CEAT Limited (NSE: CEATLTD) Q4 2025 Earnings Call dated Apr. 30, 2025
Corporate Participants:
Unidentified Speaker
Arnab Banerjee — Managing Director & Chief Executive Officer
Kumar Subbiah — Chief Financial Officer
Analysts:
Unidentified Participant
Mihir Vora — Analyst
Mumuksh Mandlesh — Analyst
Siddhartha Bera — Analyst
Mitul Shah — Analyst
Amar Kant — Analyst
Naveen Baid — Analyst
Vijay Kumar Pandey — Analyst
Ankur Poddar — Analyst
Presentation:
operator
Ladies and gentlemen, good day and welcome to the SEAT Q4FY25 earnings conference call hosted by Aquarius Securities. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing Star than zero on your touchstone phone.
I now hand the conference over to Mr. Mihir Vora from Equeria Securities. Thank you. And over to you, sir.
Mihir Vora — Analyst
Thank you. Good afternoon everyone. On behalf of Equera Securities, I welcome you all to the Q4FY25 results conference call of CI Limited. From the management side we have Mr. Arnab Banerjee, Managing Director and CEO and Mr. Kumar Subaya, Chief Financial Officer.
I would now like to hand over the call to Arnab sir for his opening remarks. Over to you sir.
Arnab Banerjee — Managing Director & Chief Executive Officer
Good afternoon and welcome to Seatt’s quarter four FY25 earnings call. I’ll be taking you through the business updates for the quarter and then I shall hand it over to Kumar for his remarks on the financial performance Post that we’ll open the floor for Q and A. We continue to be bullish on the prospects of Indian domestic market medium and long term. With government investment in infrastructure development and changing habits of the customers, we expect the tire market to grow at a CAGR of 6 to 7% volume tonnes for a long period of time. Till 2047 we expect exports to grow faster at about 10 to 11%.
Long term, we also expect the percentage of Indian exports to Occupy More than 10% of global trade as a whole. Along with the industry growth, focus on sustainability and eco friendly practices is also shaping the future of tire market. Supporting this shift, the government’s incentive schemes aims to boost electric vehicle adoption and expand the charging infrastructure which will accelerate the electric vehicle specific tires and propelling similar market demand. At seat we are fully geared to tap into this trend technology wise and CRM wise. Coming to our performance for the quarter and financial year in quarter four we grew robustly at 14.6% standalone basis on a full year basis.
In FY25 our revenue stood at about 13,218 crore which is about 11% increase over the previous year. Standalone profit was about 100 crores for quarter four FY25 which is about 5% higher Q on Q basis. Growth momentum continued in quarter four. I have been maintaining that we are looking for overall double digit growth for the year. In quarter four, volume growth was 11%. Replacement grew with high single digit level whereas OEM grew very strong double digit in fact mid 20s and we had a slight reversal in international business. We decreased slightly because of ongoing global uncertainties, tariff and non tariff barriers in quarter four.
We remain attentive to these developments and we’ll continue to take appropriate actions as international business is a focus area for us as it is margin accretive. Overall growth for the year in international business was in mid double digits. Replacement grew mostly very well in robust manner. In commercial vehicles double digit growth in two wheeler segment was high single digit growth and passenger segment was mid single digit growth. So all across there was a decent growth in replacement market. In oem we grew both Q and Q on Y O Y basis primarily due to growth across segments whether it is passenger where we have got approvals in new models with higher rim size tyres which I’ve been talking about again in the past we had vacated high volume 1213 inch tire models and now we are coming back on 14 inch upper models.
Across vehicle owners in truck, bus, radials, our enhanced supplies from Chennai plant have enabled us to take a better position in terms of share of business in OEMs. We still are small players in truck, bus, radial and barely double digit kind of share of business in OEMs. In two wheeler we have a good share of business in OEMs and we continue to build on that. Quarter four volumes were up 3.5% quarter on quarter. As far as demand outlook is concerned, the same trends which were continuing and we have been talking about continuing to the first quarter of FY26 which means the urban demand continues to be soft whereas the rural demand is definitely much more peppy and there is a Delta of about 4 to 5% in terms of demand level between rural and urban in most segments.
So this trend will continue and which means that with our extended distribution network into rural territories we should be able to tap into rural demand better especially for two wheelers and for farm tires. Demand for passenger car tires will be little bit soft because that comes primarily from the urban markets. OEM wise we expect passenger demand to be low. Single digit two wheeler growth also may slow down, but there will be significant growth in two wheelers and commercial vehicle growth may come back into positive territory as we go forward. We have been able to partially mitigate the impact of raw material prices through minor price adjustments in quarter four.
We primarily adjusted price in two wheeler tires in quarter four and we achieved a better product mix looking at commodity prices as we know that crude prices were more or less stable across Q3 and Q4. Now it is going down and hence crude based derivatives, crude based raw material prices may come off their current levels gradually more so into quarter two than in quarter one. Natural rubber prices are still holding firm. International prices have come down. So as a mix we have seen very Minor adjustments in Q4 over Q3. We will continue to see flattish trend with minor drop in Q1 over Q4 and if there are significant changes it will come at the end of Q1 more into Q2 and going by past experience we expect to hold the price line and our gross margins which are currently at about 37.5% may see some improvement thereon in Q2.
