Borosil Ltd (NSE: BORORENEW) Q3 2025 Earnings Call dated Feb. 11, 2025
Presentation:
Operator
Ladies and gentlemen, good day, and welcome to the Limited Q3 FY ’25 Earnings Conference Call hosted by ICICI Securities 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 the conference call, please signal an operator by pressing star than zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr Anirud Joshi from ICICI Securities. Thank you, and over to you, sir. Yeah. Thanks, Lizan. On behalf of ICICI Securities, we welcome you all to our Q3 FY ’25 results conference call of Borosil Limited. We have with us today senior management, represented by Mr Srivar Keruka, Managing Director and CEO; Mr Rajesh Kumar, Whole-Time Director; Mr Anand Sulthania, CFO; Mr Rituraj Sharma, President, Consumer Products; and Mr Balesh Talpadi, Vice-President, Investor Relations. Now I hand over the call to the management for initial comments on the quarterly as well as nine months performance and then we will open the floor for question-and-answer session. Thanks, and over to you,, sir. So thank you, Aniruda and ICICI Securities for this call. I wish everyone a good afternoon. The Borusa team is delighted to be communicating with everyone again. I’m pleased to inform you that Borusa Limited’s Board has approved the financial results for Q3 FY ’25 and nine months FY ’25 during our meeting on 7th February 25. We have submitted our results and an updated presentation to the stock exchanges and they are also available on the company’s website for your review. This quarter, we have sustained our growth momentum driven by, I would say, not as strong as before consumer demand, but we have been able to execute across key categories, which gives us industry-leading revenue growth for both the quarter as well as nine-month period ended sales. Our revenue performance remains robust, reflecting the trust consumers place in our brand. We continue to enhance operational efficiencies and ensure sustainable growth across all business verticals. I’m pleased to share that Limited delivered a strong performance in Nine-Month FY ’25 with revenue from operations reaching INR837.6 crores, up from INR715.1 crores in the same-period last year. This indicates a 17.1% year-over-year growth. And as mentioned before, we are one of the industry’s top performers as far as revenue growth is concerned. This underscores the strength of our strategy, operational excellence and most importantly, the trust and loyalty of our customers. It also reflects our ability to tackle challenges head-on and make the most of new opportunities with new products introduced as well as, you know, reinforces our strong position in the market. As far as profitability is concerned, in Nine-Month FY ’25, the company achieved an operating EBITDA that is before investment and one-time income of INR140.2 crores, up from INR119.3 crores in nine months FY ’24, which is also a 17.4% year-on-year growth, reflecting our continued focus on efficiency and growth. The operating EBITDA margin for Nine-Month FY ’25 stood at 17% versus 16.7% in the same-period last year. One of the downsides for us in this year was the uniform for pharmaceutical marketing practices 2024, which restricts pharmaceutical companies and the agents like distributors, wholesalers, retailers from offering gifts. And this has impacted our B2B sales which was a reasonable portion of our revenues and that affected bulk orders and distributor engagements. To counterbalance this, we shifted focus to online sales and that has experienced strong growth, although, you know the loss of a key channel or sales in a key channel has definitely impacted overall sales growth. Also, given the switch to more e-commerce sales, the marketing expenses have also increased because of higher customer acquisition costs and that has put some pressure on margins. As a result, the company has incurred higher A&SP expenses of INR18.56 crores in Nine-Month FY ’25 and INR5.74 crores in the quarter Q3 FY ’25 as compared to the same-period last year. Diwali festival being a little bit early this year compared to last, does not make the exact quarter-on-quarter sales exactly comparable. So I think it’s better to look at the nine-month sales data versus specific looking at Q3 or Q2 sales data because of the one month earlier Diwali this year. Additionally, other operating income includes INR12.6 crores from shared service support income for Nine-Month FY ’25 and INR1.2 crores for Nine-Month FY ’24 with the associated expenses captured under total expenses. Consequently, profit before-tax for Nine-Month FY ’25 came in at INR86.3 crores, up from INR81.2 crores in Nine-Month FY ’25, which includes a one-time income of approximately INR30.5 crores from sale of certain tenancy rights at a worstwhile office premises in Mumbai. At the same time, depreciation and finance costs have increased substantially by INR27.8 crores and this was largely due to the commissioning of our new glast furnace in the last quarter of FY ’24. The investment income was also