Kajaria Ceramics Ltd
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Kajaria Ceramics Ltd
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VP Strategy and Investor Relations. We also have with us Mr. Kartik Kajaria, who heads the Adhesive division. 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 a or implied Kajaria Ceramics Limited will not be in any way responsible for any actions taken based on such statements. Now I would like to invite Mr. Ashok Kajaria to begin. Thank you.
Good evening, Namaskar. I think for a long time, you wanted that [indiscernible] and it should be here. So they are here today. And also, I have Karthik, who is the allisonof [indiscernible] and my Ganan, who just completed the studies at UCLA America, and just joined the business from July 23. He is heading the additive division. So a very warm welcome to all of you. Thank you for sparing available time with us this evening.
This time, the format is a little different. I'm going to share a 3-year mission of Kajaria. What is -- what Kajaria is looking at for the next 3 years. Numbers had everything for the year, which has just ended for the quarter, just trend it is already with you. that can be part of the Q&A later. But we would like to -- I would like to share the vision of Kajaria for the next 3 years. Company at a glance 36 years of experience, presence in building materials segments like tiles, pathway, plywood and tile adhesives, 10 manufacturing facilities, 7 for tires 2 for [indiscernible], 1 bathware 7,000-plus employees. The turnover for the year ended is INR 45.8 billion for the year '24. INR 4.2 billion is a consolidated PAT. The PAT has gone up by 23% compared to last year in spite of a very difficult year, what we faced last year. Market cap, currently about INR 2.3 billion. market capitalization growth over last decade.
Benchmarking with best corporate governance experience and diversified professional board, effective risk management, transferring and detailed shareholder communication, no equity dilution since last 10 years. capital allocation strategy, which you keep asking all the time, CapEx met through internal accruals only. 40% to 50% dividend payout policy in place since last 3 years. So alike, you can come forward please. invest only in products or segments which can leverage brand or existing dealer network Invest in product segments will generate 20% plus ROC on a sustainable basis. Healthy balance sheet. Lean balance sheet to accommodate growth sound working capital management, net cash balance sheet since past 6 years, rated A for long-term facilities and A1 for short-term facilities by [ acre. ]
Our business segment, 89% is tiles, 8% is bathware and [indiscernible] ware, 2% is plywood and 1% in ads. Over the past few years, while we have identified intensified our focus on tiles and bathroom verticals, we have also extended our presence into plywood and the ads segments. Despite other than Tile segment is likely to grow faster than tiles, the later will still account for 85% of the total revenue by end of March 27. Tiles core segment. #1 player in India, as largest player in the globally, 7 manufacturing plants, our current capacity annual capacity is 86.4 million square meters. We sold last year 108 million square meters. Roughly, we produced about 83.5 million square meters, the rest was outsourced, INR 40.6 million consolidated tax revenue at high revenue in FY '24, 3,500 SKUs in tarts and 18,000-plus strong dealer network. Key business moat inherent step superior product mix, proven track record of execution, experience and retail sales team, strong manufacturing products, a robust supply chain, unprecedented focus on quality, which has been the fourth Kajaria for the last 7 years. Widespread dealer network; out of 1,800 plus 450 are exclusive showrooms and 70% presence in the retail segment. Normally, the industry norm is 50-50.
Super brand recall premium pricing versus peers, 10% market share in the domestic tile industry. The tile industry roughly, the domestic market is about INR 42,000 crores, and exports are about ending March is about INR 19,500 crores, which means the total tile industry in India currently is about INR 61,500 crores. Volume growth enablers. Market share gains to continue from user players. The key factor is GST. Domestic tile industry expected to grow at 6% to 7% CAGR over 242 sustainable of export growth momentum for mobile players to limit competitive intensity in the domestic space. Volume growth enablers. Incremental volume growth to be made through a mix of capacity addition, brownfield and greenfield and contract manufacturing, increased real penetration at Tier 3 and Tier 4 cities. Focus on adding exclusive showrooms, aggression in brand spend to continue. Focus to intensify on larger format tiles with upgradation of our manufacturing units in North and South India, Sikandrabad and Kalahasti.
Recent launch of luxury brand, Unicaratypes, Unicare run to add further premiumization. Creation of Pan India project team to intensify focus on government projects. Right now, we have a government team only for North India. We have decided to have strengthened it, and we are in the process of doing it by end of June. IT upgradation to improve business efficiency. Recent initiatives, which will take us to the next level premiumization. Recently installed continue apres line to enable us to significantly improve our positioning in large format types, slag, manufacturing, upgraded our Sikandrabad and Kalai plant, which has now started manufacturing high-quality premium types. Introduced significantly cheaper biogas well in North India units, which has made manufacturing very, very cost effective branding.