As we have been saying that we are comfortable with a gross margin of 40% plus more the better and we are now at quarter four end at 37.5% so there is some ground to cover as far as future trends are concerned. Electrification, international business, premiumization and digital. We continue our journey to take tap into these opportunities. We are continuing to hold our position in terms of market share in OEM in four wheeler as well as two wheeler electric vehicle and the visibility that we have on new vehicles getting launched with SEAT gives us confidence that we’ll be able to maintain 20 to 25% share in both these segments going forward.
International business has been a key driver and we have a new brand in the fold which is camso. We have not yet consolidated the result. We won’t consolidate the results of CAMSO for another quarter and starting quarter two. Beginning of quarter two we would be in a position to consolidate camso results into C8 results. All the antitrust regulatory activities are now behind us so integration work has started in full acceleration. As you know, it’s a carved out business. We have not bought an entity so our focus will be in business continuity with 100% retention of customers.
Initial few quarters shall go in stabilizing the operation, understanding the operation and we retain our view of medium term to long term margin accretive business as well as robust growth from the CAMSO acquisition. Otherwise also C8OHT continues to make steady progress. We got a few OEM additions, Argo, acco, Mexico, Yanmar etc. Our forestry and agriculture product ranges which have been launched recently have given us encouraging response. Our NPD activity continues in full force. We have launched about 49 plus of highway tires SKUs in Cordo 4 for the immediate term there is some headwinds in international business as I mentioned from Latin American markets where the currency has depreciated to a Great extent imports into that country has become more expensive and we have been rendered somewhat uncompetitive.
The US tariff situation has thrown some uncertainty into the market and the rest of the markets like Europe, Middle east and Southeast Asia continue to hold firm and are very stable at this point of time. Going back to CAMPSA and Sri Lanka, the economy there is doing good and it has been slapped with a 44% reciprocal tariff as we know, as we have been engaging with the political dispensation there, including all senior ministers including the Prime Minister, we are very hopeful of having, if not favorable, a much better situation emerging over a period of time than the 44% reciprocal tariff that we see today.
In fact, as things stand now, we are looking at a mere 4% tariff on the tracks business and in the worst case 44% tariff in the tax business and and we have a mitigation strategy thought through assuming the worst comes true. But we are pretty much sure and hopeful that the situation will emerge to a much better place than the 44% reciprocal tariff that we see today. On premiumization you would have heard about launches of three absolutely top class high tech tires which is The Z rated 21 inch radials for high performance mobility. Here this tyre can exceed and perform at 300 km per hour.
These are ultra high performance tyres which cater to high end vehicles offering superior grip, control and stability at extreme speeds. We have the calm technology which gives a very very low noise tyre and goes well with the electric vehicle trend that we are tapping into. And we have launched the run flat tyres which is a first by any Indian manufacturer in India which gives you the leverage to travel to a distance of 80 km before you tend to the tyre after it has been impacted. So these premium tire technologies will give us a slip towards our premiumization journey as we go along.
In terms of innovation we have had two wheeler tire which is extremely high life, it may outlive and we also have got an innovation award by the name of Golden Peacock award at the IoD Golden Global Convention 2025 for an innovative truck bus radial product. We are proud to share that Chennai plant is the new Lighthouse designated plant by the World Economic Forum. This is the second plant after Halol which has entered the Lighthouse group. This implies high productivity, higher efficiencies and lower costs. As Chennai scales further on premiumization we see the website traffic from high end car users leapfrogged by 26%.
Leads from premium SUV users increased by 33%. Brand positive sentiments moved up by 71% with 132% increase in average interactions per post yoy. Our capex has been around 950 crores for FY25 and we expect the capex to be 900 to 1000 crores in the coming financial year FY26 as well. Happy to share that the S and P Global CSA ESG scores in that C8 stands out amongst the Indian tire manufacturers with an ESG score of 56 we have a long way to go but 56 is a good place to start off with. Last year’s score was 49.
Seared is committed to set company wide emission reductions in line with the science based Net zero standards which is sbti, Halol and Ambarnath Plant have received International Sustainability and Carbon certificate. ISCC SEAT has also earned ISO2400 certification highlighting our commitment to sustainable product procurement and ethical sourcing. Recently we got ranked by Ecowadis which is widely respected by our OEM customers. We secured a score of 71 which places us in the top 15 percentile of global companies. This will definitely give us a competitive edge in opening the doors in several OEMs globally. In closing as we look ahead we are mindful of the evolving global economic environment and we are actively adopting to the evolving needs of our customers, especially the premium ones.
Our commitment to innovation, quality and customer centric solution continues to drive us forward as we enter FY26. We are also excited to bring CAMSO into the SEAT family and start a new chapter together.
With this I would hand over the call to Kumar for his remarks.
