ASTRAL LTD (NSE: ASTRAL) Q1 2026 Earnings Call dated Aug. 12, 2025
Corporate Participants:
Unidentified Speaker
Kairav Engineer — Executive Director
Hiranand A Savlani — Chief Financial Officer & Executive Director
Analysts:
Unidentified Participant
Sneha Talreja — Analyst
Shravan Shah — Analyst
Sujit Jain — Analyst
Praveen Sahay — Analyst
Pujan Shah — Analyst
Keshav Lahoti — Analyst
Utkarsh Nopany — Analyst
Sunil Shah — Analyst
Rahul Agarwal — Analyst
Rishab Bothra — Analyst
Presentation:
Unidentified Speaker
Sat Sat. Sat.
Unidentified Speaker
Sa.
operator
Ladies and gentlemen, please stay connected. The call will begin shortly. Ladies and gentlemen, good day and welcome to Astral Q1FY26 conference call hosted by Nuama Wealth Management Limited. 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 then zero on your touchstone phone. Please note that this conference is now being recorded. I now hand the conference over to Ms. Sneha Talreja from Nuama Wealth Management.
Thank you. And over to you ma’.
Sneha Talreja — Analyst
Am. Thank you Gura. Hello everyone and good evening. Thank you all for joining the conference call. Today we have with us Mr. Karav, Engineer Executive Director and Mr. Veeranam Sarlani, Executive Director and CFO. I’ll hand over the call to Mr. Kara for his initial opening remarks post which we can open the floor for Q and A. Over to you sir. Thanks a lot for the opportunity.
Kairav Engineer — Executive Director
Thank you Sneha for hosting the call. Good afternoon everyone and welcome to the Q1 FY26 earnings call. I will go over all the different business verticals one by one. We start with the pipe business. Volume was flat in Q1 due to low demand, early monsoon and low government spends. Now it looks like the volume has started picking up July onwards. And we are confident of a double digit growth this year. As per our initial guidance, PVC anti dumping duty can be announced in this quarter. And it will aid in volume growth and value growth as well.
Once it’s announced we expect some uptick in PVC prices. So one can say safely that the PVC has more or less bottomed out. The Kanpur plant will be commercially ready. Will be ready for commercial production in Q3. It will commence in phase manner starting with our tank and PVC products first. And it will assist in the growth of our north markets especially markets of up, Bihar and certain pockets of the Eastern ncr. OPVC orders have started coming in now. The products have settled. All regulatory approvals are in place. And we expect that once the government spending starts again in a proper manner.
We expect good orders in the OPVC lines as well. In the new product pipeline we are working on multiple new products at the moment. Multiple? Several high tech systems. Several systems that will be the first ones to come to India. And we will gradually announce the same as we get ready to launch them one by one. Our Hyderabad plant is now settled and is gearing up. And in coming quarters one can see Good volume benefit from our Hyderabad plant. As far as bathware goes, the response is very positive for Astral bathware products. Our project order book is healthy and our order book is growing quarter on quarter.
We achieved 27% growth in bathware in quarter one and we’ll try to maintain a similar growth momentum in the coming quarters as well. We are launching some very good and high quality products in our bathware business. They will not only aid in growth but also in the terms of brand premiumization. As far as the adhesive business goes, the India business is performing good for us. We grew by 9% in the first quarter and with our July numbers in the first four month basis we are close to our guidance of 15 to 16%. Margins are within our guided limits of 14 to 16% in the adhesive business.
UK business has stabilized and is picking up with 7% growth in quarter one and a five and a half percent EBITDA. We have appointed a new person to lead the UK business and comes with a very rich industry experience. You will see a good turnaround in the UK business in the coming quarters. As far as the paint business goes, the growth journey has started for the first time. After acquisition we have delivered a 20% growth in the paint business and this is mainly due to the Astral brand paint launches in certain territories across India. We will aim for a similar growth trajectory even the paint business in the coming quarters.
Now coming to the acquisition of Nexelon and the question of the CPVC plant. We had been doing R and D for three years and I’m very happy to announce that we have developed our in house technology to manufacture CPVC resin. Along with the technical assistance from our technical partner in the project we are going to put up a 40,000 metric ton capacity that has a total investment of 150 crores where Astal share in the investment will be 120 crore for 80% equity. Our first step in the backward journey as you all are aware was the compounding of CPVC which we started doing few years ago.
This is now the second step in our backward journey.
Kairav Engineer — Executive Director
By doing this we will be able.
Kairav Engineer — Executive Director
To grow our volumes and increase our margins at the same time. This plant will commission by Q2FY27. Q1 was slow for all building material industry but Q2 is showing good promise and we are confident of achieving our guided numbers of double digit growth in this financial year. Now I will hand over to Mr. Hiranan Savlani who will go over some financial.
Hiranand A Savlani — Chief Financial Officer & Executive Director
Welcome to all for this earning call of Q1FY26 result and price please are in front of you. So I want to just highlight the key sales number and the margin number. The plumbing division last year was 1013 crore which this year is 953 crore. Registering a degrowth of 5.85%. Adasive India business last year it was 239 crore, this year it is 261 crore. So registering a growth of 9.15%. Adasive Business UK last year it was 89 crore, this year it is 96 crores or close to about 7% growth. Paint business last year it was 41.5 crore, this year it is 50 crore.
So registering a growth of 20.72. Bathware business last year it was 26 crore, this year it is 33 crore. So close to about 27% kind of growth as far as EBITDA is concerned. Plumbing division last year it was 181 crore. Again that this year it is 156 crore. So last year 17.93%. Now this year it is 16.41%. ADC Business India last year it was 38 crore, this year it is 36.6 crore. So percentage term last year it was 16%. Now this year it is a 14% adhesive business UK last year it was 2.2 crore, 2.46 crore and this year it is 20.21%.
But if I remove the forex effect the EBITDA comes to 5.4%. Paint business last year it was 4 crore, this year it is 70 lakh. Last year percentage was 9.64%. This year it is 1.4%. So overall EBITDA on a consolidated it was 16.36% last year. Again that this year it is 14.25%. So close to about 2% drop in the EBITDA level. The biggest reason for drop was that is the inventory loss which all the industry players are suffering because of the drop in the polymer price which was in the tune of 25 crore kind of.
If we remove that effect I think EBITDA is more or less in the similar line. What was last year? And as you know that in our industry particularly For Astral, the Q1 is always loaded with more PVC volume than the CPVC volume because in the Q1 the agriculture demand will always be there. And this year monsoon was early. So because of that the construction activity slowed down the CPVC volume and the value added products were low. So because of that you can see there is a Drop into the ebitda. But if I remove that effect of inventory losses, still it is much, much better off than the industry.
As Karo communicated, we are very happy that now UK is coming to the growth path again. Back after almost last three, four quarter we were suffering the challenges but now it has delivered a growth of 7% and the EBITDA margin of 5.4%. Similarly, our new businesses are also contributing now in a good way. Pathway has contributed 27% revenue and similarly paint first time after acquisition had delivered a 20% kind of top line growth. And we are confident that in the coming time we are expecting the Paint to deliver good number at least 20% kind of top line growth for the full year.
Now coming to the our acquisition of CPVC regine plant. This is the game changer announcement which Astal had done yesterday for entering into CPVC regime manufacturing business. But before that I want to take you to the year 2016 when Astral went into the backward integration for making its own compound and we stopped purchasing CPVC compound from Lubrijol. You must be aware that with this decision Astral has not only improved the volume, but Astral has improved the EBITDA margin of between 3 to 4%. And all these numbers are there in the history. And I can give you some number which you can verify from our earlier balance sheet and from the press release.
In October 2016 when we came out from the Lubrijol and started our own backward integration of compound. That time in FY20, FY16, our EBITDA was 12.38%. In FY16 EBITDA was 12.38% which went up to 14.6% in FY17. So almost 2% more than 2% jump in one year. In FY18 it further jumped to 15.39%. In FY19 it further jumped to 16.46 and now we are stabilizing between 16 to 18%. So you can understand the jump of 3 to 4% in EBITDA because of just backward integration in the compounding technology. Now as CARO communicated, we are moving to the second round of backward integration which we were thinking for long but we were working for last three years and which we have completed now.
What was the rationale of going into the CPVC manufacturing plant? The first rationale was as you know, Astral is a quality product and I’m sure you must be knowing that in recent time lot of deterioration is happening into the CPVC piping industry. Many players are supplying the quality which Is below the mark in the market. And that is why a lot of failures are coming. And as always believe in the quality. So to maintain the consistency of the quality, this steps were needed that why don’t we develop our own manufacturing of CPVC regime so that we can have a consistency of the quality.
