores because we are very competitive. We are taking market share from some of the developed countries like Italy and Spain.
Spain for your information is exporting 82% of its production. Their domestic consumption is only 18%. Italy is exporting 72% of its production, which means their domestic consumption is hardly 28%. A tile which Europe sells at $20 per square -- EUR 20 per square meter, India is selling anywhere around $10 to $11 per square meter. So you, as a country, will be taking that market share.
Saurabh Jain from HSBC. Sir, first, one clarification first. You said your EBITDA growth will be 13% to 16% or 14% to 16% EBITDA margins. margins, right?
I said volume growth 13% to 15%, revenue growth, 14% to 16% because of value addition. Price will not go up this year because the gas prices have come down. And EBITDA margin of 14% to 16%.
And secondly, when you say 13% to 15% volume growth, that means you might require a total 13 to 15 MSM this year, right, additional MSM? Can you split that out for us where it will come from? Because I think partially your Gailpur plant will be shut down for some time this year. And then we have about 1.8 MSM from Sikandrabad, right?
Your voice is not clear.
Sir, my question is that you said 13% to 15% volume growth, that implies addition of 13 to 15 MSM this year. So can you split it out for us how much of that will be coming from own manufacturing plant and the JVs and outsourcing?
Details I can't give you, but partly it will come from our existing plants, partly from outsourcing. We are doing 3 CapExs. One is at Gailpur where we are replacing 2 old kilns of 25 years back with a new kiln, which should be commissioned by 31st of July. Sikandrabad, we are expanding to value addition, value-added tiles, big tiles just like what we are doing in Kalahasti about 2.4 million square meters at the CapEx of INR 80 crores. So I think these 2 plants plus our existing plants will give or some outsourcing will be there.
No. So why I'm asking this is because Sikandrabad, l think net addition is only 1.8 MSM. Is that right.
No, it's 2.4 million square meters now.
2.4 million square meters. Okay. And then Gailpur, will it also see some shutdown in this quarter? For this modernization?
No. No. Yes. It's -- those 2 lines are already -- not shut down. They are sold. They are cleared and sold. Don't worry about that part. What I will do at Gailpur and Sikandrabad, that's not your concern. Your concern is that Kajaria should do a 13% to 15% volume growth. Let's not go into the details right now. Any details we'll share later.
That's helpful. Why I'm asking this is because...
You see. No, no, do not ask too much things. In spite of a difficult year -- see, please understand in spite of a difficult year, which I've been saying for the entire last year, we grew at 11% volume terms. And now, as I said, the markets are positive. Cost of fuel has come down. The last year was a very, very difficult year from July to December. We didn't know whether we will get gas or not, the gas -- gas supply was cut in our Gailpur and Sikandrabad plant. Gas prices hit the roof. The spot prices were double still we could do 11%, so don't worry about that, where it will come from, it will be 13% to 15% volume growth.
I appreciate your response. Probably I'll take more details later. Second -- third question is that, can you also talk about how you're planning your digital spends for 1-year or 2-year time frame because a lot of focus by other companies has been on social media?
[Foreign Language]
Maybe I have to shout. So what I'm asking is, can you talk a little about what are your plans on the digital spends for this year or next year because a lot of focus has been put by many companies on this front, like social media, like any influencers you're planning to hire or...
Chetan.
So roughly, our digital spend, this will be INR 7 crores to INR 8 crores, which is OTT platforms, online media and social media, as you said. Rest was spending money on cricket, airports and other media like hoardings and all basically.
Okay. I was asking more from the social media point of view like...
INR 7 crores to INR 8 crores, the digital media.
And how is it going to increase for the next 2 years? Any thoughts on that.
Every year, it will increase gradually.
Sneha here from Nuvama. Just a couple of questions. In the start, you actually mentioned that industry size has become INR 40,000-odd crores. INR 42,000 crores. So just wanted to understand on that front. Until last year, we have heard a different number. How did it -- how did that change so substantially, some clarity over that?
About the Indian market?
Right sir, the domestic market.