lower by about INR1.4 crores in Nine-Month FY ’25 as compared to the same-period last year. As a result, PAT for Nine-Month FY ’25 reached INR63.1 crores compared to INR60.8 crores in the same-period last year. Furthermore, as per the Union Budget 2024, the discontinuation of indexation benefits on long-term capital assets of effective July 23, 2024 led to a reversal of deferred tax credit. This resulted in higher taxation for Nine-Month FY ’25 impacting profit-after-tax by INR2.7 crores. Now let’s take a closer look at both the category-wise performance for nine-month FY ’25 consumer division continued to expand across both and categories under the brand along With our range under the Lara brand. The Lara segment known for its modern design and speederal quality reported sales of INR292.6 crores in Nine-Month FY ’25, up from INR268.5 crores in the same-period last year, reflecting a 9% growth. This was our lowest growth growing segment across the three segments we have. In our Glasswire segment, which includes, microwaveables, lunchboxes, serving glass timbers and storage solutions, we recorded a very strong year-on-year growth of 22.9% with revenues reaching INR190.9 crores in nine months FY ’25 compared to INR155.3 crores in the same-period last year. The segment, which has a range of small appliances, insulated bottles and flass, cookua and other kitchen essentials also performed quite strongly, posting a 17.8% increase in revenue. Turnover for the segment reached INR34.9 crores in this nine months compared to INR289.5 crores in the same-period last year. This impressive performance reflects the successful execution of our strategy to expand the Borosil portfolio, catering to the evolving culinary and serving needs of Indian households. It also reaffirms the strong brand equity and broader feel of wholesal across multiple product categories. Coming to the quarter ended — during the quarter ended June 30, 2024, the company successfully raised INR150 crores through a QIP to facilitate the repayment or such prepayment of long-term project loans and for general corporate purposes. Post issue expenses of INR4 crores, the entire net proceeds of INR146 crores has been utilized. The company has utilized INR107 crores for the repayment of working capital loans and IRR39 crores for repayment/prepayment of long-term project loans. Pursuant to the composite scheme of arrangement, during the quarter ended 31st December 24, the company has also paid IR93.07 crores to Borusal Scientific Limited towards repayment of loan including interest. As on 31st December 2024, Limited has a net-debt of INR20.4 crores. Through portfolio optimization, we have enhanced efficiency and profitability, streaming our offerings to focus on high-growth categories. Our premium product lines have continued to witness strong traction, reflecting evolving consumer preferences. We continue to invest in design, functionality and quality enhancements, further strengthening our leadership in key segments. In addition, our initiatives in e-commerce and digital have gained strong momentum. By leveraging technology and consumer insights, we have effectively scaled our reach and engagement, thereby helping customers. At Lara, we believe dining should be a perfect blend of beauty and functionality, transforming everyday meals into memorable experiences. We launched our premium set collection and it’s a — which is a sophisticated new addition to our premium kitchen wear lineup. The premier collection combines exquisite aesthetics with practical functionality, making it an ideal choice for contemporary homes. Featuring intricately embossed designs, this collection brings a touch of timeless elegance and luxury to any dining table. On the marketing front, our campaigns have delivered a strong impact, reinforcing our brand leadership. Our integrated campaigns have helped us to deepen customer connect and expand market penetrations. Though we are seeing significant engagement growth across digital platforms, which reflects the success of our content-driven approach. The focus on-brand storytelling and consumer experiences will continue to be a strategic priority for us. Additionally, our media engagement and industry outreach have further strengthened our positioning. As I mentioned in previous calls, I want to reaffirm that since acquiring Lara and 2016, this flagship brand has been on a remarkable growth trajectory. Lara’s success is a testament to our strategic vision, operational excellence and unwamping focus on customer satisfaction. Sales for Lara have grown at a CAGR of 22% from INR87 crores in FY ’16, ’17 to an impressive INR358 crores in ’23-’24. Similarly, our segment has emerged as a key growth driver for with a CAGR of 50%, our sales have grown from INR23 crores in 1617 to INR387 crores in ’23 ’24. This achievement reflects our commitment to broadening our product portfolio and staying ahead of evolving consumer needs. The commissioning of our new Bor furnace last year marks a major milestone for us by expanding production capacity