Kumar Subbiah — Chief Financial Officer
Thank you Arnab Good afternoon ladies and gentlemen and thank you for joining our quarter four FY25 earnings call. I’ll share some further financial data points with you all post which we can enter the Q and A session. Coming to overall financial performance, we ended the year and quarter with some key milestones relating to revenue. Our consolidated revenue for the quarter stood at 3,421 crores delivering a year on year growth of 14.3%. Our full year revenue stood at 13,218 crores, a growth of about 10.6%. The revenue for the year and also in quarter four was the highest that we have achieved till date.
This was driven by a combination of both volume and price growth. The replacement and international businesses delivered strong double digit growth while international business delivered high single digit growth during the year. In quarter four OEM and replacement businesses continued with strong double digit growth and IEM segment was flat. Coming to operating margins, our gross margin witnessed improvement of about 60 basis points quarter on quarter largely driven by marginally lower raw material prices and selective price increases in some key categories like two wheelers and passenger within the perimeter of price elasticity of demand in the replacement segment, while the operating margin saw contraction of about 189 basis points year on year primarily due to increase in raw material prices or consolidated operating margin I.e.
eBITDA for quarter four stood at rupees three thousand three three hundred and ninety four crores translating to 11.5% margin which is about 101 basis points expansion quarter on quarter coming to overall commodity markets and raw material prices Unlike other commodities like steel, aluminium and other metals, the commodities that go into tires in the global market saw very high level but stable during the quarter four. Contrary to our expectations, the international prices remained at $1,900 to $2,000 per ton level in whole of waterfoon which is at a premium to local rubber prices around rupees 15 rupees per kg.
Local natural rubber prices remained range bound in the range of about 190 to 200 rupees per kilogram during the quarter. In the last three weeks as Arunab mentioned, the international prices have come off the peak and corrected by about $200 per tonne and currently international prices are trading at a discount to local natural rubber prices in the range of about seven to eight rupees per kilogram as local natural rubber prices have largely remained firm. Coming to crude, the crude oil prices were largely in the range of about 70 to $80 per barrel except in January where for a short period it crossed $80.
However the crude oil prices have corrected a bit in April, it is currently hovering around $65. The key crude derivatives like Butadiene, Caprolactan, CBFS prices largely remained constant in quarter four. However there has been some downward trend price movement in the month of April to the tune of about 2 to 5%. It appears that the crude oil prices would move in the range of 65 to $70 in the short term as OPEC has also announced some increase in production and is also supported by the US Government in pushing higher level of crude oil production. The third lever that influences raw material prices is rupee.
While rupee touched all time low of 88 to a dollar in the month of March, it has appreciated since beginning of April and currently hovering around 85 to US dollar. We feel that the current depreciation of rupee or appreciation of rupee is largely due to depreciation of US dollars against Euro and its collateral effect on rupee Taking all of the above and all inventory levels, we expect quarter one raw material consumption cost to be at same level as that of quarter four or maybe a percentage lower than that. We are keeping our inventory at the lower range of lower range of our normal covers to take advantage of any correction in the commodity prices.
Considering these factors, we’ll continue to keep a close watch on the RM situation and see how it evolves over the next few quarters, but we expect them to remain within range Coming to Debt, Capital Expenditure and Working Capital we spent about 235 crores on CapEx during the quarter, which is largely in line with the estimates that we had shared with you in the previous quarterly call. Our overall capex for the year was about 946 crores in terms of cash outflow and we capitalized assets to achieve 1,140 crores during the year. We are working towards incurring a capex as Arnab outlined in the range of about 900 to 1000 crores in the year FY 2526.
While our overall working capital remained negative, it went adverse to the tune of about 98 crores in quarter four largely due to higher level of inventory and receivables. By end of March FY 25th we generated healthy operating cash flow which was used to manage largely our CapEx requirement and part of our additional working capital. Our consolidated gross Debt stood at 1928 crores, an increase of about 95 crores over quarter three. We are taking steps to bring efficiencies in cash flows further so that we are able to manage the additional requirement also out of investment where we need to fund for our acquisition of Campsu business Effective quarter two, our debt to EBITDA on a consolidated basis stood healthy at 1.3 and debt to equity at 1.44x as of 31 March.
Coming to operational expenses and employee costs, Employee costs marginally increased in quarter four over quarter three largely on account of higher headcount and manufacturing locations where capacities have been added. With respect to operating expenses, we exercised strong controls on all our expenses in quarter four. That helped us to bring down operating expenses as a percentage of turnover by about 40 basis points over the previous quarter. Despite incurring additional cost towards quarter four IPL in quarter four versus quarter three, our end to end cost reduction programs covering all elements of cost helped in delivering sustainable and significant cost benefits to the tune of about 180 crores during the year.
In the coming year we will leverage scale and continue to focus on eliminating wastages and improving efficiencies to positively contribute to our margins. During the quarter, we also announced a voluntary separation package for one of our older plants that led to more than 100 people employees accepting voluntary retirement schemes that we had announced involving about 37 crores of cost that has been shown as an exceptional item in our financial statements. Depreciation marginally went up in quarter four versus quarter three on account of higher capitalization of assets, increased cost. Interest costs marginally went up in quarter four versus quarter three largely on account of increase in our debt which I just now explained.