Today Indian manufacturers are also manufacturing CPVC regime. But we all know that the quality standards are not as per the international level. So because of that a lot of people are facing challenges. Though there is a little lower price regime but still their quality is not up to the mark. So considering that in mind and considering our long term security of the quality, we thought that why not we should think on that side. So we were working for last 3 years on R and D. We have done a lot of R and D on that.
And we have done a lot of trial batches in our pilot plant. After successful of that, we have decided to come into this business. Secondly, when there is a narrow gap between CPVC and the PVC at that time, normally the CPVC volume pickup because now today if you see the CPVC and PVC price gap is narrowed down. So there are high probability that there will be a conversion of many consumer from PVC to CPVC that is going to increase the volume for the industry in a big way in the coming time. Because the way polymer prices drop, There are high probability that many customer will move from PVC to CPVC in the coming time.
The reason is that when Astral launched CPVC in the beginning of the journey, Astral adopted CTS standard. Okay? That is the copper tube size standard. And in PVC the standard is astm. So the gap between ASTM and the CT standard is almost 20 to 30% kind of weight difference. So the pipe will be lighter weight in CPVC versus heavy weight in the PVC pipe. So because of that end use level pipe, I think the value coming down for the cpvc. So that is going to help in a big way in the coming time. If this gap is going to become narrow, that will increase the volume substantially.
In that case, if Astel has their own manufacturing plant, Astel can take the highest advantage of that. Not only in terms of volume, we are definitely going to gain good market share, but also to improve our margin. Because today if you see the CPVC market, the other players are there, you can see their margins. Also their EBITDA margins are in the range of 25 to 30% which is a huge margin. So even if we conservatively pick up that margin, we can even downgrade that Margin also then also it is going to be a big saving to Astral to manufacture its own.
And the another biggest advantage to Astral is that if you compare the investment, if you compare the investment what Lubrijal has done, the announcement of CPVC plan, you see the Japanese players investment, even the current local player which they have done the investment into the CPVC plant. Compared to that the technology which Astral has developed, our investments are very very low. We are going to invest 150 crore rupees and going to put up the 40,000 metric ton capacity. So that is going to be a very big benefit to Astral in terms of return. Now if you consider 20, 25% even conservative EBITDA margin also you can work out your payback period.
Payback period will be much much faster. Now not only payback period but national’s investment in CPVC plant for us it is a zero investment. The reason is that today Astral is holding close to about 3 months raw material inventory because we are dependent on imported cpvc. So because of that we have to hold the higher raw material. So on an average our inventory will be 90 days inventory. So on an average roughly about you can say 12,000 metric ton raw material is going to be there in the system. So if I convert into the current price then the raw material itself is contributing 120 to 130crore rupees of investment in working capital.
Now if I start my own manufacturing plant then the inventory is not required because it will be near to my plant. So there is no need to hold that much of inventory. So my inventory level is going to come drastically drop which will make my plant free. So it is a big big advantage for the long term. That’s why I use in the beginning it’s a game changer for ascra. So this is the biggest advantage. Why Ascal took a decision and not overnight. We have taken this decision after working three year matching the quality. What we originally did in 2016 did lot of hundreds of trial we took and then we took the compound decision.
Similarly here also last two years we have taken lot of trials in our pilot project. And then after successful trial we have taken to this decision. So today we can proudly say Ashtal’s investment will be lowest in the industry. Not only investment low but our costing will also be lowest in the industry. Because the way we have done the hard work in the backward side for last two and a half year to three year that has given us lot of opportunity to reduce the cost. But that today I’m only just saying but after one year one this plant will be commissioned that time you will see that will be converted into the actual number.
So now this rational we have taken this call. If you have any question I will be happy to answer everyone and rest I think has covered about all the other businesses. So now we are opening up the floor for the Q and A. Thank you so much.
Questions and Answers:
operator
Thank you very much. We will now begin with the question and answer session. Anyone who wishes to ask a question may press star and one on the 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. I request each participant to ask two questions. The first question is from the line of Shirawan Shah from Daulat Capital. Please go ahead.
Shravan Shah
Thank you sir. Just continuing on the CPUC resin manufacturing. So two things to understand. First let’s say from third quarter of FY27 once the plant will be operational on a full year basis as you have mentioned the margin to improve. So for us as a plumbing division, how one can look at the margin improvement. So currently whatever 16 and a half percent is there in the first quarter can we see the margin to moving to a 20% plus once it will be on on a yearly basis that is first and second is why 40000 will this suffice the entire requirement by by FY27 or FY28 or can we also have a plan to increase the capacity to 200% of our requirement?
Hiranand A Savlani
So coming to your first question, this margin expansion will definitely be there. Exactly how much will be there? The market situation will decide because we have to take a call at that point of time that how much we want to pass on to the market to gain the volume very fast and secondly how much we want to retain to improve our margin. So we are going to split the profit into volume growth as well as into the margin growth. So that will be decided once the actual production will be ready with us and actual working will be that at that point of time.
But definitely margins will be much much better than what you are seeing this time. Regarding your second question, 40,000 plan will not be definitely sufficient for us because the way we are expecting the growth in the coming time we may be requiring more capacity in the future. But right now I think to start with 40,000 is more than enough and rebalance we can source from our Japanese partner with whom we have tie up and at a time when. If it is required at that time we will think for the further expansion. But let US first establish 40,000 and whatever the number which we have done homework and when the actual number will come we want to see that how.
How the realistic number are there. Based on that we will take that decision. But definitely I can say that the margin will definitely exp.
Shravan Shah
Got it? Got it sir. Second sir, on. On the volume front so obviously the quarter was muted there Also if you can explain in terms of the. For us CPVC in terms of the growth and then the industry growth and now July 30% growth that we are seeing. So double digit. When we are saying the guidance for FY26 the ask rate is 13%. But does that mean once the add will come this double digit could be 15. 20% kind of a number is also possible.
Kairav Engineer
See there are. There are two things. One is that you know double digit can be anything. You know it could be 10 also 12 also 15 also 20 also. There are many different parameters at play. Add is not the only parameter. Once the add comes, price will settle at a certain level. After that we need BIS for the price to even move further up. And also we need the government spending to increase in the system. And we also need the building material segment as a whole Especially on the construction front at the developer level the demand should also go up.
So it’s a combination of multiple factors. But looking at what we are seeing the trend as per the second quarter we are confident that you know double digit growth as per our initial guidance during our analysis, whatever we have guided that much we can achieve at the end of this financial year.
Hiranand A Savlani
And I read to that if all will be in favor like suppose anti dumping come BIS come then you are right, we can go up to 15%.
Shravan Shah
Will not be a big. Okay. Okay, got it. Lastly sir, a capex for Q1 and for full year and maybe a next year if you can help. Because now the additional capex of 120 crore is there.
Hiranand A Savlani
So like this year we have guided around 300 crore kind of capex. Because Kanpur plan building is ready now machinery delivery will start the Q1. We will spend only 50 crore rupees on the capex next year I think normal capex will be there because we are not going to expand any capacity for next two, three years in the pipe category so will be hardly any capex. This 120crore. Yes definitely it will be there. But that will be over a period of 12 months. So some capex will come this Year and some will come next year.
Because first building level stage the investment will be there then the machinery level will be there. So over a period of 12 months we are going to park this 120 crore piece.
Shravan Shah
Okay. And lastly if you can allow me UK this is now the post the forex 5.2% margin. Can we now see this will be the kind of a minimum and we can see a improvement in the margins.
Kairav Engineer
Historically UK has been 8 to 10% EBITDA company historically. So margins will eventually settle in that 8 to 10% range EBITDA range for the UK company because along with margin there also we are going to focus on the top line growth as well.
Shravan Shah
Got it sir. Thank you sir. All the best. Thank you. Thank you.
operator
Thank you. The next question is from the line of Sujeet Jain from Bajaj Live. Please go ahead.
Sujit Jain
Yeah. Hi Kavra and Shawlani Ji. Encouraging commentary, a few points, you can note them down and give me one liners. If I look at data for last 14 consecutive quarters, our volume growth versus supreme which is three times our size, we have lagged consistently overseas adhesives business as we’ve seen at least for many years, 10 consecutive quarters it has been weak 7% growth. But there could be some currency depreciation for this quarter. Paint when I look at it’s encouraging commentary but when we acquired the company it was close to 200 and last year also it closed at 197 crores.
When we acquired it was 215 crores. So even if you do 20% growth it will be 220 crores or slightly higher than that this year. Finally our ROE has been consistently coming down. So if you can address all of this. Thank you.
Hiranand A Savlani
So let me address one by1 your first comment on the volume comparison with our competitor. Look at the competitor’s number. If you see the major chunk of volume came from the Jaljee 1 mission, okay. In Jalg 1 Astral was not there because we are not manufacturing HDB 5. So two year there was a huge spending by government of India particularly pre election sizable spending because government wanted to showcase the water that we have done so much of work. So sizable growth has come from that segment. So because of that if you are comparing then definitely yes, volumes were very high but our presence was not there into that segment.