and not only meeting the growing demand, but also strategically reducing our reliance on imports. This move aligns seamlessly with our mission to drive a shift from plastic and steel towards healthier, more sustainable glass alternatives. Our approach of combined product innovation with accessable pricing has resonated strongly with consumers, particularly in everyday use categories like lunch boxes, which appeals across all age groups. As awareness of the benefits of continue to grow, we see this momentum sustaining in the long-run. Our key focus right now is to broaden and strengthen our brand presence. We are committed to transition — transitioning consumers from plastic and melamine to glass storage and open, while also encouraging greater adoption of microwaveable products. To diversify our portfolio, we’ve continuously introduced new innovations, including high-grade steel products and home appliances. Our ultimate goal is to establish and Lara as a go-to brands for modern Indian kitchens catering to every storage, preparation, cooking, eating and serving needs. We are highly confident in the medium-term outlook for our business, while we may experience periods of slow-growth and cautious customer segment — sorry, consumer segment, which are natural in-market cycles. Our long-term growth potential remains strong. Our strategy is focused on expanding our consumer reach to targeted initiatives, launching in innovative products that cater to evolving customer needs. We also plan to optimize our supply-chain and marketing efforts to drive maximum impact. With that, I would like to throw the floor open to questions. Thank you. Ladies and gentlemen, we will now begin with the question-and-answer session. Anyone wishing to ask a question may please press star in one on your touchtone telephone. If you wish to yourself in the question queue, you may press star in two the 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 Resha Mehta from Green HWealth. Please go-ahead. Yeah, thank you and compliments for the revenue growth considering the muted macro demand. The first is on the sourcing. So if you could just — and I’m fairly new to the company. So first on the sourcing, if you could just clarify that now with the furnace that we have is everything 100% in-house or you know, how is it for each of the segments, if you could elaborate for Glassware. Non-Glassware, is there anything that we in-source or everything is outsourced and what would be the China sourcing component over here? And for each of these segments, if you could also comment on what would be our utilization for and? Okay. So thanks for your interest in the company. I’ll answer this question from multiple perspectives. As far as I’ll go segment-by-segment, as far as-is concerned, 100% is in-house and there is no external sourcing. Coming to glassware, glassware has three separate product categories. One is presswear, which is entirely made in-house after the addition of our new production line. Second is blown wear, which is a very small segment, maybe only 5%, 7% of our overall sales and that is imported and that will continue to be imported. And the third is what we call tube made glass products, which is actually manufactured by Borisal Scientific. So — and that is purchased from Borisal Scientific. So these are the three categories. I would say glassware and even the glass — the blown glasswire is not bought from China. So glasswire is 100% either made in India or then some quantity comes from other geographies, but that’s hardly 5%, 7% of the total glassware sales. As coming to non-glassware, sorry, just sorry to interrupt. Just the last one, you said what is it that we get it manufactured from the scientific wear, which one is our glass bottles and our vision glasses, some storage containers. And I mean from a overall revenue or a manufacturing standpoint, that would be how much that is basically sourced from so that we don’t share that data, but I would say the vast majority of glass is the press production, which is anywhere made in-house. And coming to non-glassware, it’s 100% outsourced at the present moment. It used to be mostly coming in from outside of the country, but I would say in the last two years, we’ve now about 30% or to 35% made in India, 65% is imported still. With various BIS norms coming into play, I would say if I have to take a pet, in the next three years, this would become 70%, 80% in India and maybe 20% outside of India, that will be the shift. And we are also evaluating our own production versus outsourced production here. I think we’ll be taking a call
Questions and Answers:
Operator