Indian market, March '22 was INR 40,000 crores domestic and INR 12,700 crores of exports. And in March '23, the domestic industry has grown by 6%, exports have grown, of course, at much higher pace from INR 12,700 crores to INR 17,500 crores.
Right. So but a few years back, we were speaking about INR 30,000-odd crores number. So I just wanted to see the substantial difference there.
Current year? We have accepted that. Yes. You see the Ceramic World Review, which is an authenticated magazine coming out of Italy, they changed the numbers. Earlier, the number shown was much less for India. As you all know, Gujarat is a big capacity. So they did an independent survey at Gujarat and found the capacity is much higher. And last year, in the magazine, they said the Indian capacity is -- the Indian production is 2,550 million square meters. We have accepted that, which is actually a fact. We thought it will go gradually. But if they have put it, it's like that. And that's the number which we are talking about today. You are -- you see, if I take you 5 years back, China was 7x bigger than India. If I take you today, March '23, China is 2.5x bigger than India. So that much India has progressed and China has come down slightly.
Understood, sir. And sir, secondly, on the margins front, we have seen substantial improvement on the Q-o-Q front. What has been the ad spend for this particular quarter? And also gas pricing if at all you can give the breakup, you always give plant-wise how have we fared?
Gas prices, I will request Pallavi to talk about it. She has all the data.
So ad spend for this quarter is around INR 32 crores and for the year is INR 108 crores. On gas prices, for the quarter, it is around INR 46 per SCM. And if you -- for April, this number should be around INR 40 per SCM.
And plant-wise data if at all you have Pallavi?
Yes. So if you talk about North side, North is around INR 40 SCM. South is around INR 55 SCM and West is around INR 41 SCM, INR 42 SCM. INR 43 SCM is North, yes.
Sure. Sir, one last question from my end. You mentioned that you want to double the turnover in 5 to 6 years. You also gave export growth potential, like you're looking at INR 17,500 crores going to INR 20,000 crores next year. What's your outlook on the Indian tile industry, domestic market? How do you see the growth fairing out maybe 3 to 5 years' vision there?
Indian industry domestic should grow at 6%, 7%, 8%, should grow at every year. Gas prices have come down, as we all know, in Morbi also. It's come down by almost 25% in the last 2, 3, 4 months. So it should also grow at 6%, 7%, 8%. But I'm very confident that exports will grow more exponentially. It will definitely grow at 25% plus in this financial year. [Foreign Language] you are a very competitive player. And you are taking market share from a lot of the organized players in Europe because we are competitive.
So just to extend the last question. So your comment about the INR 60,000 crores of industry and you said export will be growing faster than domestic. So this number from a current level to the next 5 to 6 years, the industry size, where do you see, sir? The INR 60,000 crore number?
Industry size should be more than INR 1 lakh crores. [Foreign Language] Just a quick calculation since you asked it should be INR 1 lakh crore plus, where exports should be almost to the extent of INR 35,000 crores to INR 40,000 crores. It's doable, it's doable.
Second question, sir, for the full year, how much price hike we have taken against the gas price increase?
Last year?
Yes, FY' 23.
None. Because gas -- sorry, last year, some price hike was there. But this year, there will be no price hike. Last year, the price hike should be about 4%, 5% only because earlier year 2020, '21, '22, the overall price hike was almost 11% to 12%.
Okay. Against the RM inflation sir? Raw material inflation?
Raw material inflation has come down.
For the full year, how much raw material inflation?
Last year?
Yes sir.
Close to about INR 20 crores on 2 fronts, some raw materials and some packing boxes -- packing material. And that has come down now.
So that is for the full year impact?
Full year. Full year.
Rahul Agarwal from InCred. Sir, you guided for revenue growth being higher than volume growth. We are also saying that prices won't go up it's purely mix improvement is what we expect?
Due to some value-added materials like in Sikandrabad, we are adding 2.4 million square meters, that's all value added. The plant is being converted to value added. Gailpur, again, when we are putting a new kiln, removing the 2 earlier kilns that's all value-added bigger tiles of floor in ceramic. That was making wall tiles. Now it will be making value-added floor tiles, bigger size. So something will come out only out of value added. Prices per se will not go up this year.