Now regarding your second question on paint side. Yes we have communicated in the past also that we were working on the strategy because we wanted to launch the Aspel brand and we were doing a lot of homework at the back Office level. So I think now we are trying to settle down because we have worked out certain strategy and now that is going to play in the market. That’s why we are confidently saying that we will be able to deliver 20% kind of growth. Because now the senior person has also joined having rich experience from the similar industry.
So that is going to help us in the coming time. Because the moment you launch the new brand a lot of spending will be there. And on a 200 crore top line, if you are spending even 10 crore rupees for any marketing expense or anything, it work out to be 5%. So because of that margins were also under pressure. Secondly, you also know that the industry is also passing through the challenge of one of the competitor who has created lot of issues in the market which I don’t want to discuss in everything. But that has also created the pressure on the margin for the entire industry.
So that has also affected and that also given us the more time to take that kind of strategical decision. So now I think we are ready. We have a team which is also ready. That’s why we can confidently say that this year we will be able to grow minimum 20%. So we will be near to 240 crore kind of run rate this year. And going forward we will give again the guidance for the next year. But I think now things are settling down and we will definitely going to grow. And once the volume will pick up definitely the margin will also improve a lot in the coming time.
What was your third question? I missed that part.
Sujit Jain
This was regarding overseas adhesives. This 7% growth, if I look at at least 10 quarters later that is weak. But even for this quarter 7% growth in sales could be on the back of currency depreciation in that geography. So this business has continuously been in the WIP more. So when do we finally get our act together here?
Hiranand A Savlani
So I told you that this year we are confident that we’ll be back to the normal. I am very happy to share you that because top line growth was missing for last 4, 5 quarters. So because of that overheads were very high. So there was a tremendous pressure on the EBITDA margin. But the last quarter our you can say the gross profit margin was highest in the last four years. So there is an improvement. But it is not converted fully into the EBITDA. EBITDA has come to the 5.4% only. But in the coming quarter we are confident that is going to definitely help us into the improvement into the EBITDA also.
And at the same Time top line growth. We have appointed a very senior person having very rich experience of more than 25 years of the industry to take charge of our UK business and he had just taken a charge and that is the reason that today Mr. Sandeep Engineer is not on the call because he is with him in Ukraine to make him understand the entire company and how we have grown up this company and what is going to be a strategy for the growth. So all these things are going to be discussed over there and we are confident that you will see in the coming quarter things will improve.
Question was consider pressure on roe. Yes, definitely you are absolutely right. We are also very worried about that thing also the reason is that in last three years if you see we have spent close to about 1500 crore rupees of capex. This 1500 crore rupees of Capex. Unfortunately when we have spent at that time the market scenario is not in our favor because polymer is going down. Because of that continuous pressure is coming on the realization side and the building material is passing through a challenging time. So actual utilization of this 1500 crore has not been there in the system.
Now in next coming two to three years time you will see CAPEX will be on hold and the utilization will improve. So that definitely it is going to help to improve our ROI and ROC both. We are quite confident the moment we will stop that CAPEX cycle it is definitely going to help us to improve our margins and all this data you start.
Sujit Jain
Yeah when I look at data you start the year with a CAPEX guidance and you end up doing at least 2x or higher CAPEX by the end of the year. So I think capital efficiency is something you should really focus on.
Hiranand A Savlani
No, I fully agree with you because lot of decentralization exercise was going on and when you enter into the market at that time you realize that the certain cheese things are needed. So because of that you have to change your CAPEX plans also. But I can assure you that particularly in the pipe division this year will be the last year for the Capex. After that two, three years will be only maintenance related Capex and then you will see lot of improvement. But ultimately you know company has already spent money so then benefit always for the Capex comes at a later stage and it is unfortunate that the market condition was not in our favor.
Now if the polymer not have dropped by 25% kind of level in last two years then this situation could not have arrived. Overheads keep growing every year but if your top line doesn’t grow then it always Give you the pressure on the margin and because of that the return ratios are getting disturbed. If polymer could not have fallen so high then this situation might not have arrived. But your point is valid and we respect that part and will give you confidence that in the coming quarter you will see continuous improvement into that side.
Sujit Jain
Thank you. And I’ll come back in the queue.
Hiranand A Savlani
Thank you.
operator
Thank you. The next question is from the line of Sneha Talreja from Nuama Wells. Please go ahead.
Sneha Talreja
Hi, good evening sir. Just two questions from my end. Firstly in your opening remarks you mentioned about improving demand scenario. Wanted some update on that, you know, is it on the retail level, project level, you know, building material side, where is the improvement which is actually seen? Is it on a pan India level? Certain geography, some flavor here will be helpful. Secondly, on your CPVC reason plant, you know, just wanted to understand your procurement strategy because you will be, you know, of course procuring PVC and chlorine both from outside, you know, given there will be some time, you know, QC implementation on pvc.
How are you things, how are you seeing, you know, procurement strategy for both PVC as well as. Where are you looking at, you know, procuring chlorine from? I think these are the two from my end. Thanks.
Kairav Engineer
So I will tell you on the demand side, basically see demand side. Pan India demand definitely has not opened up. It is certain pockets and geographies are doing better and certain pockets and geographies are still in the improvement space. Looking into this festive period, especially Rakshabandhan Janmashmi and the long weekend of the 15th of August, we are hopeful that once all these festive times pass, you know, September is looking to be very promising in terms of demand as of today’s trend, I may be wrong, things may change. But as of today’s trend, you know, we feel that from September the market has to open because this year Diwali is in the middle of the October month.
So most of the home improvement activity usually starts two months prior to the Diwali period, two or one and a half months prior. So we feel that after this festive period from the third week of August, things should improve per India basis in terms of demand. Second question, you are talking about the procurement of PVC for our CPVC plant. I am very pleased to tell you that in the three years of the R and D that we have done, we have worked with very different types of PVC grades and we have done the chlorination of different types of PVC grades, domestic as well as International.
So we are confident of using different type of PVC grade as per our wish and desire and as per the market pricing to make our cpvc. So we are not limited to a single PVC supplier for our CPVC plant. We have done R and D for very different type of grade for different PVC that coming from China, coming from Korea, coming from us, coming from the local manufacturers, lot of R and D has been done. So on the PVC procurement front we are not afraid or scared of the anti dumping scenario at all. Now as far as the chlorine procurement goes, chlorine is right now in the negative and surplus is available.
We have to procure the liquid chlorine. So we will procure the liquid chlorine. There are many chlorine people in the state of Gujarat who are ready to give the liquid chlorine to us. So even the chlorine procurement there is no problem at all.
Hiranand A Savlani
Now I can add what Cairo say that the demand scenario we have given the July numbers so we are not communicating investor that 30% volume has come so that will be the benchmark in the going forward. This is what the July number. Even if I give the beige effect also then also it looks better. Even if I consider the last year little negative effect of Q2 volume then also it is looking better. But we have to wait for some more time because we cannot just jump in on the one month basis and say that no no no, now going forward everything is looking rosy.
So I request every investor that give us some time. We will be the most vocal company. We will be communicating to you regularly on every con call and we are meeting every investor in the conferences also. So we will communicate what is the ground reality. But July was looking promising and August so far is going good. But yes, rightly Kara said that festive seasons have started. So we have to wait and watch whether it is going to give the effect in the coming time or not. That will be only assessed at the end of the September.
If for the entire quarter the numbers are looking good then we will communicate in our next concord. But we cannot say on the basis of one month that these are the number which is going to be for the rest of the year. Let us wait for some time. Secondly PVC side, absolutely we don’t see any problem. You all are aware that India is going to increase the capacity of PVC local manufacturing in a substantial manner. Both our big giant companies of India are increasing the capacity in a big way. Whether it is the Reliance or it is the Adani.
So Absolutely nothing to worry. On the PVC procurement side chlorine is also amply available in the Gujarat state. So we have done all this homework because last three years we were working on that. It is not the decision which Astral has taken overnight. So we are quite confident that these kind of things is not good. Even if there is a challenge at the local level we are prepared for the international PVC also. We have done all this trial in our pilot plant. Next question.
Sneha Talreja
Thanks a lot sir.
operator
Thank you. The next question is from the line of Praveen Sahai from PL Capital. Please go ahead.
Praveen Sahay
Yeah, thank you for opportunity sir, two.
Praveen Sahay
Questions from my side. One is related to the employee expenses.
Praveen Sahay
For a quarter which has.
Praveen Sahay
I can see that’s increased.
Praveen Sahay
So what’s the reason for that or.
Praveen Sahay
We continue to be at this level.