Very shortly on capex in this area because as you can see, the market is growing and we’ve also done reasonably well in this segment. So overall, the in-sourcing is definitely the theme and Made in India is definitely the theme that we see across this range. And coming to capacity utilization, I would say on Opalware, we are roughly at about 85% capacity utilization this year. And in glasswear, as far as the press is concerned, we would be closer to 55% 60% capacity utilization. So there’s a lot — there’s room for growth in both these product categories. The other areas, there is no real — it’s not — on the front, there is no capacity utilization anyways outsourced. So it doesn’t make sense to have any number on capacity utilization. So that’s — yeah, I think that answers more or less all your questions, but some data we can’t share. Thank you. A reminder to the participants, anyone wishing to ask a question, may please press star in one. The next question is from the line of Joshi from ICICI Securities. Please go-ahead. Yeah. Sir, two, three questions from my side. So first of all, just wanted to understand regarding this plan on the — in a way the metal bottles, etc. So what is the current situation means the SMEs are, I guess, allowed to import right now. But till what time they might be allowed to import? And again means in India, I guess the capacity to produce the products that are getting consumed right now is very limited, the high-quality production capacity. So what can be the ultimate solution over here? So that is question number two. Secondly, now that can be a very big opportunity for a successful brand like Borosil because we can gain market-share at the smaller stoke unorganized players may struggle to set-up the new manufacturing units as early as Borosil. So what is our strategy in this market? And lastly, if the steel bottle market itself may in a way declines, can that be taken over by glassware bottles? Okay. So look, as far as the — I’ll answer the last one first and the answer is no because steel has a totally different requirement. So I don’t think glass can replace steel from an application or from a use perspective because people go to the gym or sitting in the train or you know, going-in a bike to work, unlikely that they will carry a glass bottle for fear of breakage. So — but the — we have, frankly speaking, no alternative but to decide to make this product in India. And I think very shortly we will be doing that. We do see some short-term challenges in terms of revenue growth, which I think we’ve alluded to that in the past also. But I think these are short-term challenges, as you rightly kind of highlighted, there’s actually a very strong medium-term opportunity for us because when we set-up the manufacturing plant here, we are likely to be doing it in a much more organized way than you know, let’s say, smaller players. And I hope that will give us a long-term reason to win in this category in a bit — in a bigger and better way than we have. So whatever we do, we’ll be doing it with some large-scale in perspective — large-scale in mind. And I expect that the short-term headwinds will be able to let’s say, overcome that from a medium-term perspective. We have imported more products in the short-run to avoid or to, let’s say, reduce the impact of the sales slowdown. But yes, there will be some small short-term impact. And we’re actively working even today to increase our domestic sourcing. The challenge is that we can’t even just go-ahead and choose any vendor. We really have a lot of quality-control mechanisms, which are in play to make sure we give a quality product to the end-customer. So we can’t — we can’t be compromise our brand even if at the cost of losing sales in the — even in the short-run. So there are certain challenges. I think in the medium-term, I’m not even saying long-term, but even in the medium-term, I think it’s a fantastic opportunity for us and it will only help us increasing our sales and increasing profit in the medium-term. Okay, sure, sir. Understood. Very helpful. Second question on the small kitchen appliances. So we have entered multiple kitchen appliances, obviously at the top-end or premium end-of-the market. So what is the current revenue run-rate and whether the products are available pan-India or we are still present largely in metros and Tier-1 cities and how do you see this business panning out? We see there is some stress at the bottom of the pyramid and overall other kitchen appliance companies have also reported a muted growth rates over past two, 3/4 and even e-commerce is the only channel which is doing well in that kind of market. So how do you see the market panning out and what is the three-year roadmap for this business as well? See a non-glass, you can see the growth, 18%, okay, 17.8% to be precise. It’s on Page 13 of the presentation in nine months. So I can say that we — primarily comprises of three categories, that is your kitchen appliances, second is the hydra, the bottles and the third is the steel serveware. And steel serve is still quite small. The other two categories are, let’s say, the dominant, you know, more or less equal in share from non-glass. So I would say we have scaled reasonably well in that segment. And I think the mass premium segment where we operate, we are not really spending too much money in advertising for this category. Of course, we spend a lot of money advertising overall for the brand. But for this