Got it, sir. Sir, margin guidance of 14% to 16%. We are almost 14.6% last quarter. I think it's a bit conservative. Are you building in like conservatism here?
I'm conservative. I have seen a very tough last year. So I'm conservative.
So they is the potential to build that.
[Foreign Language] But I'm taking on the safer side because we have seen a very tough year last year. So I want to be a little conservative on that front. I can tell you only one thing that the mood is positive, at the ground level, on the sales, on the gas sector, all is positive. But that angle, I'm taking a conservative approach.
And apart from the price, the supplies are normal now?
Yes, yes, absolutely. Absolutely.
Okay. And sir, lastly, on competition, our interactions with some other brands, they tell us they'll grow 20%, 25%. They've got some private equity money. Do you agree that organized market share will actually be more fragmented and divided between more organized players?
No, no, you see, organized players per se are doing well and will do well because of GST. Now when you talk about the 2 players who have taken money, they're also part of organized. You see once you have come to that level, where you have taken money and your market cap, [Foreign Language], although it is not listed, but the market cap is around INR 2,500 crores, INR 2,400 crores. They have to behave like organized and they would like to come to organized. You see some people in the organized sector will go away. And some will come in. So it's a positive thing because if the industry grows in a positive manner, it's good for everybody.
But compared to last 5 years versus next 5 years, next 5 years, we'll see more organized competition also, right?
See, today -- tell me one thing. Before GST -- Let me take you before GST. I think all of you are aware of what was happening before GST. [Foreign Language] Because I was totally evading taxes and the taxes were in the range of 28% to 32%, depending on the state where you live. If you are in Delhi, it is 28%. If you are in UP, it is 32%. Do we all agree? Today, after GST, GST started with 28%, then after 4 months, it was reduced to 18%. 18% is a GST on all tiles, sanitaryware. We get a moderate of 5%. So the net impact of GST is 13%, right? [Foreign Language] We have seen whether it's Kajaria, Somany, Johnson, we have seen where people have, you know 0 tax, no tax. Today, you are talking about instead of 13, somebody will be 11, 12, here and there and how does it make a difference? And GST, as we all aware, in the room, that they have tightened the belt in the last 2 years. Today, if you are caught in GST, you're finished. Your career is finished.
They are saying forget about what you have done in the past. If you are [Foreign Language] doing in, GST and you're caught, you're gone. So believe me, the organized sector will grow and not only the manufacturers, I'm talking about dealers. [Foreign Language] They are opening more and more showrooms. Our #1 dealer comes still from Coimbatore. He did a turnover of INR 88 crores with Kajaria. He is #1. He is #1 in Somany. He is #1 in Kohler. And you will be surprised his own turnover, which he said is INR 400 crores for ending March '23. He has 13 showrooms of his own in Tamil Nadu only. And he has 400 salesmen selling that. [Foreign Language] In South, there is no such thing. Everything is there. [Foreign Language] So that's how it is the industry is progressing. And believe me, GST, I have said, and I'm saying again, GST has been the biggest game changer for the entire origination. [Foreign Language] you can imagine our situation, what we have seen. And still, we have grown over a period of time. So I would say the growth is going to be faster and faster. There is no looking back.
Ashokji, you've been talking about the export front, INR 17,500 crores now and moving up to INR 30,000 crores probably in the next 3, 4 years. Could you give a flavor of what kind of value these tiles are selling at? Is this the mid-segment? Is this the higher segment or what?
This is -- most of the exports today are glazed vitrified tiles. Glazed vitrified that is a hard segment, you can say. Because you are taking -- because glazed vitrified tiles, what is coming from Europe also, as I said, they are basically exporting only glazed vitrified tiles, whether Italy or Spain or any other European manufacturers. You are basically taking away their market share gradually. You will take their market share more and more. The price difference is too high, the product is same or better than what we are giving.
And the most export out of INR 17,500 crores you can say is from Morbi. Out of that, I would say INR 16,000 crores plus is from Morbi. [Foreign Language] But most of the exports are from Morbi. There are almost to my knowledge, I may be wrong or right, there are at least 65 units in Morbi out of 600, who are only doing exports, only doing exports. They're also making ceramic, they're also making glazed vitrified. Most of the thing is ceramic, and glazed vitrified. Polished vitrified [Foreign Language].