Our bank spend has stood at over INR 840 crores in the last decade, more than cumulative expense of 3 major listed players in the last decade. A&P spends for FY '24 stood at INR 131 crores. Major spends in '24 included spend towards creating more exclusive dealer showrooms, airport branding cricket and sponsoring for women's IP [indiscernible] CBT. Distribution. We have taking concerted steps to further improve our existing distribution network, increasing our pocket share is in existing dealers, while removing the nonperforming dealers. The year we ended, we have added 200 dealers. But at the same time, we have removed almost 150 dealers who are nonperforming adding more exclusive showrooms in Tier 1, Tier 2 and 33 cities and towns in particular.
We currently have presence in 1,000 towns in India and aspire to expand it to 2,000 tons over the next 3 years. Currently, as for government data, there are 4, 41, 41 towns with municipalities in India. Kajaria presently is in about 1,000. We hope to increase it to 2,000 in the next 3 to 4 years. Digitalization, we are also upgrading our IT-related infrastructure with recent reduction of SFA, which will improve employee productivity and DMS, which will increase business efficiency of our dealers at end branches. Key initiatives can [indiscernible] presses installed in our own manufacturing units at Sikandrabad and Kabasti. Exclusive showrooms opened in Tier 3 cities. You are seeing one Kushal Nader, Karnatka and one is in Rocha, group packaging company and many sectors. Of course, the RCB Women's team, which won the recent WPL. Focused on large format tiles and slabs, the bigger times which are -- we have started manufacturing now at Kalasiand Sikandaba. Key initiatives airport branding. You see Pegar everywhere in all the major and smaller airports Batra far as growing supplementary segment. Current positioning, we are there for almost 10 years, 10 years of existence. Kajaria is a brand name, synergy wear and faucet capacity of 1.2 million and 1.6 million pieces, respectively; 500-plus dealers, including 85 premium outlets. Premium outlet means a guy who has given us a good space of almost 1,500 to 2,000 square feet -- billion base revenue of 24%, 7.4% EBITDA margin in FY'24, 2% market share and 15% equity held by this bridge cross fund. Growth enablers. Increasing number of bathrooms in the structure state segment, Bathware industry will continue to grow in double digits over 24/7.
Higher penetration of premium products. Recently commissioned a state of our newer plant in Morbi to drive volumes and premiumization. It's absolutely state-of-the-art plant, expanding the existing distribution network focus on aggressively adding exclusive shows and brand spend to gain further momentum. [indiscernible] -- respond by Kajaria tile additives is taking a big space in the industry now because with the large format tiles coming in, especially the floor. They are only a -- they're only being put by additives that gives additional strength. This market has grown over a period of time. And currently, it is a INR 5,000 crore market. Kajaria's positioning is, it's been 3 years of existence. Presence in tile additives, routes and tile cleaners, [ Gabon ] is a brand name, currently an outsourcing model. Meanwhile, we are putting a plant at our Galfor plant very shortly, it will be commissioned by end of September. But of course, we have to buy regionally also because [indiscernible] is a very important matter and INR 50 crore revenue in F '24.
Market in growth enablers for editors, market share gains over a player unorganized players to continue. Our biggest strength is the dealer network because every dealer sells adhesives, right now, we will be selling other brands such as Latika, Roth, where but at the right now, we have faced only about 20%, 25% of our dealer network. Tiles industry to continue to grow 12% to 15% CAGR over 24 increasing acceptance of large format tiles and slabs. That is where the additive users is growing, significant scope to leverage [indiscernible] network. First manufacturing plant to be set up in Galp, I just shared. This should be happening by September 24, not FY '25, yes. outsourcing to continue for East West and South markets. Plywood diversified business segment. Now almost 7 years of existence, presence into blackboards, shutting ply and laminates, tears Kajaria is a brand name currently an outsourcing model and the revenue was INR 14 crores in Feb 24. Liberto industry to grow at 5% CAGR 24 market share gains over unorganized players to continue on a gradual basis. Plywood industry, however, is currently grappling with rising timber prices, which is like 2 to is over 12 to 18 months, focused on expanding the distribution network; 3-year mission, where we will be at Kajaria. 150 million square meters of tiles, revenue of INR 5,500 crores. Other segments should be around INR 1,000 crores. EBITDA margin, we are targeting at 15% to 17%.
EBITDA margin enablers. One, benefit of operating leverage. The realization across tile categories seem to have bottomed out. As we are aware, '22, '23 gas prices have gone up very much which came down in '23, '24. So some benefits have to be passed on to the dealers in the form of edition incentives. So there was lesser -- some prices have not been cut, but lesser price [indiscernible] Coalition across the value chain, scaling up in adjacencies to be margin accretive. EBITDA margin trajectory likely to remain sustained at 15% to 17% range, bearing impact of steep gas price molecule. Three-year road map, consolidated revenue, INR 6,500 crores, 3 years CAG at 12% INR 500 crore [indiscernible] were INR 675 crores about INR 175 crores and addressable be at INR 150 crores. Proposed CapEx every year may be INR 225 crores to INR 250 crores every year from '25 to '26. Thank you.