specific category, we don’t really spend much money and it’s more — it dependent on customer pull. And hopefully, you can see reviews on Amazon and other social channels, you know, you will find that people generally have a good view of our products. So we are from — we are a quality led you know company in terms of really the feel of the product, the performance of the product has to really help customers give word-of-mouth feedback to their friends and relatives. And we have been quite successful over there. So I don’t see that the muted growth from this is something for us at this scale to really be too concerned about. The larger challenge even here is supply-chain because of, again, BIS issues, even in appliances are getting larger and larger, although we have successfully transitioned a lot of this range to India to Made in India. There are few products which still are not the ecosystem, the vendor ecosystem doesn’t exist in India. So — but I think we’ll be able to find solutions here. And in terms of the supply-chain, the supply-chain for the steel bottles is more critical at this stage at least compared to the appliances. But overall, I believe this market has substantial potential. We are available, like you rightly mentioned, more in metros, but actually, you know, we are seeing the penetration increasing in terms of number of retail outlets in which our — are our channel — sorry, our appliances are available. But I would say it’s still the tip of the pyramid. There’s a huge number of places where we are not available and our team is working diligently to add those areas wherever it makes sense. But online, I think we have a fairly good presence even here. But on the trade side, I think there’s still a lot of work to do. Okay. Understood. Sir, last question and then I will join back-in the queue. So what is our current channel-wise mix, let’s say, in nine months FY ’25, so general trade, even modern trade, e-commerce, including our own website and other e-commerce. And also what is our strategy on commerce? Lastly, we have seen there is a lot of stress in MFI channel also. So one is Borosil present in the MFI channel and again means is there any impact we have also observed in that channel. Also, in case of CSD, some of the companies have said that there is inventory correction happening and that can lead to a relatively lower primary sales, while secondary sales may remain healthy. So again, what is our impact on — due to the changes in norms per se? Yeah, that’s it from my side. Thank you. Thanks,. You said one question, but you asked 10 there anyway. The to answer your questions, I would say that as far as far as the percentage share of channels is concerned, we don’t share that data. And I would not like to share it either. We want to reach the customer. The basic strategy is that the customer Customer is who we care about, how to reach the customer that the customer chooses, whether he or she wants to buy online, wants to buy on quick commerce, wants to buy on-trade, that’s a customer’s prerogative. We have to be everywhere and wherever the customer decides to buy our product, they will find it there. So that’s actually the strategy, not necessarily speaking, quick commerce or e-commerce or those are just means to the end. And those channels, every time there is a change in their own competitive intensity, their own desire to kind of penetrate the market. So we just follow those trends. We are not making those trends. But yes, to substitute plastic in the kitchen, to substitute, let’s say melamine for serve, these are the strategies that we have and the channel is just a means to achieve that end. As far as the — the question of the channels is concerned of MFI rather specifically, we are not directly present in MFI and therefore, you’re right, there has been some — at least what I’ve heard is that there has been some stress there. We have not been impacted because we didn’t have much revenues from that segment. Not to say we won’t participate in the future, but at the moment, we don’t have much revenues directly. Maybe some of our distributors would be doing it on their own independently, but nothing direct. Coming to CSD, you’re absolutely right. You have good research. There has been some correction in stocking at CSD. But these things happen in business every two, three years, something or the other happens. So sometimes something grows a bit less, sometimes it grows more. I would say that’s just a general business case. So I would not highlight it. The one thing which has to be highlighted, which I also shared in my opening remarks, the gifting reduction in B2B for — for your pharma companies, this has definitely impacted not just us, but the whole industry. So that is something which is one-off. I do believe that eventually this should come back. But at the moment, I would say that if I had to pick one thing in the whole year, that was the biggest impact from a sales perspective for us in this year. Other things are business-as-usual, whether it’s increase of quick commerce