Hiranand A Savlani
So Praveen, we have communicated earlier also that because of continuous falling polymer the top line is getting eroded. So because of that the percentage terms it is going up absolute level it is going very negligible but absolute level percentage level it is showing very high because we have entered into the multiple new businesses. So because of that we have to appoint the new people not only on the ground level but at the senior level also. But now base effect is going to play its role in from the coming quarter onward and there you will see there will be a drop in the employee cost.
So it is only a problem of temporary because new businesses contribution the moment we’ll start growing up like Bathwell we communicated that we have grown 27% paint we have grown 20%. So if these kind of contribution will keep coming in the coming quarter this employee cost will definitely going to come down in the coming quarters.
Praveen Sahay
And next question sir by year end how is our capacity going to be? Right now is which is a 3,87,000 where you are seeing at the end.
Hiranand A Savlani
Of the year I think another 25,000 kind of will be added in the Kanpur in the first phase and when if needed we will add more also but buildings will be ready for all the plant like Hyderabad also you completed the building only as and when needed we will add the machineries so that capex will be very low.
Praveen Sahay
Okay, thank you sir.
operator
Thank you. The next question is from the line of Poojan Shah from Molecule Ventures. Please go ahead. No sir, can you please be little.
Pujan Shah
Am I audible now?
operator
Yes, much better.
Pujan Shah
Yeah yeah. So my first question pertains to the current CPC procurement. So as of now as we don’t have any backward integration or for the CPVC reasons so from where do we procure the cpvc? Right now? Yeah. After the backward integration what percentage of our total consumption will be used as a captive consumption there?
Kairav Engineer
So right now we are procuring our CPVC from secasui Japan. Okay. And some from DCW in the local level. So we are procuring from multiple sources. We are procuring good quality CPVC resin. And after this plant completion, you know it will be based on the demand scenario. At that point in time you will be able to answer that how much of our internal capacity, internal demand does this 40,000 ton resin suffice? Because 40,000 is just the resin. On top of that I have to do the compounding. So when you do the compounding another weight is added so that 40,000 when converted to compound becomes almost 46 or 47,000 ton.
So once this plant is complete and 40,000 is on a hundred percent utilization basis the number is there. So we have to see that you know when the plant commences and how much you know yield we are getting and how the plant stabilizes. Because CPVC plant to stabilize also takes some time. It does not happen directly because the process is a very volatile process. So basis on that we will be able to give you answer that how much of our internal consumption this plant wheel going to provide?
Pujan Shah
Got it sir. My second question is as we are investing 150. So we are investing 120 crores out of 150 crores of the total capex. So 20 share will be I think invested by a Japanese company. So what are the things they have been bringing onto the table to just. We are sharing that R20 share to them. So why we are.
Kairav Engineer
20% is not by any Japanese company. 20% is our technical partner. Okay. He’s a Indian nationalist also and he has worked on this particular technology along with our team. And he’s bring for the balance 20%. He’s bringing the cap his own capital into the business.
Pujan Shah
Okay, got it. My last question would be in the open.
operator
Sorry to interrupt Mr. Shah but I request you to rejoin the queue for the follow up question. Thank you. The next question is from the line of Keshav Lahoti from HDFC Securities. Please go ahead.
Keshav Lahoti
Thank you for the opportunity sir. As you have Highlighted your adhesive 4 months growth possibly can you do the same for the pipe division also? And secondly in June the growth has came. It is not at the cost of margin. Like nothing of being from the strategy you’ve learned nothing. Cost cut, price cut, any such strategies has been adopted by Ashtel no, no.
Kairav Engineer
Margin is always of a priority to us. So we are not going to cut the for this type of growth. We are not going to cut our margins and do the business. So whatever margin for the piping business we have guided 16 to 18%. We have always guided the investor community. That will be. We will try for the 16 to 18% EBITDA in the piping business, I think we will stick to our guidance of 16 to 18% for the annual basis.
Keshav Lahoti
Okay.
Hiranand A Savlani
And I think no, no for the sake of growth if even if margins are 1 or 2% lesser, we don’t mind it as far as the demand is there in the market and we feel that we are able to get the good growth by dropping 1 or 2% margin. I think we will be happy to do that thing. It is not a thumb rule that we want to work on this and we don’t want to sacrifice the order below that margin. But if we see that there is a demand in the market then we are ready to sacrifice our margins also and will be giving the first priority to the volume, not to the margin.
But unnecessary cutting the price and disturbing the market. That is not the mindset of the stock. But if we shortly see that there is a growth by reducing 1 or 2% margin if we are getting the extra growth. Yes, definitely we will try first to that thing.
Keshav Lahoti
Got it. So in the first four months plumbing volume growth. What I’m trying to understand how is the June basic. Is it more to do with base impact? How much the 30% growth number.
Hiranand A Savlani
So this 30% we have considered yoy basis. So last July we are comparing the.
Keshav Lahoti
Right, right. So what I’m trying to understand is is it the base was very weak so the number is looking 30% growth or possibly as you highlighted ADC growth for the first woman. Can you do the same for the plumbing volume growth for the first four months. What is the year on?
Hiranand A Savlani
So I don’t have a particular month number handy with me but post con call definitely you call me. I. I will share that number to you.
Keshav Lahoti
Yeah, thank you sir. That’s it.
operator
Thank you. The next question is from the line of Praneet who is an individual investor. Please go ahead.
Unidentified Participant
Yeah, yeah, sorry for the delay. So I was wondering in terms of.
Unidentified Participant
CPVC manufacturing, why would it. So what. How.
Unidentified Participant
What is the timeline of becoming operational? I joined the call a little bit so don’t mind my question later.
Unidentified Participant
So. And I understand that the yield is going to be higher at the present rate.
Unidentified Participant
What is the yield? You’ve been expecting during R and D.
Unidentified Participant
Phase and how are you expecting it.
Unidentified Participant
To change over time? Like I understand what is in capacity is not going to happen instantaneously. So how is that going to happen?
Unidentified Participant
And in terms of PVC are we going to continue to because there’s a.
Unidentified Participant
Domestic supply chain inherently like with DCW or chemplast, so would it not be.
Unidentified Participant
With them or is that competitive prices internationally that we are expecting you to capitalize on?
Unidentified Participant
Could you give some perspective on PVC procurement like that?
Kairav Engineer
So CPVC we will commence in the second quarter of FY27 is what our initial plans and commentary is. As far as the yield goes, we are not sharing the yield data because it is proprietary to our RD technology. So exact yield data we will not share. As far as the PVC sourcing for this manufacturing of CPVC goes, we are like I said, we have worked with several different PVC manufacturers from across the world. So we are comfortable in sourcing whichever grade is available at the competitive price to ensure that our end product remains competitive. And you know the benefits get passed on to the parent company.
Hiranand A Savlani
And secondly I can add here that we have a very healthy relation with all the names you have. Whether it is a dcw, whether it is a Reliance, whether it is a Chem plus they all are our trusted supplier and we have a very healthy relationship of years. It is not one or two years, last 10 years we are working with them so I don’t see any challenge into that side. They all are our trusted supplier and at the same time lot of international suppliers are there with whom also we are working for so many years so we don’t see any problem into that side.
Unidentified Participant
So the price is going to be the primary factor.
Unidentified Participant
That would depend on the sourcing because.
Unidentified Participant
R D is done with all the.
Unidentified Participant
Grades so it is not just price.
Kairav Engineer
But we will ensure that we manufacture this product at a competitive price and at the desired quality to ensure that at the end of the day the parent company gains the market share and volume without sacrificing on margin.
Hiranand A Savlani
Secondly you see today also if you see the price now for PVC whether you picked up any company in India, all are having the same price. They follow the same price across the board. You source from any company, all the three companies PVC price is common. Now if you compare with the international price also the price gave will not be more than one or two rupees because PVC not that product, it’s a commodity so you your gap will be one or two rupees Whether I buy imported material, whether I buy local material, the gap is not going to be more than 2 rupee.
And that is how the local players are adjusting their price. They are always giving the price on import parity based. So it is not going to be a big gap and CPVC margin. It is already in public domain of the other companies. You can check all are working on 25% plus EBITDA 25, 30%. Some are working on more than that also. So one or two rupees price is not going to affect the CPVC margins or maybe CPVC costing. Understood.
Unidentified Participant
And in terms of inventory management, you.
Unidentified Participant
Mentioned that it is going to be.
Unidentified Participant
Not a high impact on terms of cash because of the reduction in winter days. So what extent do you.
Unidentified Participant
What to what extent do you think.
Unidentified Participant
You’Ll get down to the 90 days from which could it be 30 or how would it be once the manufacturing process comes in? Because I don’t know, it will be blended sourcing, right?