The floor is open for questioning. You can address who you want to answer. Ketan is here. Rishi is here, our CFO, Mr. Sauter -- and Kate is here. So you can say that who you want to address that?
Yes, please, Matt. Go ahead.
Good evening, sir. That is a very crisp presentation. Can you hear me now? Yes -- good evening, everyone, and that was a very crisp presentation. We haven't, in fact, the kind of upside that we were expecting to see in the tariffs to pick up in terms of -- can you hear me now? Okay. We were expecting the tire segment to do well in the second half, and we haven't seen the kind of numbers -- while the road map looks quite nice, quite promising as well.
I wanted to understand when do you think the tire segment is actually going to pick up -- do we see this happening from second half of FY '25? Or is it like the story is yet to start maybe from the third or the fourth quarter of FY '25? And secondly, of course, to the young generation, -- how do you see -- where is your vision in terms of files and on the larger scale, we're moving towards modernization of ties into table top to -- where do you see the tires business actually going forward from here -- so 2, 3 things.
What are we doing as a company? One, you asked that demand is not -- we are not able to sell that much. So as we are aware, the construction industry is now in the right front. And as they say, your tile demand comes 3 plus 2. So from this year onwards, we see a very good demand coming in for tiles. Number two, what have we done and what are we planning to do? At Kajaria, we have invested in technology. we have put in 2 continue plus lines in North, and we are the only company which has a plant in north and south of India for continuatechnology. So we are investing in technology. We are making excellent products, number one. Number two, we are training the people -- the dealer staff, especially in South, the showrooms are huge. They are 30,000 square feet, 40,000 square feet, they deal with multiple brands.
So what we are doing is like recently, I went to Kushal Naver was opened a showroom in Karnataka. I also went to Velor in NamilNadu. So while we are traveling around, we see potential is huge. But a lot of these dealers are working -- are working with multiple brands. So what we are doing is, one, we are working on our products, giving them good products. Secondly, training their staff, we are -- on our cost, we are getting these people to our factories like all the sold people are coming to Kalastifactory. We are training them, telling them about the product, giving them that energy to sell when they go back to their shop, they are so bullish on Car that over all the other brands, Kajarias anyway and clearly, we are spending a lot of money on brand
So fourth, we are also -- we have recruited people who are meeting architects and interior designers to push all our -- since -- as a company we're going more on value-added tiles, this is mostly sold by acidities -- so we are also keeping a team who's going to promote -- who's going to go and meet them. As CMB just said that we are also spending a government department. We just had a 10 people team in north of India. Now we have kept a senior guy, and we're going to have 30, 35 people team all over India, meeting only government projects.
So with all these moves, we are very sure that going ahead, we look at a very, very good year. The key is, as we said, in India, there are 4 towns. As Kajaria, we have just seen about 1,000 of them. The key is to make these showrooms and wherever we can to penetrate as far as deep in India, Mobara, Mara, Scooter. The only thing is to make showroom, showrooms, motivate our retail partners, motivate our dealers and make showrooms. [indiscernible] a Hanshanadia. Jaramarar, Presence Hogar, we have seen a drastic improvement in sales, drastic improvement. I do a very small example, when I went to Kushal Naga, the guided 5.5, INR 45 crores -- he says, sir, I will double it to INR 10 crores this year.
So my only point is that the potential is huge as keep as we keep on making showrooms, we are definitely there to achieve the growth. Yes, last 2 years have been tough, the volume growth has not been there, but we see the future very, very good.
So but then the elections, do you think your demand is affected. I mean we've lost 2 quarters, which is FY '24-- we think we're going to lose another 2 quarters of FY '25 as well because of elections. We haven't seen much pickup in construction as well as cement as well. So where do you see tiles, sir?
The year which went by has been one of the toughest years on the demand front. Now you ask why loans Jabil Water, Real Estate to boaters I'd say, tailcone degree. See, real estate was very bad for the last 7 years. [indiscernible] they sold their inventory, which was every day, the whole stealing is not a inventory, inventory. They're sold their invent. Last year, they started the construction we [indiscernible] Point. This was a year where they will finish the finishing part there pay entire Cheniere all will be. And we are confident enough bearing aside 1 or 2 months, which is election, you all understand. That 1 onwards is a very positive -- and we have already said that for the year also, that will be a low double-digit volume growth and 15% to 17% of EBITDA. So I think we are very confident.
And fortunately, we have shared our 3-year vision plan. So this will -- we have never talked before. This is the first time we are sharing this forum like this. And we are very confident that we are there and will be there.
I'll come back for more questions.
Should also address who you want to answer. My job will easier.
So this is the question for Suzi. The question is, how has the industry volume growth in F '24 and whether we have gained some market share of our positioning in the market.