or decrease of any other channel, those are just normal things and I would not say they are really — from a larger trend perspective, they are not that meaningful. Okay, sure, sir. That’s very helpful. Thank you. Thanks. Thank you. We’ll move on to the next question. That is from the line of Daval Shah from Girik Capital. Please go-ahead. Yeah, hi. Thank you for the opportunity and very good growth in compared to the industry. So sir, my question is with related to the brand extension in terms of getting more products and to support our growth going-forward. So if you could tell us more about it. Also, Opalware is now seems to be hitting full utilization and we are already at INR400 crore annual run-rate. So how do we get growth going-forward from the open segment and also the newer categories, which we had spoken about. So how do we get growth for the future years? Yeah. So we are actively working — so okay, let me talk about categories first. Although we ourselves say open wear, actually the appropriate definition for that is not open wear, the appropriate definition is dinner wear. We say as open wear or let’s say serving wear is the appropriate definition for that category. Now in Opalware, we do see more competitors coming also maybe in the future. But there is still a lot of scope in the broader category of serving to substitute plastic, melamide, even Bone China. So we are actively working on other materials and hopefully soon, we should be able to launch some products. I don’t know-how we — how the scale will work-over here. But that’s certainly something we are working on and we will be launching in the next few months new products in the general dinner or serving wear segment. We also have other products in the other categories we are working on which in the non-glasswear space, which I believe, which we will also probably look at launching in the next three to six months. So I would say that new categories will drive some percentage of growth. Obviously, when you launch a new category, there is no guarantee of success. We have succeeded many times. We also played many times. So we keep trying and I believe that if we do the right process, we should have a fair share of successes. But I would not like to comment too much on that because it’s still work-in progress. And hopefully, that should also cover some percentage of, you know say losses that happen in the short-term coming from things like BIS implementation. So I would say that — let’s not look at growth. I don’t have any answer for you specifically that how will grow, but I do have an answer on how serving wear will grow. And I have always maintained that overall as a company, we should have a 50% to 20% kind of medium-term CAGR, which I still believe that we can achieve. Although in the very short-run, there may be some challenges owing to BIS, but I would say we should be able to overcome that. And if you look at historical numbers from 2016 till now, even through COVID, we have grown at better than 20%. So while, of course, the base grows higher, I would say that 15% to 20% is achievable when we look at new, new category launches as well. Got it. Noted, sir. Sir, now two questions on this topic, sir. So one is now, let me say about newer category of product we get into. I mean so in the dinner where you have a lot of you said bone china or maybe something else. So in terms of positioning of the product, so we have glassware — I mean Borosilicate glass, glass though not as a pure dinnerwear, but as at the premium end-of-the pyramid and then we have open wear. So the newer category would be priced below that or somewhere in-between. So as I — as we can — as I can understand, we are trying to — we will be occupying more shelf-space at a retailer’s end. So how the pricing would work because, yeah, giving the premiumness of Borosal as a brand in the consumer’s mind. Yeah, and then I have other questions. This one, please. So as far as well, you mentioned that Glasswear is the high-end of premium, that’s not entirely correct. It’s probably a mass premium product, slightly higher than mass premium, but there are also other products which are even more premium than glass. So we could be — we are evaluating entering even further more premium categories as one option. But in-principle, we don’t really go after markets which are too low in cost, that’s not like say, whether that’s not the idea to get into those kind of categories where it’s not good for you or not good for environment, not good for health. So we will not enter those categories. The idea would be to look at categories which are good. Our tagline has performed beautifully. That’s the — so products that have high — some high-performance and they must look good also while performing. So that’s something that — so those are categories where we will enter. I would not like to give too much away at the moment because it’s still work-in progress. When we launch it, we’ll definitely talk about it. But it’s not necessary to say that glass is the highest and there are even many