Hiranand A Savlani
Yeah. So right now I’m talking about CPVC PVC inventory we are not keeping for 90 days because it’s a local supply. So don’t. We don’t need one week or two week inventory is more than enough. Whatever the higher inventory which we have to keep, that is for the CPVC because that is more inventory dependent on the import. So because of that we have to keep the high inventory. Now suppose 90 days inventories are there in the system today and if my local plant is there and it’s our own plant will be there, I think we can easily manage in one week inventory or max to max two week inventory, there is no need to keep higher inventory because the supply is at shore.
So if I reduce my inventory by two and half month, even if I’m considering higher than 15 days, there are many benefit.
Kairav Engineer
As to Hiranand Bay Said, I want to add that you know, there are many benefits that we will still explore once we make our own resin. We can also do the compounding and pelletizing on site which aids in better efficiency. So we can get rid of the compounding processes across our plant to further enhance the secrecy of our recipes and raw materials. And we can ship directly the finished compound to our factory so lot of synergies can be unfolded which we will work on once this plant is stabilized.
Unidentified Participant
Understood. Thank you for your answers.
Kairav Engineer
Thank you.
operator
Thank you. The next question is from the line of Shravan Shah from Daulat. Captain, please go ahead.
Shravan Shah
Hi sir, just one thing. So this quarter obviously the prices were very low. Realization on the plumbing side just to understand so if I just do a math obviously though PVC share was higher and that’s why the crisis was lower but still from FY25 the current realization is close to 8% lower. So given let’s assume the ADD does not come right now just for the assumption so a current prices vs the Q1 average how it is and how one can look at Unless the CPVC sir goes up obviously it will help us to improve the realization but still on a full year basis if somebody if we remove the ADD still I think we will still see a kind of a 5% on a Y basis decline on the on the realization front.
So your comment will helpful.
Hiranand A Savlani
I think it is very difficult to predict the balance nine months because first quarter is over now and balance nine months when ADT is going to come, when BIS is going to come when the polymer prices are going to go up. I think this very difficult to predict this thing because the market is volatile and what is going to be the CPVC price in the coming time. So it is very very difficult to say that what is going to be there by the year end. So every quarterly we will keep updating you. Now if you see that Q1 Q1 the polymer price drop and then the later stage PVC price has gone up and now it is stable.
So maybe Q2 will be better in terms of realization versus Q1. So very very difficult to say when prices are going up and when prices are going down. So it is volatile. So I think once the things will settle down. Yes definitely we will be in a position to predict but at this stage giving the year end realization number will be really challenging for us.
Shravan Shah
True to know what what I I wanted to understand is Currently PVC prices versus for us in Q1 how much is is higher?
Shravan Shah
14% down is there compared to last.
Shravan Shah
Q1 Q1 FY26 versus currently is 14% down.
Hiranand A Savlani
Yeah. Q1 FY25 versus Q1 FY26 is 14 now. But what is Q1 to this quarter?
Kairav Engineer
There is no change.
Shravan Shah
Okay okay. That’s what I work so so from.
Kairav Engineer
Yeah yeah. This quarter we don’t foresee any inventory losses.
Shravan Shah
Okay, okay, okay okay. Got it, got it. And and for for industry in Q1 CPVC volume growth would be how much and for us would be how much.
Hiranand A Savlani
To be very frank nobody is giving the CPVC data in the market so very very difficult for anyone to predict how much is the volume, how much is what everyone is talking percentage and all this Thing but there is nobody giving the exact number. So very very difficult. If you compare with what we are comparing and what the players are giving the that is misplaced.
Kairav Engineer
If you look at the import data, we have checked the import data. If you look at the import data then then I think the type of the CPVC data that we are getting from the market from the commentaries, I don’t think such data without any proof we have to think that, you know, they are absolutely correct.
Shravan Shah
Got it. But for us the combined plumbing volume is kind of a flat half a percent.
Hiranand A Savlani
So in that yeah, it is flattish.
Kairav Engineer
In Q1 because of overall demand. Sluggishness was there but we will cover up in the subsequent quarter. So nothing to worry about. And CPVC side we have not decrown or lost any market share. So nothing to worry about that majorly the PVC destocking happened because of the falling PVC prices. Nothing. No problem on the CPU side.
Shravan Shah
Got it? Got it, sir. Thank you. And all of this. Yeah, thank you.
operator
Thank you. The next question is from the line of Utkarsh Nopeni from Bob Capital. Please go ahead.
Utkarsh Nopany
Yeah, hi. Good evening sir. So my first question is regarding your pipe realization. So if we see it was down at a much higher pace on a Q1Q basis compared to our peers despite we have a low exposure to the AGRI pipe segment and we have a high exposure to the CPVC pipe portfolio. So wanted to know whether this is because of steep decline in the CPVC resin prices in the June quarter and if we could also quantify what has been the sequential change in CPVC resin prices in the June quarter period.
Hiranand A Savlani
So I think CPVC price was definitely down. There is no doubt about that thing. But I think what if the actual price had dropped from where to when nobody is having the authenticated data because everyone is buying from the different different source and every place pricings are different like local players are selling it. Even local players are not selling at the same price. So they are selling at a different price. Japanese are selling at a different price. Lubrijoli selling at a different price. So very very difficult for anyone to compare that that from where to where it has gone down.
Utkarsh Nopany
So for you only what has been the change in the CPVC procurement is for the June quarter on a quarter on quarter basis.
Hiranand A Savlani
We don’t share all this in internal information that this much is down or this much is up because we don’t share all this in individual numbers.
Utkarsh Nopany
Okay.
Hiranand A Savlani
Goes down that the realization drop was there.
Utkarsh Nopany
Okay. So my second question is on your capex side. So how much capex we have incurred in the June quarter and what is our guidance for FY26 and why we are acquiring 80% stake in the proposed CPVC resin plant? Why we are not acquiring hundred percent stake?
Hiranand A Savlani
So I think this answer Kairo has already given. I think you have not listened that thing that this 20% is with the technical partner. I can’t leave technical partner alone because he has given us the technology and he has helped us in our R D functions and all this thing and he was working with us for last two, three years and he wanted to invest in that plant so he has.
Kairav Engineer
Taken 20 and you know we need someone. See CPVC like I said is a volatile polymer and we have to ensure the chlorination process has to happen under certain parameters and it is a process that needs a lot of care that has to be taken to ensure the quality of the final product. And we will require this partner to run the factory on a day to day basis and to be with us for further expansion and for further support. You know we need, we require his services at the moment so he’s with us.
Utkarsh Nopany
Okay. And so on the capex side what is the guidance for FY26 and how much we have spent in the June.
Hiranand A Savlani
Q1 we have spent 50 crore rupees. So we have given the guidance of 300 to 350 crore rupees and we have stick to that.
Utkarsh Nopany
Okay, thanks so much.
operator
Thank you. The next question is from the line of Sanya Kothari from AUM Capital. Please go ahead.
Unidentified Participant
Good evening sir. Congratulations on us on successfully navigating a challenging polymer market this quarter. I just have a couple of questions. With the acquisition of Al Nadiv Plastics how will its product mix complement ASCL’s existing portfolio and what synergies are you expecting in next 12 to 18 months?
Kairav Engineer
So Ilaz makes multiple products. It makes electrofusion fitting for water supply for gas. It makes a PPR fittings, it makes some PPH products, it makes very different variety of products. Like I said in my opening remarks that we are working on several new systems to be launched in the Indian market. Some of these systems will utilize the fittings that are manufactured by Allazis. So we are going, we have good long term plans with the fittings of Allazis. On top of that a lot of Alazis fittings are used in the industrial application and a lot of them are used in, you know, water supply application as well.
So once the government demand starts again the demand for Allazis product will start. So we can utilize the Alazis product for clean water supply, for gas supply, for wastewater supply. Lot of different product categories and product lines we can manufacture using this fitting. And we are under the process of manufacturing a lot of new innovative product lines which we will announce as we are closer to the launch date for each one of them.
Unidentified Participant
Okay, sir, what percentage of revenue do you target from this acquisition? Say in FY 26 and 27?
Kairav Engineer
See, it is very hard to quantify right now, madam, because they are only making fittings. And in that also a lot of range expansion is going to happen. And on top of that I have to develop some of the piping product to go with the fitting. So it’s very hard because it will all sell as a. Sell as a system. So very hard to quantify right now that what percentage of top line will this happen. But like with our double wall corrugated systems that we acquired the Rex company like it has become a substantial revenue driver for Astral.
We foresee that even the Alazis product will become a substantial revenue driver for Astral in the coming quarters.
Unidentified Participant
Okay, sir, so this backward integrations and acquisitions, I can see they are diversifying beyond plumbing. So what percentage of the revenue do you target from non plumbing segments say for next two years?