Industry volume growth for the domestic market was almost 0. We at agri have only grown by about 6%, 6.5% in volume terms. So I don't think that's a big gain of market share. I won't call it -- but of course, exports have grown up drastically from the industry. And as we all know, it has gone up by almost 30% -- 25% to 30%. So that's the current scenario. And as I said, industrial should grow at 6% to 8% in volume terms over the period of next 3 years. and Kajarias growth will be better than that. There we are targeting for a volume growth of low double digit, which is anywhere between 11%, 12%, 13%.
And second question on the gas price correction. So in F 25, how much cost saving we can quantify from that account which account SP-6 Gas price.
There's no change in gas. F '24 has been a very normal year for that. The gas prices almost are the same as what it was in F '24. Quarter-to-quarter, it's almost the same.
No, no, I'm asking for the next year -- you said in your presentation that.
No, I said the F '24, F '23, the gas prices went through the roof, as we are all aware, F '24, the gas prices came down. quarter-to-quarter, there is no change in the gas prices for F '25 also as we see it now.
And then what is the total cost, the amount of spend on the advertisement branding for F '24.
F '24, we spent INR 131 crores. I already said that.
Hello. One more question.
No, not after [indiscernible] You can't ask too many questions.
This is Sudan from Kari Capital, and we are also into export and imports Quality and Karara are 2 sides of the same coin that's how you have progress in the last 40 years at home in your financials. And I think we need to give him a big round of applause. Please Sir, export, you mentioned 42,000 -- sorry, total turnover total industry is 42,000 and export is 19,000 -- now what is the growth you feel in export market and which country? Is it Africa, it is South America, North America, worry where is your presence is dominant in export. That's number one.
Number 2 is that what about your -- you are expanding from 4,000 city to 1,000 cities of India, what is your take on Northeast -- is there any notes 7 sister states some because 1 of the biggest state of India. Number 3 is that the urban and rural divide because low-cost housing is going to be dominant in the coming next 20 years. The demand for nominal, the cost-saving factor is going to be very, very interesting. So how do you now look this issue in the low-cost housing area. Number 3 and the last -- not the least.
Too many questions we can't remember.
One more because you remove you removed 10 million I mean not very good dealers, and we added 200. That means, actually, you added only 550 of them. So the effect is almost a low -- so do you think in this 400 new towns, you're going to be doing a real good dealership network. Thank you.
So replying to your question on, exports should grow by a minimum 15% to 20% this year also. The biggest export markets in the world for India is versus U.S., followed by Russia, U.K. and Europe. Your second question was the Northeastern states. We are focused there. And it is 1 of our target areas to how to increase volume growth there. We have a strong sales team based in Bengal and Katara and team-based there. Definitely will focus on that part also.
Your third question was the urban demand and the rural demand. Our focus is to penetrate more as we all said in the earlier presentation, also make more and more showrooms. The real growth is going to come in Tier 3 and Tier 4 cities going forward. And the company's focus is on making very good showrooms in those cities to tap the growing fund in these rural towns in Tier 3 and Tier 4 cities. The last question related to your low-cost housing, Kajaria, the premium brand. We cannot drop our prices too much because we were to maintain our margins also.
But we are doing projects on a case-to-case basis. where the margins are decent and the payment securities of utmost importance to us also. So all things being in focus, we have to take a very balanced approach in that regard for your fourth question.
Hello. I'm Smith Ash. Just one question with regard to demand. See, we -- as per presentation what we suggested 2 can be a revival for the tile industry and ancillary home industry. Plus from 1,000 towns, we are going to 2,000 towns, right? And right now, we are doing -- I mean, we have a limited capacity. So how do you plan to increase the capacity? And secondly, would we be able to meet the entire incremental demand if it comes through outsourcing what we are currently doing also.
There is no limited capacity, there's unlimited capacity. I mean, whenever we want, we can always scale up through outsourcing, that is always an option and our plants are very well equipped. So as long as demand is there, we are completely equipped to fulfill all the demands -- so capacity is not an issue. Does that answer your question?
Good evening, sir. Thanks a lot for the very brief presentation firstly. Just 2 questions from me. You mentioned about your growth targets and given your revenue targets, you've given your volume targets when we do some math on volume figure comes out to be around 12-odd percent versus your revenue CAGR at 10%. Just trying to understand what kind of product mix are you expecting to change? Is there any products which are expected to come at lower end because of which we'll be able to ramp up volumes and where they could be in a slight dip in realizations.That's my first question.
The current volume mix in our basket in ceramics is 43%. PBT is 26 and Vision -- what we're looking at is ceramics and PBT can grow a 10% volume growth, Go grow both 15% to 16%. So all the divisions will grow in the next coming 3 years to a in the numbers which is shown in the presentation.
So ideally speaking, JV, if I'm not wrong, is a better product in terms of pricing and in terms of realization, idle that should have led to. If it's 12% volume growth, that should have led to at least a 13% or 14% revenue growth. So that is some math I'm just trying to understand. So is it the pricing strategy, which is going to be more aggressive? Is it competitive intensity, which we are planning to address something there?