categories more premium than glass. Or conversely, there are categories which are cheaper than open, but also are healthy and which are — which may be looking for some disruption. So those are also categories we can think about. But I would not like to comment more on it till we actually have a firm launch of those products. Got it. And now the other question is on the margins front. So two things here. So one is that this quarter the margins were clearly below expectation of the investors. And so there must be some line-item which could have seen a lot of inflation one-time maybe. So I would like to understand in detail about it. And secondly, you also — and now in the short-run, do we — is there some cost or some DAS regulation as one-off, it could be which could put further pressure on the margin. So as over a longer-term period, two-year period, we are aiming to have a 20% EBITDA margin come at a company-level. So in that journey, what should we be expecting? Yeah. So I’ll refer to EBITDA margins because going after PAT doesn’t make sense right now because our depreciation is skyrocketed, which was always expected given the capex invested. So if you look at EBITDA margins, we are roughly around 17.5% EBITDA margins. And as mentioned already, this is — this is not a gross — it’s not a gross margin issue. It’s an EBITDA margin issue, okay? Gross margins that we shouldn’t share of data, so you don’t — you don’t have it, but our gross margins have actually been growing. Even this year, we have grown at least two percentage points in gross margin across — across the whole — all the categories. The challenge has been, so as I mentioned earlier, there has been A change in channel mix and advertisement expenses for online have increased, which — which has contributed to this. The second thing is because again this, this change in channel mix, things like institutional sales, which were relatively more profitable because normally these are large-volume orders, they are more efficiently producible and they are delivered at one location. So freight costs are lower and so on, plus manpower costs are lower because you don’t — these are large key customers. So the loss of the pharma, you know, let’s say, orders have definitely contributed to some reduction in margin. Now, I would say that’s a temporary phenomenon that should reverse itself. So we look at the gross margin and the gross margin is more, I would say, indicative of any challenge, let’s say, in the category itself, which we don’t see. So the number which we have — I’ve also always mentioned that in the next, say, two, three years, can we increase our EBITDA margin to beyond 20%. I think that is very much on the cards. There will be short-term blips is never a straight-line increase. So we are going — we are going through one of those bps and I’m not too — given the fact that gross margins are improving, I’m not too worried about it. Issue which could come would be — would be in terms of higher sourcing cost and thus some — again, some pressure on the margin, is that what you mean? I don’t think — see, the higher sourcing cost would be applicable for everybody in the whole industry, okay. So in my opinion, that would — that should not reduce margins because that would — the product price may go up and the total demand of the product may suffer to some extent if you increase the price, okay? I don’t think the margins will be impacted there. Your revenue growth may be impacted for sure. And in the short-term, if you’re not able to get the full supply-chain in order, you have fixed overhead, which will not be able to absorb, okay. That may be the — I mean the short-term margin impact will only come from overhead, not from the actual gross margin of the product. And in the long-term, the impact will be dependent on what the — you know-how efficiently we can make the product in India. And therefore, how little an impact it will be — there will be definitely some impact to the end-customer in terms of higher selling prices, but how we can limit that impact. But I would say, I don’t see any margin impact because of this in the medium-term at all. Only revenue growth impact. Hello. Yeah, go-ahead. Sir, when are the BIS norms kicking-in, they’ve already kicked-in. Okay, okay. So is there some quota in terms of reduction of imports or how is it? No, you — there is no quota per se, but whatever you’ve imported, you can sell but you — fresh imports are challenging. Understood. Okay. Thank you very much and good luck. Yeah. Thank you. The next question is from the line of Aman from Cement. Please go-ahead. Yeah. Hi, sir. Thank you for the opportunity. So my first question is on. We haven’t grown much there in this quarter. And since we had launched some premium products recently, does that mean there was volume loss in this quarter? No, actually volume growth is higher. But the premium products is just a small percentage of overall sales at least at the moment. There is no volume loss. In fact, volume, like I said, volume growth, overall nine months revenue