During the quarter and previous quarter, Reserve bank of India announced reduction in repo rate to the tune of 50 basis points aggregating to reduction of 25 basis points each. The same has not been reflected in the MCLRs of banks. The interest rate has seen some corrections in the short term. Government bonds as well as treasury bills. We expect the interest rates to soften progressively as we see improvement in the overall liquidity. Overall, our consolidated profit after tax for the quarter stood at 93.23 crores which compares favorably against rupees 91.61 crores in quarter three of the current financial year FY24.25 and rupees 92.87 crores in quarter four of the previous financial year.
And during the year the company delivered a profit of rupees 449.56 crores which compared to 614.48 crores on a full year basis in the year 2324. Profit for the current year translates to an EPS of rupees 116.84 share value of about 10 rupees. We are pleased to also announce that the board of directors in the meeting yesterday recommended a dividend of 300% for the financial year 202425 which translates to rupees 30 per share. The dividend would be paid post obtaining the formal approval of shareholders.
Thank you once again. We can now open for Q and A.
Questions and Answers:
operator
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press Star and one on their touchstone telephone. If you wish to remove yourself from the question queue, you may press Star and two participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles.
The first question is from the line of Mumuksh Mandalesha from Anand Rathi Institutional Equities. Please go ahead.
Mumuksh Mandlesh
Yeah. Thanks sir for the opportunity and Congratulations on the healthy growth performance. Firstly, on the growth side, we have seen a very good market share gains last year. For next year also, how do you see the OEM growth where particular how do you see the CV segment growth? Sir.
Arnab Banerjee
CV was in negative territory, as you know this in FY25. So we expect CV to be in OEMs, the vehicle growth to be in single digit. It should be in a positive territory basis. The information that we are receiving and our play will be we are a small player in tbr so our play will be in just about double digit kind of share of business of that group.
Mumuksh Mandlesh
Got it. And sir, on the exports market, you mentioned some of the challenges there. So how do you see next year growth for that exports market? And also sir, can you give an update, how is the OHT segment in Europe doing, sir?
Arnab Banerjee
OHT segment has been facing headwinds since last two years. If you see last seven, eight quarters, definitely primarily from the OEM segments, we have an OEM play there and OEM margins are not significantly different from the aftermarket. So we have been making this up with an aggressive play in the aftermarket. And in Europe also that holds true. The OEM demand is showing signs of revival but it’s not yet in. So the headwinds are still there and we have to rely on growth on through aftermarket for some more time.
Mumuksh Mandlesh
And sir, on the Camzo part of the business is compact segments. How that market doing? So generally, sir.
Arnab Banerjee
It is the same situation. Overall OEM is sluggish, which is the construction tracks and tyres. But aftermarket is relatively better and the performance in aftermarket is steadier. And then the oem OEM demand should come back in some time. As I said, green shoots are visible but not yet in.
Mumuksh Mandlesh
And sir, on all export side, will there be a growth for next year?
Arnab Banerjee
Sir, yes, we are definitely planning a growth in Europe. In Latin America things have to turn around. Turn around. The currency situation has stabilized. Southeast Asia, Middle east, those are our traditional areas. We will seek growth there. So we are definitely planning growth in international business as well as in oht, part of the international business. Overall, we are looking forward to growth. Apart from Cancer, that is.
operator
Thank you. Sir, the next question is from the line of Siddhartha from Nomura. Please go ahead.
Siddhartha Bera
Yeah, thanks for the opportunity sir. And congrats on a great set of numbers. Sir, first question is on the replacement side now can you sort of highlight if the industry growth has been similar or there has been market share gains for us as well and what will be it for two wheelers and passenger car in FY25 and going ahead, how do you see the scenario? Will it be more steady or do you still see some scope of market share gains? For us?
Arnab Banerjee
Yeah, I would first share the market share status. So year on year we have seen good gains in truck, bus, radials. But as I mentioned in the context of OEM in aftermarket also we are small players. We are still in single digit market share. So on a small base good market share gains. Good gains in two wheeler where we are market leaders and both in motorcycle scooter. Scooter market itself is growing very well. But both in motorcycle scooter we have seen significant gains over one year period in passenger car tires we have had a flattish kind of situation where we have neither lost nor gained market share in aftermarket.
As far as demand is concerned, a two wheeler which is which is penetrated across the pops strata will see a stronger demand in rural market is what we think. Passenger which is relying more on the 50,000 plus population town will see softer demand and truck bus radial is steady. If the GDP is growing at around 6 or thereabout, the demand is also going to be around that or slightly lower, maybe mid single digit.
Siddhartha Bera
Got it sir. So second question is on the export strategy. Now I think you had indicated that we will enter probably the US market from quarter two onwards with the TBR range and all. So any change to that plans, whatever you had, how much do you think we can contribute or get from US market in FY26 given the current scenario now and in the longer term also you had the target of touching 25% from exports by the next 12 years. So where does some of those targets stand given the current context?