So right now, we're just looking at fulfilling the demand of the market. So whatever it is, however, it will shape up, we'll change our strategy accordingly. Right now, our only focus is volume, volume, volume. So right now, we're not making any product mix change. We have to promote all the 3 verticals you have to sell, whether it's ceramic PBT all are selling -- all have to sell as the market takes the demand, we'll do it. We are also working on, yes, value-added products, which takes a little bit more time to get established as they are -- as we're making showrooms as the despite the showrooms, yes, the margins will be a little bit better.
Understood. So when you're talking about it's large flat, basically, that's one product which I understand.
But the market size is very, very less for it. I mean we are working on it. We are trying to promote it as much as we can, but still the market the overall -- in the portfolio, it's very, very less. It's a very small percentage.
Understood, sir. My second question is related to CapEx. When you mentioned INR 250 crores of CapEx and your -- are we looking to add at least about 5 MSM capacity each year, that's the plan? Or if you could elaborate on your CapEx plans?
So these are now you have almost 7 Tai plants and 3 Santa and on faucet plant. So they're all regular CapEx -- any other -- whether you want to add some production. There'll be different CapEx. This is all the CapEx to maintain the plants -- regular CapEx.
So my very first question would be the coalition of a trading ceramic tiles filed a petition within U.S. International Trade Commission. to initiate an investigation to seek antidumping on times which have been shipped from India. Do you see any upside potential risk that multiplayers will start ultimately dumping their production volume in India?
So the U.S. market is only 7% of India's export turnover. If the duty comes out, we only lose 3.5% our exports will still happen [indiscernible] player. So it will not get a big difference in the entire export scenario going forward.
Okay. And my last question would be how exactly do you see this overall market panning out in next 2 to 3 years -- more of what exactly customers are preferring the design? Or are they preferring a big time? How exactly is in Tier 1, Tier 2 and Tier 3 cities.
See, what does the customer want? A customer wants a good product, a good brand, right? The designs are more or less the same. What type Kajarias making XG is making a similar kind of tile. The only way what as a company, what we can do is good products at good cost, good prices, again, as a customer, a customer who's in Jalgaor any other small city, what does it look for? He makes his house once or twice in his lifetime. When he goes when he wants to build a house, he will go to his -- he will go around in the market. Kajaria, yes, is the #1 brand in the country. Because we as a company spend a lot of money, and that's one of our biggest ports.
Secondly, by giving that experience of the showroom, so when a customer gets a good brand, a good customer experience is a showroom a good product. We perceive will you go to somebody else. That's what we can do. As a company, this is what we can do, right? Giving good products, good experience as a customer, a good brand, good well-trained staff to attend the customer. If a customer is getting all those factors, we personally feel of whatever experience we have in the industry and whatever we have -- when we speak to our dealers, we had a big dealer meet right now in Thailand about [indiscernible] is by -- and so we take all this feedback from dealers.
And sir, for sure, it is -- Kajaria is the #1 tile brand in the country, is my code. And as we are giving the right experience to our customer, we feel that he will not do anywhere else.
Hello. Yes. So over the past 10 years, we've seen 2 major events which has happened 2 major market sizes, which have formed where Kajarias not really been able to gotten a lot of market share. So when I'm speaking out exports from India is like you did like a INR 20,000 crore odd market, the adoption of tile rises which are on the INR 5,000 crores market. So that's almost half the market size of your current domestic market, which you are -- and we've not been able to be able to take advantage of it yet. So what are we doing now to ensure that any of the next big shift or big market size gets created, we'd be the prime manically obviously.
See, exports will always be a very low realization business, and we don't intend to do more than 2% to 3% exports because globally, we have not invested that much money in branding. You fight against the whole world. In India, as we said, we spent 800 stores in the last 10 years to build a brand premium. So exports is a very, very competitive market. You don't get the realization.
More we does that because they have to sell their production at the plant because they don't have a brand premium in the domestic market. Coming to a second question. We just entered a [indiscernible] 3 years ago. Now we started taking it very seriously. Our first plant is coming up in Rajasthan by September. That will give us a boost on our own manufacturing facility. And as we keep on going further, we'll take more tests to see how we can consolidate the position in this new segment, which we just recently entered.
This young man is handling the digital. So I don't move to this about that, is it.
So in FY '24, we grew at 42% from INR 35 crores to INR 50 crores. And this year, we're targeting a 70% growth to INR 85 crores. So we are being very aggressive in the segment, and we're targeting to capture as many dealers from our network as we can to sell our products [indiscernible] Kate is here and talking about that Adia?
Yes. So Kartik, you're talking about the growth near term. How should we think about the margins of this category, let's say, 3 years down the line?
So currently, we have EBITDA margins of around 20% and I expect that we can maintain somewhere around 18% to 20% going forward as well.
And should we expect any kind of CapEx in this because right now it's an outsourcing model?
Yes, we will have some CapEx, but it's not very expensive to set up a DC plans. And we are going to set up units across the country because it's a freight-intensive segment.