So this growth will continue to be in this segment as far as exports is concerned?
Yes. We are very competitive as a country.
And give or take, post-GST and now, what would be the differential that Morbi enjoys, say, over larger players like you?
I will answer for Kajaria. Kajaria before GST, the difference was as high as 40% to 50% in pricing. Today, it has come down to 20% 25%. So that gap has narrowed quite a bit. And that's where we will grow faster. If you take Somany, it should be 15% to 20% between Morbi and Somany.
This is Mohit from IIFL. So my question is on the sanitaryware, faucetware business and the plywood business. What is the outlook for FY '24? And if you could share how do you see this over a medium term, what is the kind of targets or opportunities that you see in this business? What is the kind of market share that you want to have, and any challenges that you have faced in the last few years in growing this business?
Faucet, sanitaryware?
Yes. And plywood, Yes.
We did INR 320 crores -- INR 320 crores last year. Our this year's target is INR 440 crores to INR 450 crores. Challenges, we have faced many because first few years for any business is very, very different. But today, that brand is in place, Kerovit brand is in place. We had a dealers get together a few days back , 4th to 6th of May in Pattaya. Lot many dealers are now coming to join that bandwagon. And vision is to grow at least 30% every year from here on.
This year, we'll grow faster over last year. Our base was [Foreign Language]. This year will grow faster. But from here on, after this, it will be 30% every year.
Sir, just to continue the previous question. So right now, our non-tile business is roughly less than 10% of the total revenue. So the way you explain about our 5-, 6-year plan for the tile business, where do you see this business growing in the next 5 to 7 years on the 3 segments.
Non-tile?
Non-tile segment. On what will be the revenue mix if I see 5 years from today?
[Foreign Language].
But it will also grow at a...
It will go at a faster pace. Non-tile will grow at a faster pace than tiles.
But do you see that market also expanding going forward? The way tile business has happened in the last 10, 15 years from India?
No. That market, we are very young. So it has to grow faster. Tile market, we are saying we'll double it in next 5 to 6 years, 13% to 15% growth. Bathware, sanitaryware as you know, we are a very young player. [Foreign Language] to catch up with the bigger players, but it has to be a gradual process. Similarly, in ply, I think they are also looking at that vision. So [Foreign Language].
Is there a different distribution structure or a sales structure, if you can give some sense on that. How that part of the distribution network which we are expanding...
No. Tile, we have 1,840 dealers as of 31st March. In tile, there are only dealers. They are no distributors. In faucets and sanitaryware, there are distributors who sell to smaller people, and there are premium leaders who sell from their showrooms. In ply it's a similar thing. They have distributors and dealers.
And sir, if you can share, is the gross margin different between them and the tile, or it's more or less same?
Yes, so gross margin is better in bathware as compared with tile. And it should be similar or a little lower than tile.
Chetan, a couple of years back, we had this issue with MDF in the country. People who had set up MDF plants were struggling. I believe things seem to have sorted out on that front. How has that impacted the plywood business in general, if you could explain?
So the MDF guys made a lot of money in the last 2 years because the demand for MDF has shot up. Now there's a lot of imports in MDF coming, especially in South India. And a lot of overcapacity also happening in this industry. So it is a cheaper substitute for plywood, but the market is -- currently MDF around INR 7,000 crores and plywood is INR 30,000 crores. There's a huge gap between both the segments and verticals. So MDF truly increased, but there's a huge gap between both the verticals as of now in the country.
So a sense of pricing of, say, MDF and plywood?
MDF is slightly cheaper than plywood and it's more mechanized.
So slightly cheaper means what, 10%, 15%?
Roughly 17% to 18%.
Sorry to inform just my younger son couldn't come. He fractured his right hand. He wanted to come out he couldn't come because he fracture his right hand. I forgot to mention.
In some of the quarters, before your competitor had made a statement about the tiles industry.
[Foreign Language] Yes, sir. better, better.