Hiranand A Savlani
So backward integration is not diversion. It is the same plumbing product only. We are doing the backward integration. So it is not the altogether different product we are doing. It is. It’s a part of the plumbing only.
Unidentified Participant
Okay, so any guidance for the revenue growth?
operator
Sorry to interrupt but I request you to come back for the follow up question.
Unidentified Participant
Okay, thank you.
operator
Thank you. The next question is from the line of Sunil Shah from SRE pms. Please go ahead.
Sunil Shah
Yeah, thanks for the opportunity. Hiran. I just wanted to understand, you know.
Sunil Shah
About the plumbing and the adhesives.
Sunil Shah
That has been our core business for many, many years now. And the new one is on the paints and the bathware.
Sunil Shah
Just wanted to understand the penetration of.
Sunil Shah
These two lines, the bathware and the paints in our distribution reach. The question is, you know, plumbing. We are throughout the country, all across the country, similarly, maybe even adhesives. But what about paints and bathware?
Sunil Shah
Just by bathware also.
Kairav Engineer
Sir, we are, we are sorry, sorry, sorry, sorry to interview. I’ll just finish on the bathware side first because there are two different segments. So bathware also. 70% of our channel is selling bathware. We had done an internal survey and we are in bathware also. We are present across multiple thousand outlets in India. And our distribution reach is going up. We are present in three geographies majorly now in the bathwait side. North, west and south east. We have to still ramp up east. We will ramp up in the coming year or so. Because to ramp up east we have to onboard a lot of manpower.
So that we have decided that once the west, north and south stabilize we will gradually enter the east geography as well. So bathware also our aim. And if we are not entering the different geography then committing a 25 to 27% growth for the year is also not possible. So bathware also our focus is. But see bathware again if you have to look at the Indian market. Because in Indian market there are hardly handful of companies that have more than 500 crore top line in the bathware business. Bathware business. It takes the time and the lot of end user conviction to reach that scale of a 500, 600 top line player.
So our first goal is to cross the 500 crore top line in the bathware business in the coming years and to enter that club of being a manufacturer that does 5 to 600 crore of annual bathware sales. Post that we will look to ramp up in a more aggressive manner.
Sunil Shah
Sure.
Hiranand A Savlani
Just if I can talk about bathware.
Hiranand A Savlani
Right now since we are discussing that. So 70% of our distribution reach has.
Hiranand A Savlani
Is selling our bathware products.
Hiranand A Savlani
So.
Hiranand A Savlani
That they deal with the bathware product. It could be of any brand.
Hiranand A Savlani
Okay.
Hiranand A Savlani
Okay.
Hiranand A Savlani
So I’m saying that that 70%.
Kairav Engineer
We have seen one full year of that penetration already happen in not everyone, not everyone is going to stop selling whatever they are selling and pick up my product overnight. That is why I’m saying it takes years of conviction and convincing and customer preference building to succeed in the bathware space. You look at all the other players and you see, you look, make a list of all the companies in the bathware space in India. You. You will only figure out that handful of companies have crossed the 5 to 600 crore top line level. Because in this space it’s a slow burn.
It takes some time to convince the customer. It takes some time to convince the retailer it is a finished product. It is in front of the wall product. It is not a behind the wall product or it is not a commodity product. Where tomorrow if I say I will give you 5% extra discount, you stock two trucks of material, someone will go ahead and stock two trucks of bathware. It does not work like that. So this industry, you have to work with the influencer, you have to work with the homeowners. You have to work with the architects, you have to work with the plumbers.
It takes some time to develop the preference and to penetrate. But looking at what we have accomplished in our three years of journey I am very hopeful that we will cross this 5, 600 crore threshold and we will become one of the Indian players who has crossed that mark. Sure sir, sure.
Hiranand A Savlani
I can add little here. See every distributor, normally when he joined he watched the other distributor. Okay, so one distributor will take a lead in Ahmedabad, hypothetically. Then he will do some sale. Then the other distributors are watching him. Okay. The moment certain level of volume he will reach the other will be tempted to join with ashtray and then the third person will join. So this journey like that because nobody want to take a risk to hold the inventories and do the business for the new business. So the whatever the most trusted distributors are there whom we are convincing that so many years you have worked with Astral, you give us a chance and you see that whether product is working or not, so slowly and gradually distributors are putting trust in Astral and they are growing.
The initial journey as Arrow say will always be slow. Because I can give an example. If I go to any good contractor or maybe the good developer like Godrej, he will select me as tale fitting for one of his project and he will give me two or three towers. That okay, I want to test your product, how it is functioning, how is the aesthetic look wider. This tower will take three years to complete. Until that time he’s not going to give me the other order because he will watch my product, he will see my functioning of my product.
So after that he may be in his second tranche. He may be giving me hundred towers or maybe 50 towers or something like that. But in the beginning of the journey he will give me few towers. So the waiting period will be long for the same builder for the next order. So that is the reason we always communicate every investor that the initial journey will be slow. Then the second level of growth will be very fast. Because he is convinced with my product and if he is repeatedly coming to me then he may be giving me 50 tower, maybe 100 tower, maybe 500 towers also.
So initial journey will be slow in this business. And that is why we are repeatedly communicating investor that this will take time. The best part is that that plumber’s connect with Astral is very high. So because of that plumbers are pushing this product into the retail level and that is picking up very fast. And that is why we are seeing that. You tell me which Company had given in two three years time triple digit number. Very, very hardly any company will be there. So that is the strength of brand as tal. So maybe another one year or so we have to work slow and then all of a sudden you will see there will be a fast growth because I explained you that the next level Repeat order your 3 year.
Anyway I have to wait for that builder before this tower will not be completed. He will not be giving me the repeat order. Coming to your second question of pain paint when we took over a lot of systemic changes were there. Lot of Latinas were there. We implemented saps and also that we can have a right way of reporting structure and MI structure in the organization. And then we started appointing the distributor or sorry dealers for the pain for Astell brand. Because now JM is restricted to the south market. Only the other market where we are entering, we are entering with the asphalt pain.
Now the moment I am entering into any smallest of the smallest market one or two dealer meet I do it is costing me too much because my top line is not there. So because of that I have to aid the more team. That’s why my employee costs are going very ballooning. Secondly, I am spending a lot money on dealers meat distributor meat gifting them and doing a little bit of branding activities. So because of that my EBITDA is getting eroded. But now I think we already entered into Gujarat, Rajasthan, some part of Maharashtra and in this MP also.
So hopefully now certain level of dealers we have already appointed in brand Astral and that is why you are seeing there is a growth in this quarter. And from here on this same peoples are going to give me the growth in the coming quarter. And at the second stage we will appoint more dealers in the more state. Because if I am going to open up the entire pan India then I have to bleed like anything because I have to need more and more people to. Because it is a retail business, it is not a distributor led business.
It is a direct to dealer model. So that will kill the my employee cost. So because of that in a gradual manner we are working and we have a clear mindset that we don’t want to make a losses. Okay, we may be a little positive EBITDA and keep growing one by one geography. And that is the reason we are not going big way into the paint. Otherwise it is going to be a cash burn for us which is not the mindset of the management. That’s why it is going slow. But yes, now certain state we are already open.
That’s why you are Seeing the number and we are confident that in the coming quarter also by year end we are targeting minimum 20% kind of growth. Minimum. I’m telling you it can be high also.
Sunil Shah
Fine, fine. Thanks.
Sunil Shah
Thanks sir. All the best.
Kairav Engineer
And we look forward to the old.
Kairav Engineer
Growth rate and old ratios once again.
Kairav Engineer
Sir, we are also ready everyone see at the end of the day we are also working for growth only. It is not that one. No one, no one likes to, you know, not grow. So we are also working in the CPVC plant also. We have whatever we have decided, we have thought about it for years and we have deliberated and talked about it. And all these whatever initiatives that we have taken are to further drive the growth of the company only. Sure, absolutely.
Sunil Shah
Thank you so much for this, all this insights.
Kairav Engineer
Thanks so much.
Sunil Shah
All the best.
operator
Thank you. The next question is from the line of Rahul Agarwal from Igigai Asset. Please go ahead.
Rahul Agarwal
Hi. Hi. Good evening. Karav and Ji sir, just extending the discussion further on this categories. I think lot of product categories need investment on branding as well. Apart from manpower. I think more and more we are adding B2C products apart from paints pathware. I think the core categories of Adesis also has that stuff like tanks will also need some kind of branding. Because a lot of retail demand is out there. Just from a sales and promotion perspective. Typically the business is spending about 3.3.5% of top line into branding. Should we expect more spending into this line item and you know, get further brand strength or to further ramp up these sales? That’s the first question.