If I can ask Rishi or Jason on your sanitary here. So as our growth plan is quite aggressive, like talking about 24% kind of CAGR growth, right? And plus 2 should be applicable here as well the same amount of time.
So sanitary where we have done a lot of things, 30th March, we just opened a new plant in Gujarat the CapEx, which was approved by the Board. So it is 1 of the most -- very, very high-tech brand, producing very, very good value-added products. having a big launch in July, where we're taking almost 300 dealers all over India to the plant to book orders and to show them the plant.
So with sanitaryware, our phosphate range is anyway is very good. again, the model is the same. Again, here, we are again making showroom, showroom showrooms. -- armada Oita. Again, the penetration is the same. Sanitaryware finally, it's a big industry. again, when you're talking to dealers, we have talked to this dealer. He says, I'm going to open a showroom next month in Kanpur. It is open at 25,000 square feet showroom. 7,000 square feet is aqua and Artis, where he's given us 8,000 square feet of ties as well. He's been dealing with Jaguar for a while.
So what I'm trying to say is that, again, we have the same concept, chargeadeep penetration cutting in, wherever we can penetrate make showrooms that was the volume will grow. So we are again with this new plant, our product basket will be completed -- will be properly complete. We have all kinds of products, all ranges. And we're going to spend on brand and again, make shower dealers.
So size wise, we have been reached a reasonable size? And should we think about how company thinking about the margin versus the growth? So in terms of the margin in the next 3 years? Or where you think you can stable at what level and what time.
I think what we are really missing out is in the volume right now. So right now, we did INR 380 crores top line last year. And the vision is in the next 3 years to the vision is to double it. We are going very aggressive and the vision is to touch INR 700 crores to INR 750 crores of top line. If that happens, the marginal automatically come. Margin is not a problem. It's a good margin product. The only thing that volumes are not there, our expenses are more as the volumes increase, the value increases, the margin automatically come. It is -- it will be more than -- it will be in the similar lines of tires, not less for short, not less for sure.
We think in the next 3 years, we can reach, let's say, low double-digit kind of a margin in the catal low double digit or -- in next 3 years, can we reach, let's say, low double digit to mid-teens kind of margin.
100% For sure. Better than that. Better than that. Because even the plant which we have put, we're going to make much more value-added products where the margins are much better. So as the plant sale picks up, automate the margins will start getting better.
So sir, 2 questions. In your PowerPoint, you said realizations across tile categories seem to have bottomed out. I think in the last quarter, you said realizations are lower because of increased promotions by.
May I request people to introduce themselves and then put up the question. It will be better.
So my name is Venmo from JM Financial. We can't see you when number -- so my only question was, does the bottoming out of realization? Does it mean less promotions? Or is this due to larger talent sizes in the portfolio?
Have now not come down further. I will only be making at the same level to not go down more. That's what the bottom of realization sent means basically.
Okay. So next question is, so premium and especially elite consumption, it's really doing well. Premium tiles are a great segment. But marbles are the ultimate form of premium flooring, how are you convincing customers between the choice of tiles versus models?
Again, the key is making good showrooms and experience centers. Tires have a lot of advantage of Mabelin terms of the cost, the laying time and the consistency. So as you penetrate deeper with the larger format tiles in the slabs, which are equivalent to able automatically, the timeless large which is already happening in a lot of cities when we talk to dealers across the country.
Just to add to that for your information, a lot of projects are now taking times who used to take Marble, out of them are converting into times. So mobile industry is not growing, but tile industry as it is.
[indiscernible] here from ICICI Securities. I just wanted your revenue and volume mix for FY '24 in terms of the ceramic Pit and JV.
Yes. So the volume mix category-wise, ceramics was 43%. PBT was 26%. GBT was 31%. In terms of revenue mix, ceramics was 38%. PBT was 26% and GBT was 36%.
This is Anmol. I have a question that what are the key IT initiatives that we are going to take in the next 3 years as is [indiscernible] presentation as well.
You asked the key IT initiatives, right? Yes. The first, we're introducing the sales force automation concept, which will improve the efficiency of our own sales team. We have 155 sales force across the country. So they will be able to routing better meeting dealers better, they can open a lot of function in the app to manage the whole system. Then you also introduce a titer management system. -- which will help the efficiency of our dealers are placing orders garage to the factory, which goes through the sales coordination team right now. They can see the online, their accounts online. It will be very easy and efficient for them going forward once the whole system is introduced across the country.
So in your present Sameshima. In your presentation, there was a mention in reference to digitalization. I think the time when the come the time has come for digitalization of at least marketing and communication. You referred in your presentation to digital -- so that's what
Part the IT initiatives. But we're also spending money on digital marketing towards our brand. That's what we already have right now. every year, the budget is increasing for digital market, the Kajaria brand. That's also been taken care of Okay. In radio social media like YouTube and Instagram and Facebook and [indiscernible] way, that's already happening.