So in last few quarters, your competitor had made a statement about the tire industry that it is going through a difficult, there is overcapacity, lack of pricing power? And how do you respond to these statements? I mean, do you agree with this?
Industry is positive, as I said. Last year it was very tough because -- mainly because of 2 things: inflation and gas prices where you do not know what the gas cost will be, what they're pricing, there was a lot of uncertainty. All that uncertainty is over. I'm repeatedly saying that mood is positive on the ground level. Demand has always been good, except for a period of July, August, September because the interest rates went up very, very high. So things are very positive on the ground. You can be rest assured on that front.
Can you make it more clear? Your voice is not clear.
I think it was more coming from the perspective of -- it was coming from -- more from the perspective of the overcapacity in the industry and the lack of pricing power and not necessarily the gas prices or the struggle that the industry went through specifically in the last year.
Pricing power, cannot be. You can't have a pricing power. Then you're saying I have about 13% -- 13% to 15% volume growth. You have 600 players in the Morbi. So you have to strike the right balance. As I said, there will be no price increase in this financial year. The additional revenue will only come from value-added products.
Sir, Rahul again. Sir, one question on the industry. You're saying 6% to 8% growth, like largely CAGR. Obviously, we all know it's oversupplied right now. So at that pace, when does this equilibrium actually reach, right? I mean demand supply has to equal so that we all can be more -- we can execute pricing power. So at this 6% to 8% rate, it will take like at least 5 years for supply to meet demand? Like how will that...
You are forgetting the past when you put this question. It's not a standard answer. Why these units have come? Let me take you 10 years back. The units have only come in Morbi. We are all aware sitting in the room because [Foreign Language]. Am I right? GST has changed everything. Every year, if you look back before '20, every year, 30, 40 plants used to come. Am I right?
[Foreign Language]. I'm giving you all the data so that if I'm wrong, you can correct me. [Foreign Language] So why? Because the whole focus was [Foreign Language] 6 of March 2019, they were not allowed to use coal in that gasifier. So today, it's a level playing field. Please understand what I just said. The difference before GST between Kajaria and those Morbi players was 40% to 50%.
So it was a push here for Kajaria, right? Today, the difference has narrowed down for Kajaria to 20% to 25%. Automatically it will be up, demand pickup. So this is the change, basic change. [Foreign Language] But you understand these questions you will have the right answer. You will have the right. And not only Kajaria, I am very confident that people like Somany and Johnson will also grow faster. Will also -- they are all doing and trying to do a good job. Even one company from Morbi is a good friend of mine, simple, they will also grow faster because he's doing a good job. See, somebody is doing a good job, he is to grow faster.
This is Keshav Lahoti from HDFC Securities. I know it is already discussed, you said volume growth of 13% to 15%, but what I want to understand, if I see the past growth of industry have been 6% where you have just outperformed the industry by 1% or 2%, but you're pretty confident to grow at 2x of the industry. So I'm not able to understand what I'm missing why you are so confident?
You don't have to understand that. It's my job to do. I can't tell you everything, it's my job to do. I don't have to explain everything to everybody. It's my job to do. Don't have to understand everything. And can't -- everything can be explained in half an hour or 45 minutes. Sorry.
Perfect. Okay. So what's the idea about changing the capacity like moving to 5 MSM from 8 MSM in Nepal. Is it something related to demand or something?
We are putting up a capacity in Nepal. Earlier, we thought to put up 8 million square meters of 2 kilns. Looking at the scenario, we reduced it to 1 kiln, and we are going to put up a plant 5.1 million square meter 1 kiln, which will make both ceramic and GVT. And the current market size of Nepal is about INR 2,000 crores. All imports from India except 1 small plant, which is operating, 2 more plants are expected to come and the third one is from Kajaria. So that's the current scenario now. And all everything has been tied up as far as Kajaria is concerned, we hope to commission it by March '24.
This is Shubham Agarwal from Axis Capital. Questions on the export front. Could you comment what makes you confident that the exports from India are sustainable even over the next 5, 7 years because we've seen in the past that when exports decline, unbranded players start pushing material in the domestic market. So what makes you confident that, that is not expected to happen going forward?