Arnab Banerjee
Correct. So I’ll answer one by one with the integration of CAMSO right away in FY26 will hit the target of FY 25%. Saliency of international business number two, in the current tariff situation there is the key thing is uncertainty, right? None of us really know where the dust will settle. But as far as I’ll clarify on the tariff, I’ll take this opportunity to clarify on the tariff situation. What is our reading? India is not marginally uncompetitive. If situation remain as it is so vis a vis our key competition competitors from Thailand, Vietnam and China, we remain slightly competitive or if the auto component tariff of 25% applies uniformly, we are neither competitive nor uncompetitive.
As far as Sri Lanka is concerned, 44% is a big burden. But as we think as we see that in tracts, probably the tariff is already down to 4% in TARS. If it is 44% then 28% or 30% of our business is from Sri Lanka to US. That has to be. That risk has to be mitigated. And we have a mitigation plan which I may share maybe later on. So that is a tariff situation overall at this moment. If everything is as bad as it is today, our exposure to us is in low single digit.
So therefore whatever we do, the material impact to our numbers will be very very minimal in FY26. Having said that, US is a key investment market, a key growth market for future. We believe that these things will sort themselves out. So our investment plan in terms of product development, product launches in US market in oht, PLT as well as Turbus radials will continue as usual.
Siddhartha Bera
Got it sir. So lastly on this camp. So just a clarification. Either the tariff is 25% in auto parts or it is a reciprocal tariff of 10%. So does this 44% tariff apply? Because as of now I think that has got delayed.
Arnab Banerjee
You’re right. Reciprocal tariff has been postponed for 90 days. After 90 days, if it is not postponed again then a 44% reciprocal tariff is applicable on Sri Lanka. This is the current situation on tracks. As I mentioned it has already been re indexed to 4%, not 44, 4% which, which is 50% of the business. And the other 50% 44 may apply as things stand now. But we with the indications that we have got by interacting with the local government officials as well as Michelin which has got other business interest in Sri Lanka. So they are also working hard at Washington. We understand that things may resolve out to be better in future.
Siddhartha Bera
Got it sir. Thanks a lot. I’ll come back in the few.
operator
Thank you. The next question is from the line of Mitul Shah from Dam Capital. Please go ahead.
Mitul Shah
Sir. Thanks for my question and congratulations on a very strong performance. Particularly in this tough environment having double digit volume growth. So my first question is on clarification on this camp. So business to USA you indicated 30%. So that includes both trucks and tires or only tire related or if at all then how much would be the only tire from this 30%. Out of this 30%
Arnab Banerjee
it’s total tracks. And tires are roughly half and half. So 15 and 15 roughly.
Mitul Shah
So effective this 40% 44% impact would be only on the 15% of the overall business of Kemso. Right.
Arnab Banerjee
As we speak now things are very dynamic. Things are changing by the day. Yes, as we speak now, that is the impact.
Mitul Shah
So now my question is on the average realization in export geographies. Considering the slightly favorable currency movement as well as few price hikes we have taken on last one year. So now YOY basis or Q on Q basis how what was the average realization per ton basis in this geographies Blended average.
Arnab Banerjee
So on YOY is not very relevant. On QOQ basis we have seen a realization growth in excess of 2% in quarter four over quarter three. And if we can manage the mix then we would like this realization growth to continue.
Mitul Shah
So despite this volume related challenges, we are able to increase the prices by 2% in export, right?
Arnab Banerjee
Not necessarily prices, it’s a mix of price plus volume mix.
Mitul Shah
Okay. So lastly again on this same similar strategy for considering next few quarters of challenges, what would be your pricing strategy? Whatever benefit from this lower RM basket to pass on or we’ll try to maintain pricing or margin benefit.
Arnab Banerjee
And if the RM basket comes down, definitely the price lines will hold. And when the prices were going up, we were unable to pass on the entire effect to the market. So I am pretty sure that we will hold the price line as the raw material prices taper off. And if they take time to taper off, we will also be open to looking at some opportunistic price increase. In the meanwhile.
Mitul Shah
Sir, geography wise, can you give any color that over near term first half maybe which geographies you think will decline in absolute terms and we geography can still continue to grow. The overall market seems to be challenging. But any geography you see decent growth coming in.
Arnab Banerjee
If you’re talking about international markets.
Mitul Shah
Yes. Yes, sir.
Arnab Banerjee
Yeah. So we have stable business and growth in European Union, Middle East, Southeast Asia. We have headwinds in Latin America and North America. Barring that, it is business as usual in most geographies.
Mitul Shah
Sir. Thanks and all the best.
operator
Thank you. The next question is from the line of Amar Kant Kaur from Access Capital. Please go ahead.
Amar Kant
Yeah. Good afternoon everyone. Thanks for taking my question. Sir, I had two part questions. One is related to Camp. So correct me if I heard it right, your exposure via camso to us is about 30%, is that correct?
Arnab Banerjee
Yeah. Correct.