Yes. That's a wonderful thing. And the second thought was there is a serious push towards a portable and low-cost housing, are we contemplating to have a production line or a dedicated plant towards this segment catering of our guide.
First, let me tell you, some gentlemen also put this towards low-cost housing. Low-cost housing in India has paid. I hope some of you are aware of that. It has not worked the way it should have worked. Because aspirations of people have gone up, they are not looking for low-cost housing. Am I right? Please correct me if I'm wrong. So there's no question of putting a separate client and low-cost housing per se paid. As already said by agri a premium brand. So the question of low cost doesn't come.
Affordable housing is one segment which....
Affordable housing and low-cost housing are 2 different things.
Good evening. Ashaka from Matco Capital. Sir, I had 2 basic questions. One was on the demand side, you mentioned real estate demand comes for us. So last 3, 4 years, when I look at resale numbers of major real estate developers in India, they've not gone up by 10%, 15% between 3 or 4 -- and when I see our expectation or our projection of time growth for us is just 11%. So my question to you is, are we being conservative in this -- because if I look numbers we could be looking for a very serious upcycle for us. That's the first question. Second is.
I think people ask this question even without listening to what we are saying, right? Everybody asked real estate does body tailcone. I keep on answering this first inventory, we second [indiscernible] time year. right? But if you keep on asking the same question answer what he will do more than that tell me?
I'm just tying to understand 3 years out, maybe a sale
Our journey has just started.
And that's why we have shared a real vision with you. So yes, yes, we might be a little conservative in our approach. Let us perform and then talk about it rather than just talking about and not performing.
Got it. Second, also somewhere on similar lines, but on the EBITDA margin. Historically, we've done much higher margins also. I understand once growth comes, we could be looking at that. as expected to do 20% margin 18% to 20%. Our sanitary ware business also, we are seeing margins could go up sharply from where they are. So then why the 15%, 17% range, again, is that conservative? Because historically, we've done much higher and the other segments and margins are relatively lower will scale up significantly.
I think the main contributor will be the volume. -- because we are not -- we are going to get some operating leverage also, but that will be mainly for the -- because last 4, 5 years, we have grown in mid-single digits. So now our focus is to grow in a good -- at 10%, 12%, 13%. So when the volume will go, the expenses will not go in tandem with that. So definitely, that will give us operating usage and selling prices have bottomed out and we see good growth coming and everything will be better going forward. The expenses are not going to go in tandem with the volume.
Good evening, sir. My name is Maja from Motilal Oswal Financial Services. Sir, my first question is related to the biofuel. What was the mix in FY '20 for full year. And we're expecting a further benefit on the biofuel side in the total power and fuel cost.
Overall is about 22%, roughly about 22%, our North plant is close to about 30%. And oil prices are more or less on the same line what it was in FY '24 quarter-to-quarter. First quarter will almost be the same like before. Another sense any drastic thing happens for the gas front, more or less a streamlined, whatever happened in.
Okay. And sir, second question was on the mix for the institution as well as retail. Like we are now focusing on the adding more to the government projects. So is there any material shift from institutional, I mean B2C?
See, currently, our sales are 70% retail to the against the industry norm of 50-50. That's why Kajaria's margins are better. Out of 30% that is sold, we call it institutions. Institutional sales are about 3, 4 kinds. One is government projects. where there is a lot of money being spent by government on infrastructure like education, health care, airports, defense -- now railway stations, so these are the areas where the government is working on that. That's roughly about 12% in Calgary as of now.
It can further go up with the sensing of the government project team by at least 3%, 4% in the coming next 2, 3 years. Another 7%, 8%, you can see is for the large builders that we talk about, which I understand builders, you can see like business. and 10% is in mid-level buildup across the game. So that's the basic question.
Just to add to that, we are putting our effort in every channel, whether it's a show of retail channel or the project channel so that we are looking at where we can get business.
This is Krish Lahoti from HDFC Securities. Just a follow-up on last question. In FY '24, how has been the demand if you can divide into retail and institutional side? And further, you can give some sense how is your private order book right now? And what is the outlook on Istre side?
You just mentioned it is 70-30, 70% is our retail orders and 30% is our distribution orders. That's the basic fund. And as we said, we are penetrating from both the angles. From the retail angle also we're gating very aggressive institution on a we're getting aggressive so that we can get more market share, increase our volumes.
Okay. And how is the margin profile on institutional side?
It is lesser than retail.
Any broader ballpark number?
It will always be 3, 4 basis points lesser than retail -- 4%, 5% lesser than retail.
One last question from my side. We can see the discounting might have increased in Q4 to push volumes. So will this incentive continue in Q1 also?
Not only Q4, the time last year, as you are aware the gas prices kept coming down. When I say gas prices will be 1 point. The combination of gas and the other biofuel and everything. So as a result, we had to pass on the incentive to the dealers to sell more because the market was such. So basically, it happened throughout the year. Now the prices have already said bottomed out because there's nothing further to go beyond that. So this year, you will see the realization also getting better than what it was in F in all the previous.