In the beginning of this year, April, I told some of my fellow colleagues here who have met me that [Foreign Language]. I don't think people believe me because [Foreign Language]. By the time the data came and one of my colleagues told me who was keeping track [Foreign Language] which was even surprising to me because in the month of March, the exports was almost INR 1,800 crores to INR 1,900 crores, number one.
Number two, again, I'm repeating, India is a very competitive player. India, cost of production is very competitive. And just for your information, gas prices have also come down at Morbi by almost 20% in the last few days, 20%, 25%. We are even more competitive now. And please understand one thing. I repeat that for the benefit everybody. We are taking market share from some of the other countries. That's why the export [Foreign Language]. Lot of countries have put anti-dumping duty on China because they were dumping, one. Two, a lot of countries are averse to China till March. I don't know what will happen tomorrow.
But you are taking a market share from a lot of players like Italy, Spain and other players who were -- who are much more expensive, even Turkey for that matter. Turkey was a big exporter. You know what is inflation out there, 80% plus. So there, we, in India, are taking market share from these countries. That's why exports will go. And the current scenario, I don't say what will happen after 5, 6 years, but I can tell you, next 3 years, our exports will grow by 25% plus.
So that is a function of we staying competitive, right. So if -- that is a function of we staying competitive in the global market as a cost -- lower-cost producers, so we are in line with China right now. And if -- is there -- are there any anti-dumping duties that are expected on India because for any of the reasons from many of the places we export to U.S. sales are big client or GCC.
I answered that. Last year, there was little exports to Europe. You'll ask me why? There was a possibility that anti-dumping duty is going to be put India, China and Turkey. You know what was the duty, they put a 7% duty on India. This year, so much of exports will go to Europe because people are expecting very huge duty. Now 7% is nothing. When I said they are selling at EUR 20 per square meter, you are selling at $10, what does 7% mean. So a lot of exports will go to Europe also. [Foreign Language] Gulf, Saudi Arabia [Foreign Language] 41% anti-dumping duty. It is the second highest export market of India. After U.S.A. it's the second market. Third is UAE, but there is no anti-dumping duty because of bilateral trade.
Sir, my second question is, since there's so high growth expected in export. Are you seeing any more unbranded players putting up additional capacities to service that demand in the export market?
In export market?
Yes.
I said, you didn't listen. I said there are almost 65 players in Morbi who are exclusively working for exports besides other players.
Are they adding capacities is my question?
They have to find out. One plant has come by which I know Comet, which was a big exporter to Saudi Arabia. They have put up an investment of INR 400-plus crores to put to continue plus lines for export only. So export will go up.
So would you have an idea like what is the capacity utilization at the Morbi level from the unbranded players...
No idea. You have to find out.
Sure, sir. Sir, the second is, given your margin guidance of 14% to 16%, what kind of gas cost are you pricing in for the next 1 year so that you are able to deliver 14% to 16%? I know we are already at 14.6% and there is...
I'll give you rough data. I shouldn't give but I'll still give you. This year compared to last year, '22, '23, we at Kajaria will save about INR 150 crores on gas, fuel, gas fuel means gas only. Taking all the plants into consideration, out of that INR 50 crores will be passed on to the trade in terms of discount. [Foreign Language] But we incentivize the dealers so that they can sell more. [Foreign Language]. I hope that this year, we'll give you another INR 30 crores to INR 40 crores out of JVs extra, whatever we have done last year roughly.
My question is very simple. If you are putting factories in Nepal, what precautions you have taken?
Pardon me?
If you're putting new factories in Nepal...
[Foreign Language]?
For government instability over there.
No instability. [Foreign Language] But let me tell you off the record, there is no political instability for business. It's for political. They are -- it's like what happens in Italy. Every 6 months, the government changes the business continues, it's like that. There is no political instability as such. [Foreign Language]
To tell you honestly, me and Sanjeev are there 2 days back -- 3 days back. We met all the senior people, all is positive.
Thank you, everyone. You are now invited to join us for an informal interaction with the management and you can move ahead for some dinner and cocktail.