Hiranand A Savlani
Rahulji, you see how the aspel work out the branding strategy. Because when we entered into the adhesive business, multiple brands were there. Okay. So because of that we have to spend a lot money on the branding side. So what we did, we consolidated that business into the one brand bond type. Okay. Earlier if you see there were a multiple brand for individual category wise of Chemical you can say and that we consolidated and make it a one brand bond type. And now today you see whatever the branding we are doing that is in the name of bondage so that our branding cost come down substantially.
Secondly, in our new businesses like Mathware or Paint what we have done, we have given the brand Astral to them which is already established brand. No need to explain anyone what is Astral. So today all our market products are carrying Astral brand. Similarly paint is also carrying Astral paint. So they they are getting the big advantage of the parent brand. We have not kept the separate brand so that we have to do the separate branding for that. And that is why in the coming time when the volume will start picking up now our branding costs are not going to go up, it is going to come down.
So that is why we have worked so much of time on that and work out the strategy in such a way considering next 20 years in mind that so that in future we should not do the branding for individual category. So we we don’t see branding cost to go up in the coming time it is going to be within control. And once this volume will start picking up then it will come down. Last two years the polymers were on the down cycle. Otherwise you could have seen now also the branding cost have come down.
Kairav Engineer
In absolute term we are spending less and less on branding than what we are spending two years ago. So on absolute terms we are not in the rupee amount. It’s not that the budgets are going up. So don’t worry on that side every we have kept all this parameter under check.
Rahul Agarwal
Perfect. Got that. And just one clarification on the you know large discussion on CPVC reason. I’m assuming that 100% of this reason will be used captively and there will be no sales outside. Is that understand 100% captive use.
Kairav Engineer
100% captive use. And we might actually have to buy some resin from the other supplier outside also. Because in the initial phase this might not suffice suffice our demand. So whatever we are making this 40kt will be hundred percent captive use.
Rahul Agarwal
Got it. And you know a sub question to Hiranandi. Just from an accounting perspective sir this regions will be a segment three kind accounting or it will be included in plastic product.
Hiranand A Savlani
That we will decide. We have not given the thought on that side because you are just and done the announcement of the plan. So at a later stage we will communicate to you.
Rahul Agarwal
So you know just technically Speaking if it’s 100 captive do we need to really report you to come back for.
operator
The follow up question?
Rahul Agarwal
Yeah, it was just a follow up. But anyway thank you. Technically.
Hiranand A Savlani
Technically we have to show separately.
Rahul Agarwal
Okay. Okay. Got it sir. And best of luck for the rest of the year. Thank you. Thank you. Thank you.
Hiranand A Savlani
Thank you Rahul.
operator
Thank you. The next question is from the line of Rishabh Bhotra from Anurati Share and Stock brokers. Please go ahead.
Rishab Bothra
Just wanted to understand are there more surprise elements in coming quarters? As last quarter few quarters we have seen paints B now this Al Aziz and currently the backward integration. So is there something else also going there?
Hiranand A Savlani
I don’t think so right now anything on the card but if any opportunity will come definitely we will look into that. Because if want we want to grow then definitely we have to be like that because the kind of growth companies foreseeing then lot of cash flow will be generated so naturally we have to invest somewhere and you see the history of Airdal we are continuously generating good cash flow from the new businesses. Right now it looks like that because it’s the beginning of the journey. You see the NDC what? What the cash flow we have generated from that now bathware also will start generating the cash flow and paint Right now it is looking weak but once the volume will start picking up the paint will also generate the cash flow.
So we don’t see any problem what we have done so far but any new business or any new acquisition initial journey will be like that only. I remember in 2014 when we acquired Reginova Adesu business the similar kind of things were there Everyone was worried about what is going to be there at that time Regin ova’s margin was 6% EBITDA it is not that Today I am telling you you can go back in 2014 number and you check we already reported at that time also the margins and everything the margin was 6,7%. Today we are happily delivering 14% 15% 16% so that business had not only given the growth but it had double the margin percentage also.
So initial journey for any new business will always be a challenging. Once it will settle down at a certain level of volume economy of scale will be there Then definitely it is going to generate cash for us. But then for any new business we have to keep patient and we have to give some time because we are not here for 1/4 or 2/ we are looking for any new business for the next 10 to.
Hiranand A Savlani
15.
operator
Mr. Rishabh, does that answer your question? As there is no response we’ll move to the next participant. The next question comes from the line of Sudeet Jain from Bajaj Life Insurance. Please go ahead.
Hiranand A Savlani
Can you please. Sorry, we were not able to hear you earlier conversion can you repeat the question?
Sujit Jain
This three year R D that you’ve done in the company on CPVC how much is the, you know total R and D spend that you’ve done for the CPVC project?
Kairav Engineer
We have not done much spend, it is negligible maybe 4,5 crore at maximum we have spent in the R and D side we had set up a pilot plant, small pilot plant which was manufacturing 50 to 100 kgs of batch every day so Very, very small amount of spend that we have done in.
Hiranand A Savlani
This side R and D side.
Hiranand A Savlani
And the other thing is this company which is going to invest 20%, this was incorporated in just December 31, 2023. So if they have done something, I mean this is a curious thing basically that we have communicated that we did something on our part for three years, but that amount is not big. So see from here on, can we also see let’s say your UK business head, let’s say this partner in some of your calls, this company has become big. Can we also get to hear your other heads and your other partners so that we also kind of come to know what capabilities they bring from their.
Hiranand A Savlani
You know, which part.
Sujit Jain
UK side we are, we are going to take the hundred percent control of the UK business. So there is no, I’m not saying.
Sujit Jain
That at least once in a year if you put the UK head, your paints head, your head in front of.
Sujit Jain
Us, we have just UK head, we have just recruited.
Hiranand A Savlani
Okay.
Kairav Engineer
And the paint side also the new team is there. Next year in the analyst meet, we will try to bring as many senior as possible so everyone can meet them in the one platform so that they.
Kairav Engineer
Face the questions rather than you for their performance.
Kairav Engineer
Definitely you are valid. You have a valid point. You have a valid point. So next year we, we will promise to bring our senior people to our analyst meet that we have annual analyst meet that we have in Bombay. We will bring our senior from the different division where people can interact with them and where people can ask them direct question.
Hiranand A Savlani
In, in the past we have already invited our UK partner also in the one of the analyst meet and people have interacted with him also. And similarly, even when the Regina was acquired, the Regina promoter was also there in the endless bit.
Sujit Jain
Yeah, and you know, Keral, can you stick to a format, let’s say an acquisition when it becomes not one year, two years, but let’s say three years old. After that, a clear guidance for each acquisition in terms of sales, growth, margin, cash conversion and roc and progress on that quarter after quarter. Can we stick to this format?
Kairav Engineer
Yeah, we can definitely work on that. That is not a problem.
Kairav Engineer
Well accepted because this will yourself. You yourself will come to know your own history of acquisitions where you are. Otherwise there’ll be no check in terms of where things are headed in terms of ROCs of each individual component.
Hiranand A Savlani
No, no, no, no.
Hiranand A Savlani
I agree that we agree to it, but as you said, sir, that in India, whenever you do an acquisition or whenever you do any acquisition, you know, once you do the acquisition. See, someone is selling the company because.
Hiranand A Savlani
They are not being able to manage it, okay?
Hiranand A Savlani
That then only they will sell the company. So when you are buying a company there is a lot of things, you know, you have a leg, you have.
Hiranand A Savlani
The different attitude of people working in.
Kairav Engineer
The company that you have to change. Lot of change management is there. You have to bring in your software, you have to bring in. We run on SAP, so we have to introduce SAP. We have to introduce best practices for hr. We have to introduce best practices on plant. See lot of things go into play. So it is not that, you know, today we buy a business and tomorrow, you know, they start working as per our whims and fancies. So in India, people management and change management is a really tricky thing that one has to take on when you do any acquisition.
So some staff and some companies you acquire, people are more receptive to change. Some companies, people are less receptive to change. For example, UK company, they were very receptive to change because UK traditionally has that mindset that people, there is no emotion attached to the business. But when you acquire an Indian company, lot of people are attached with the old promoter still. Old promoter is existing in business. He still comes to the office. A lot of people are still going to him with the problem and grievances. So all these things are in have to, you know, we have to manage in a very delicate manner.
But your points are well accepted. We will create a standardized format.
Sujit Jain
It will help you in terms of tracking your own data. That’s the point behind it.
Kairav Engineer
Yes, yes, you are correct. You are correct.
Sujit Jain
Yeah. Thank you.
operator
Thank you. The next question is from the line of Aditya Das, an individual investor. Please go ahead.
Unidentified Participant
Hi. Am I audible?
Kairav Engineer
Yes, yes.