Okay. Got it. The question was more on that side because earlier fuel prices were pulling off. So higher incentive we have given. But in Q4, fuel prices were stable, still we can see NSR taken a NOC, which has led to a lower margin.
Last year, as I said, the market was subdued. Don't even -- you have to understand that part also. If the market was subdued, what do you do you try to sell more with better discounts to the dealers, prices in the industry doesn't come down normally. -- but it's a more incentive to the dealer to sell more. So that's what it is.
And Nitin, from in August advisers. Just trying to understand what's likely to be overall capital allocation strategy for Bath Play and adhesive because you are aiming, say, 20% revenue coming by in 3 years to that level. So what's going to be like out of 250 to 225, 250, or so how is it going to be a and what's likely to be the gross block by 27% for these 3 business or capital employed for that matter. And what's the overall strategy that what kind of percentage revenue you would look forward from non-tile business, say, 5, 10 years down the line?
So the other non-tile bases are growing faster than the tile because the base is low. And our -- we are a title company, we would remain majorly a tip. So going forward, let's say, after 3-year fiber our sales from tile would not be less than 85% to 7, maybe 84%. So they may grow faster but tail because of the high base will always have a very, very major portion. And the capital allocation will primarily be for tile and for normal CapEx. In other adsorbatware, it is going to be very small. Like in we have that putting a plant is just for INR 15 crores.
So for ads, the CapEx will not be more than INR 20 crores, INR 30 crores depending upon the growth if you're getting good growth, maybe the CapEx may be more, but we are not going to do a very big CapEx or diversify into any business. So the total focus will be tied and the products which our dealers are selling because we will leverage the branded dealer distribution network.
And regarding Napa, if you can share some thoughts, what's likely to be potential revenue coming from there? And how is it considered in 20 Crores.
Basically, we're putting up a 5 million square meter plant in APA. It is a mix of ceramic and GBT. The CapEx is INR 181 crores. It's a 50-50 joint venture within Kajaria and the niche Corporation out there. The total market size roughly INR 2,000 crores. So we're expecting a 10% share of the total market has 40 million square meters, expecting a roughly 10% market share once we sell full capacity due to incent rains in the last couple of months, the project was delayed. Looking at production starting roughly around July 24, basically.
So it's likely to be low or set down with.
Margins are better turnover the sugar. Margins will be better. So once we double the capacity in the 1 or 2 years, it will even get better. we came up on apartment duty is very, very expensive when you sell from India. So we'll get a lot of margin -- much better margin than we produce in Nepal. That is the reason of putting our plant -- the duty is 50% to 55% out of the customs duty.
And to double the capacity, what will be the additional CapEx required?
Much lesser. We are putting INR 180 crores right now, it will be about INR 70 crores, INR 80 crores.
I think I missed asking you what is going to be the CSR model, if there's any -- is it IPL, which you mentioned, is there any connection with the CSR project.
No connection -- the IPL is a brand spending. It's not the advertising budget and CSI on to the corporate social responsibility.
So what is that CSR projects which you have in the country.
A lot of projects are happening. The most recent is failing of basins, which is initiated -- then a lot of our factories are doing their own CSR in their surrounding districts and neighborhoods, the cancer treatment things building sanitation facilities. So it's not there on the website. A lot of activities are happening in the CSR regard.
Building of schools, building of toilets and schools. So what we also do is in and around our factories we -- because that can be monitored very well by our factory team. So in an out of factories, we spend a lot of money on CSR -- develop the local places -- so I just give a good
Anything on AI, artificial intelligence, to be to your workers or no to your.
Dealer workers as artificial intelligence on what I ran. No, see, Kajaria looks -- maybe I know 50 years and That's how I am my cost we look 5 that, but we go with the time, right? We have to do what is right to
My name is Jana Mora, and I had a question to ask what are -- it's a macro question. I'm trying to understand what are the trends that you see in the building material industry, particularly in tires, has the customer behavior changed in terms of -- like you were talking about, it's a premium brand and you're taking those initiatives.
So I just wanted to understand from a macro perspective, when it comes to building material because we are also looking at adhesives and all the other categories as well. Is there any change in the consumer trend? And is there anything that has remained same because there is a tendency -- the macro tendency, I can understand of building home ones and all that. But is there something that has remained the same? And is there something that has changed? If you could throw some light on that?
So one change that you noticed is after Koin,people have gotten spending more on their houses that has come more into focus because that is where they spend a lot of their time. Now they want to splurge more and have higher brand aspirations also. So this is gradually translating into buying more known brands and spending more money in renovating the house and going for bigger size tires also because that is where the maximum of the time is spent in the house. That's one change you've noticed after COVID.
If there are no questions, thank you very much. But we can informally discuss over drinks and dinner outside after this. Thank you. And please join us.