Amar Kant
So just wanted to understand a little bit. In terms of the compensation that we are paying to Kemso, would there be any component that is withheld or that is dependent on the performance in the next maybe 1, 2, 3 years?
Arnab Banerjee
No, nothing is related to performance or anything. There is some deferred compensation, but that’s for the brand and the stocks that we will take over at various points of time. Not everything is paid on day one, but there’s no correlation to the volume in every quarter or something like that.
Amar Kant
Understood. And so second question was on the other expenses, we have seen other expenses remaining flattish versus typically we have an increase because of the marketing expense that we have IPL related and otherwise. So what is preventing these? I mean not a significant increase. We have seen in other expenses 4% kind of qq increase in revenue while other expenses have only gone up by only 1%.
Arnab Banerjee
Kumar
Kumar Subbiah
see other expenses. This is one program that we have been running in terms of bringing efficiencies across all cost lines. Okay. Generally it is reflected there are two where you’d be able to see that impact. One, obviously on the raw material costs. On all programs that we have undertaken to bring efficiencies in raw material costs either in the buying or in reducing wastages in our factories or any other programs that have led to reduction in raw material costs, what do you see largely in other expenses is programs on utility cost, programs on factory related costs, programs on supply chain related costs.
So broadly, despite the fact that revenue has grown quarter on quarter by about 3.6% even after adjusting for IPL expenses, we kept all our other costs either constant or lower than the quarter three. So which is what you are seeing it, There is no nothing exceptional about it in terms of there is no one time cost benefit or one time cost impact in the previous quarter. For the purpose of comparison, largely the programs that we are doing, our endeavor is to keep it at this level. If you look at it same period of last year also we were around 660 crores level and even the quarter three we are about 655 crores.
So we would like to be at this level. Even if you have to incur some IPL related expenses which would spike up in a particular quarter. In those quarters we try to keep other expenses little lower so that overall cost remain within this range.
Amar Kant
So would it be fair to, I mean assume that with some of the marketing expenses built into this quarter, these numbers would likely on a steady state basis, those IPL expenses notwithstanding would be slightly lower than these on a steady state going forward.
Kumar Subbiah
Quarter four, IPL duration was small. So yes, obviously such small period related IPL costs can be mitigated through strong controls and other elements of cost. But in quarter one where we have longer period IPL, where reasonable portion of our marketing expenses is tilted towards ipl, it will not be able to bring it at par with the quarter four or quarter three. So that you will see some spike in other expenses Particularly marketing expenses in quarter one.
Amar Kant
Okay. Okay, thanks. Thanks for that and all the best.
operator
Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants in the conference, please limit your questions to one per participant. The next question is from the line of Naveen Bait from Nirvama Asset Management. Please go ahead.
Naveen Baid
Thank you. Thank you for the opportunity, sir. And congratulations on a very good set of numbers. I’m not sure if you have spoken. About this but what was the overall. Volume growth for this quarter and for the full year?
Arnab Banerjee
Well, exact guidance we normally not share but we are definitely looking at.
Naveen Baid
No, no. The quarter gone buying.
Arnab Banerjee
Oh, sorry. Sorry sir. My mistake. So for quarter four you mean? Right.
Mihir Vora
Yes, for quarter four and for full year.
Arnab Banerjee
Yeah. So quarter four growth has been 11%.
Naveen Baid
Okay.
Arnab Banerjee
Total. Total quarter four has been 11%. And
Naveen Baid
volume growth.
Arnab Banerjee
Yeah, yeah. Volume.
Naveen Baid
Okay. Okay. And for full year
Arnab Banerjee
and full year. It is about 7%.
Naveen Baid
Thank you. Thank you sir.
operator
Thank you sir. The next question is from the line of Vijay Kumar Pandey from Nuama. Please go ahead.
Vijay Kumar Pandey
Thank you for taking my question. Just wanted to understand about the employee expenses. So it has gone slightly up on bio wise like as compared to last year on full year level. So just wanted to understand what is driving this. And despite like we have our. Like despite the VRs team this has gone up. Is it like something related to.
Kumar Subbiah
Okay, I’m sorry. Could you. You want to understand about VRs and other expenses. Can you repeat your question?
Vijay Kumar Pandey
The employee benefit expense and the VRs expense.
Kumar Subbiah
Okay. So VRs cost is what we are showing as exceptional item. Okay. We incurred about 37 crores during the quarter four. We announced VR separation package in one of our factories where the little over 100 people accepted VRs. So therefore that we are showing separately with respect to employee cost moved up on quarter on quarter by about 10 crores. 215 crores was quarter three. Quarter four was 225 crores. All of that cost increase in employee cost can be attributed to additional manpower cost incurred in our factories where we have had capacity increase. For example in Chennai factory we commissioned our truck and bus radial plant in September which we are scaling up.
So therefore in quarter four we had to engage more people. Similarly the volume growth number that we were talking about in quarter four, 11% kind of a volume growth happened. All that had been producers. These are directly relating to production activity. That cost was incurred in quarter four. Which is the reason as to why quarter four was about 10 crores more than quarter three. With respect to other expenses, I think I’ve already explained. So unless you have any specific questions, I think other expenses have been explained too.