Unidentified Participant
So my question is regarding this pad that you know, are market share in the piping business is still relatively in the higher single space, I think. And the other new businesses that we have, paints or adhesives have comparatively even lower market share. And so the opportunity to grow in terms of the longer term business opportunity is huge. So I understand that quarter to quarter, you know, we might have some disappointments because of the polymer prices not, you know, meeting our expectations and going down. So we are technically reporting inventory losses. But that is something which is of short term nature.
What I want to understand from you is where do you see this business say five years from now, seven years from now? And what is the volume growth or probably top line growth that we can sustainably expect from this business considering that we have a lot of new businesses that’s My first point.
Hiranand A Savlani
So see volume growth we are expecting minimum double digit in next five years. That is what internally we are working. Now with this recent announcement of this backward integration there are high probability that our volume may go toward this higher direction. So one, this plant will be ready and all these numbers will be in our hand. And we will work out our strategy. And based on that we will communicate to all of you that what will be the new strategy for Esther. But the way we have understood, the way we have worked out the number, it is very, very promising.
But it is too early for us to give you that number. Let us first we be ready with the plan when the commercial production start. One or two months, we work on that and we work out our exit saving. And based on that I think we will revise our number. But right now without that also we were working for a minimum double digit kind of growth margin. But with this announcement we are expecting that the number will be much much higher. So give us some time to work out our strategy and based on that we will communicate to you.
Now coming to the new businesses. You are right, the new businesses base is very low. So there is high probability that on this new businesses we can grow much faster. Like bathware last two, three years number. This is the third year now you have seen that how the numbers are moving. So we are confident that new businesses will be giving us much higher than the other businesses which is other established businesses. Pipe. We are struggling for last couple of year because of this. You rightly said the polymer issues are going on. But that is also on said it done.
It is going to get over by this year and post that we don’t see there will be a further erosion from here on. We don’t know 100%. We are not a 100% right predictor also. Neither we are expert into that side also. But it looking to over so many years of experience it looks that this is year where we see the bottom will be there. And then PVC pride. We are saying that now it is trying to settle down. And if something goes positive in our favor like we said the anti dumping duty or BIS then in that case it will be another bonanja to us.
And then in that case it is going to help us in a much better way. In a much positive way. So all said and done, we are of the view that growing double digit will not be a challenge to astral. And now base effect will also start playing. So it will be on a higher side also. And with this next year second half will Be once this plant will be ready then it is going to give us a much better positioning and it is going to give us most booster dose to push the volume in a big way in the market.
So keep finger crossed. We know last couple of years we are passing through this challenge but we will not be disappointing any of our investor once we will be ready with this plan.
Unidentified Participant
I totally appreciate the fact that you know even when compared to peers we are holding our EBITDA margins relatively quite well. And also you know it is clear that you know through our margins that you know some of our peers might be you know pushing some of the products into the market and we are not. So that you know strategy is quite clear and you know I will, I.
Kairav Engineer
Will only say one thing. I will only say one thing sir. That quality has been in our DNA since day one. And we are the ones who will always advocate for the good quality product for our Indian consumer at the fair prices. You know giving a subpar quality is never in our ethics or DNA and at aspect we will never engage in such practices. So for us not only margin but the good quality product, well certified product and a product that is clean and beneficial for the human health consumption is a priority and a social responsibility as a corporate.
Hiranand A Savlani
Secondly, I can add what Kairo said that you know we are in a category like pipe that the failure doesn’t come immediately. Today I am installing the pipe. It is not going to blast tomorrow. It is not going to leakage tomorrow. It is going to give the effect over a period of time. Maybe once the building will be ready. Building normally take two to three years to complete and then the people will start using that pipe. So normally failure comes at a later stage. So many of the competitors whosoever is doing the shortcut route and playing with the quality they will suffer at a later stage.
May not be on an immediate basis but astral philosophy is very clear. We don’t want to do any shortcut route. Sometime it may happen. Sometimes we also get frustration that what is happening in the ground why somebody is selling at a 7%, 10% cheaper. But we have to understand that these kind of quality is going to give pain over a longer period of time. May not be one year or two year down the line but maybe four year, three year, five year down the line. Lot of failure is, you will see and which we are communicating since long that these kind of practices particularly in the plumbing and pressure pipe will not work because all these pipes are are behind the wall and it is already started.
Many competitors have started painting right now many of their projects are getting failure. But it will exaggerated over a period of time. It is not going to happen tomorrow. So keep patience, trust. Ultimately the good quality product is going to survive for a longer period of time. And the brand which is giving the quality product at the right price, it is going to survive for the long term period. This shortcut fruit can give benefit for a shorter period of time. But long term it is going to be a real pain. Today anyone see today I am looking.
Kairav Engineer
At long term and my family is looking at long term business. Okay my I am 36 years old. I will work till at least 70, 75 if health permits. So I am look I am going to be in this market for another 3540 years. So whatever I will do and whatever I will guide to the fellow investor and the fellow commute different community members present here will always be hundred percent true and genuine. Because we are here for the long term. We are not thinking of any short term gain. We are not looking to exit any business.
We are always here for long term and always trust the regulatory body of India like BIS who is certifying these products. You are very well aware of such regulatory body. They will always certify the good quality products. So you know we are here as a quality player for the long term basis.
Unidentified Participant
Absolutely well noted. And you know fully appreciate your views on this. My last question would be. So recently you know a lot of building materials company are also complaining of, you know, overall demand slowdown in the construction sector as such. So apart from the polymer and PVC price decrease that we’re already seeing for one or two years now, is this also something that you are witnessing in the piping sector as such?
Kairav Engineer
So some demand slowdown is there. Definitely demand slowdown is there. That is why the quarter one was flattish. Because real estate side some slowdown is there, demand issue is there and government side also the spending is on the lower end. So I think with this festival period, once it’s over, we are hopeful that some demand revival will come from government as well as private sector. And since Diwali is there in the month of October, lot of home improvement work should happen from the third week of August till Diwali. So we are hopeful that some sort of a demand scenario revival scenario should happen in the coming two to three months.
Unidentified Participant
Thank you so much.
Kairav Engineer
Thank you.
operator
Thank you. The next question is from the line of Varun jala Saria from 360 Capital. Please go ahead.
Unidentified Participant
Yeah, hi sir, I just wanted to check like on the base side, what is the kind of penetration in the display showrooms that we have currently?
Kairav Engineer
And I don’t have this number on hand but after the call you can get in touch with Dheera Nanji Iranandji will provide you with the latest numbers.
Hiranand A Savlani
I think till thousand number we were giving to the market but now every day new counters are getting in the system. So we don’t track on a daily basis but I think till 1000 mark was reached. Till that time we were giving the investor the number. But now every day new counters are getting added. So I have also not checked recently what is the real number. But definitely I will collect from the team and pass on it to you.
Unidentified Participant
So these are all full display showrooms or just the counters.
Hiranand A Savlani
It will be a dealer’s point where they give us one, one section for the display, one wall. They are giving it to us to do the display activity. That is how they work. But exclusive showrooms are also there. So that is our distributor. They do the exclusive showroom there. All the bathware products will be displayed and that will be exclusively for Ashtel product. So these kind of also many stores are being already there in the system. Otherwise on the dealer point they give us a one wall and there they do the display.
Unidentified Participant
Okay sir, then I’ll connect with you. And what was the losses that we incurred in the bathroom in the first quarter?
Hiranand A Savlani
To be very honest because earlier it was a separate plan so we were able to know exit number. But now the same plant is manufacturing lot of plumbing related product also. So it is very difficult for us to work out the pathway related profit or loss. Because it is a club with the plumbing product. Because there we are manufacturing lot of brass ring. I can say thousands of everyday rings are getting produced over there which are being used in the plumbing product. So all this, our brass elbow tea kapling, all this brass item for PVC and CPVC all are manufactured at the same plant.
So very difficult to know exact number of profit or loss for the bathware. It is club with the plumbing product.
Unidentified Participant
Okay, thank you. I’ll connect with you offline for the show number. Thank you.
operator
Thank you.
Hiranand A Savlani
I think you can take the last question.
operator
So there are no questions.
Kairav Engineer
Okay. Okay. So thank you everyone for joining us on this call and we are committed to working hard and delivering growth. I know the last couple of quarters have been very challenging but they have been challenging for everyone in the industry. The entire building material industry is going through a tough phase but you know good things are looking in the near future. You know, we hope that good things are there in store for the industry and we will continue to deliver best on our promises as possible. Thank you everyone and have a good day.
Hiranand A Savlani
Thank you everyone. And thank you Sneha, for hosting this call. And if any question is not answered, we request that you can directly call on my mobile number. Thank you so much.
operator
Thank you. On behalf of Nuwama Wealth Management limited that concludes this conference. Thank you for joining us. And you may now disconnect your lines.
Sneha Talreja
Things.