Vijay Kumar Pandey
Yeah, that’s okay. Can you give us a brief about the equity daily income? The. Because that has come down on year on year level for full year. So just wanted to understand what is driving that.
Kumar Subbiah
No debt. No debt to equity. See, look.
Vijay Kumar Pandey
The JV income.
Kumar Subbiah
Huh.
Vijay Kumar Pandey
JV income. JV income. Profit from jv.
Kumar Subbiah
Okay. Your consolidated that. Which is it?
Vijay Kumar Pandey
Share of profit of associates and jv.
Kumar Subbiah
See, it’s more or less in line. Okay. This year in fact is higher share of profit this year is about 21.8 crores vs 20.8 crores the previous year. Okay. And the share of profit is largely the JV venture that we have in Sri Lanka. We don’t consolidate it with our assets. So this is our share of profits. It has seen an improvement about a crore. Okay. Even in the quarter. Also there is a marginal improvement in by only about 5 lakhs quarter on quarter. But year on year about a crore higher.
Vijay Kumar Pandey
Okay. Okay.
Kumar Subbiah
Yeah. You look at full year basis. I, I. Unless you’re comparing quarter four of last financial year versus quarter four financial year. Okay. But I think the right comparison is full year, full year or quarter three to quarter four where you would see some kind of stability.
operator
Thank you very much. We will now begin the next question from Ankur Podar from Swan Investment. Please go ahead.
Ankur Poddar
Hello. Thanks for taking my question sir. And congratulations on great set of numbers. Sir, my question is regarding the realization for FY25 on the overall basis have increased by around 2% while the RM basket has increased by around 8 to 10%. So there is roughly an under recovery of around 6, 7 odd percent. So do you plan to have a price increase in near term? How do you plan to mitigate this kind of under your thoughts on that?
Kumar Subbiah
See increase in raw material as a percentage of turnover. When we began the year was close to about 60% of our revenue. So when we say raw material has moved up by 8%. Okay. The impact of that on sales is about 60% of that 8%. Okay. So that’s the way we need to look at. And our realization has moved up by Maybe little over 2% both through price increase as well as through mix. And the difference is what is the difference between the impact of raw material cost and the realization part of it and which is evident in the gross margin also.
Okay. But we should also keep in mind in the previous year we had a very high level of gross margin improvement. Also significant improvement in gross margin, which is why our overall operating margins went up by more than 4% in 2023, 24 versus 22, 23 and so on a high base of about 43%, kind of a gross margin. And maybe the gross margin has shrunk by about four and a half percent. And I think Arnab also earlier mentioned in, in response to another question, currently our gross margin is in his opening remarks hovering around 37.5%.
Our endeavor is to take it up to in the range of 40 to 41%. Okay. And we will do that using both the levers. One of them being like any correction in raw material cost from here on would be retained. And second was obviously judicious price increases across, depending on the categories, geographies and segments, both of them will happen so that we get back to the normal level of gross margin and normal level of operating margins.
Ankur Poddar
Fair point, sir. Thank you, sir. My second question is regarding our export strategy. As Arnab already said that, you know, we’ll be clocking around 25, 26% after Camso integration. What is your strategy, you know, to scale up the export business from here on for the CET as well as Canso in terms of, you know, which geographies you want to venture, what kind of products specifically with Canso, if it can throw some light, you know, your broad business plan in terms of scaling up the, you know, Canso operations from here on.
Arnab Banerjee
Right. So when I said 25, 26%, it is at current level of CAMSO business, which utilizes the facility that we are purchasing at the level of 50%. So our endeavor is to take the capacity utilization to 80, 85%. So that much headroom we are looking at in what time period? Obviously in medium term, which is about two to three years, but the first year will go in understanding and consolidating business continuity, retention of customers. So not much may happen in the first few quarters. So that could lead to that much kind of growth, you know, with some inflation, may be almost 2x of the current volume or 1.7x 1.8x of the current volume.
So that’s Campso on the Non Kamso part. We also have umbrella Ambernath plant which is now utilized up to about 65%. So about 35% headroom is there in Ambernath. Plus we are expanding Ambernath as this is our topmost priority of growth to about 150 tonnes. Per day. So we can in a reasonable time period, if the OEM volumes come back, we can double Ambernath volume in some time period of maybe three to four years to five years maybe. So that’s the export growth on OHT of CEAT and Camso. And of course we have headroom for growth for OTRs as well as bias OTRs from the Bandu plant as well.
Now coming to passenger and truck bus radial here we have aggressive plants in Europe and us. There will be some headwind unless this uncertainty uncertainty is sorted out. Current impact is very low as I explained earlier because our exposure is very low. But it is an investment market and will continue to invest in this market and in Latin America as well and for passenger, for two wheeler categories and passenger categories in some select markets in Asia as well. So there is a well laid out plan. Kamso, to answer your question, will go primarily to North Central America and Europe.
Most of the business will come from there, about 90%.
Ankur Poddar
Okay, great sir, my next question is to Kumar sir. What are our plans regarding post the CAMSO acquisitions? There will be a fair amount of increase in the debt level. So any, you know, medium term plans, how will you kind of scale down these debt levels? If you can, you know, share your thoughts on.
Kumar Subbiah
Okay, see currently on as of 31st March, our debt was about 1922 crores. That was the level of debt. And if you were to look at from leverage ratios point of view, it is about point Debt Equity is about 0.44 and debt EBITDA is about 1.3. So low level of leverage. That’s the way one can come to conclusion with respect to the current level of leverage. While the debt might go up because the scale of operations is also increasing overall as a company is also growing overall absolute EBITDA also we are almost delivered 1500 crore EBITDA in the current year and last year was maybe 1650 crores of EBITDA.
So. So in absolute term everything has moved up. So therefore debt should be seen in the context of leverage ratios. So our understanding is that, you know, it’s not that entire consideration of 225 million will have to be invested upfront. Okay, so at least about 20% of that we will be paying after three years, three to three and a half years. Some amount of consideration is relating to finished goods inventory. That will also not happen upfront. It will happen over a period of time as we take possession of those goods in different markets. So since debt is fungible, since the cash is fungible and we are generating cash profit of 1000 crore plus.
Even in the year FY24 25 our cash profit was about 1,080 crore. So we have to decide whether we want to keep the debt low even on a ratio basis or whether we want to keep debt at normal levels and help the business to grow through investment not only in this acquisition but also in capacities so that we are able to deliver growth. I think the growth of 14.5% in quarter four was delivered because we had capacities available to meet the sales. Growth and scale does play a role, very important role for a tire industry in terms of distributing the fixed cost.
So coming to your larger question, it’s possible that it can move up in terms of debt equity debt debit ratio from current 1.3 level to maybe a 2.2 or 2.3. Maybe the peak in a very bad quarter would be 2.4, 2.5 which is far lower than where we were even two years back we were debt EBITDA was closer to about 2.8, 2.9. That kind of a level. That’s the way we see as we integrate the business as we generate more cash the absolute debt and there will be some improvement in overall debt EBITDA which would Translate to maybe a 3,000 up to 3,000 crore kind of a debt level over a period of time.
Internally we would try to keep it below but that’s the way we see the debt movement over the next 12 months.
operator
Thank you sir. Participants are requested to limit their questions to one per participant. The next question is from the line of Mithul Shah from Dam Capital. Please go ahead.
Mitul Shah
Hello.
Arnab Banerjee
Yes, hello.
Mitul Shah
Am I audible?
operator
Sir, you’re audible.
Mitul Shah
My question is again on the chemso side in terms of the apart we have enough capacity but apart from that any strategical investment required in terms of the increasing the network or what could be the ballpark investment or capex requirement even considering the maintenance capex from annual point of view.
Kumar Subbiah
Okay, no, look from our point of view beyond what we the 225 million which encompasses a lot of other elements in the in the acquisition of that particular business we may have to add some key upstream equipment at least two of them in the next 12 months. After 12 to 18 months after we acquire the business. Okay. We our to fund that, to take care of that. In addition plus normal maintenance capex for camps for business in Sri Lanka. Maybe we need about Indian Indian rupee terms possibly about 100, 225 crores per annum for the first two years.
That’s what? That is the way we see in terms of requirement.
Arnab Banerjee
Hello.
operator
Thank you, sir. The next question is from the line of Siddhartha from Nomura. Please go ahead.
Siddhartha Bera
Yes, sir. Thanks for the follow up. Sir, one question on your margins in various segments. Because like we have pushed a lot in OE stere we have not seen any meaningful margin impact. So how should we think about the difference in margins between your replacement OE and export markets? Some sense there, sir, will be helpful.
Kumar Subbiah
See look. Among all three segments, OEM margins are little lower. Okay. And which is where our overall revenue share is about 28%. 28, 29%. But having said that, OEM business also gives us some cost protection during the period when we see high volatility in prices or high upward trend in prices. Because we have a mechanism to adjust any movement in raw material prices with a 1/4 lakh. So for us to grow in the replacement market, it is important that we have a reasonable presence with oem. So in general, in terms of margin distribution, in the normal circumstances, international business and replacement business operating margins are at similar levels.
Gross margins replacement could be little higher. But we also need to invest in marketing. And therefore at operating margins level similar in case of OEM business. While operating margin vary depending on the categories. For example, our two wheeler margins would be little better. But in passenger car where we are penetrating into high end tires etc. It could be lower. So operating margins of OEM business could be lower in mid single digits versus replacement and experts at a high level.
operator
Thank you ladies and gentlemen. This was the last question for today. I now hand the conference over to the management for closing comments please.
Arnab Banerjee
Thank you very much for attending the earnings call and being with us through FY25. Looking forward to you being with us in FY26. Wish you all a very good financial year in FY26. Thank you.
operator
Thank you. On behalf of Aquarius Securities. That concludes this conference. Thank you for joining us and you may now disconnect your lines.