growth of 9%, volume growth is probably slightly higher than that. But the — again, I’ll just repeat, the main issue was because the loss in the — in the institutional sales, which has impacted the revenue growth of the organization. And because most of that has come out-of-the openware sales. I see. And my second question is on utilization of glassware capacity. So when do we expect to reach the maximum capacity there we have overall given three years as the let’s say, the timeframe in which we should utilize the whole glass capacity, but we hope to do it in two, let’s see, it’s only year-one, which we are going through at the moment. So it depends — depends on the market. I mean, we’re not really having a lot of tailwinds from a market perspective at the moment. So we would hope that we have some more tailwinds. And if things go well in terms of our new product development even in, I do hope that we can do this in two years. But in any case, it should not be longer than three. So it’s fair to assume like FY ’27, we should be able to completely utilize this yeah, absolutely. And do we have a number for steady-state EBITDA margins then? Yes, we have already indicated that we expect somewhere in the 20% to 22% EBITDA margin overall. Right. And my other question is again on other expenses. So other expenses have come in higher this than last year like you mentioned. But in our Q2 call, we were expecting some normalization in ad spends from this quarter on, right? So are we expecting ad spends to stay elevated for some time, if you could give us some timeline there? Yeah. Like I said, the challenge has been the channel mix because at the channel e-commerce has become a larger share. So normally for e-commerce, you have to spend more advertising money to keep sales growth alive. And that because of the B2B business reducing, the bad spend has kind of been impacted in a negative way, meaning we have to spend more. It’s hard to give you very short-term input on this in what will happen in Q4, Q1. In the long-term, we have always indicated that at a certain scale our ad spend should come down and that will also be a part of the operating leverage, which I still expect it has to happen. But unfortunately in the very short-run, in quarter-on-quarter, it sometimes gets impacted. But I do expect our ad spend used to be 10% at some point, now it’s down to 8% and hopefully, over the next two, three years, it should come down to 6%. And I think we should be able to maintain that. And you just said that there was some slowdown on some of the channels. Is it like a broad-based slowdown like in all the channels, are we seeing some slowdown or how do you generally, you can see data now across there has been a general consumer slowdown. I mean if you — it’s not just restricted to kitchen products, if you look at numbers shown by most of the consumer-facing companies, I don’t think there’s been really very aggressive growth. So in general, there is a slowdown. And specific for us, there was a slowdown in the B2B, you know, channel. Right. And another question I have was on — so do you have a number for us for change in margins when it comes to importing bottles versus, let’s say, sourcing them from India or other mobile culture. I mean that it’s too early, it’s too early. And how much do these bottles contribute to sales? You see the non-glass wire is about a third of our sales, if I’m not mistaken. And this is a large chunk of non-glass wire. It’s about actually 40% of our sales. And yeah, it’s about half of that, let’s say 20%. 20% or so. Yeah. And the last question I have is on — so we are doing about 20 CR in depreciation every quarter. Can we expect this number to come down next year since the second where furnace might be near fully full depreciation, right? No, the depreciation takes about five, seven years if I’m always saying. So this number will be around this 20 cr for the — throughout next year, right? Next year. Yeah. Depreciation is not a bad thing. Yeah. And sir, do you have any CapEx plans to be shared with that for next year? At the moment, I have nothing specific to share, but like I told you that thematically, we do — we will have to put the — most likely the capacity for the bottles here in India and that will have some capex. I don’t know the exact number, but my sense is somewhere in the INR50 crore to INR70 crore range would be the capex. So INR50 crores to INR70 crores per bottles for next year. Yeah. This includes working capital and everything. So thank you. The next question is from the line of Akil Parik from B&K Securities. Please go-ahead. Hi, thanks for the opportunity. Sure, my first question is on the Opal. I mean, you have mentioned the reason for weekly sales in openware mainly because the gifting sales has not happened. Would you be able to quantify how much is the impact or maybe broadly how big was gifting as a percentage of whole business? I would say it’s cost us at least at least about 10% of revenues of our open revenues. Okay. Okay. And this is like a permanent loss, I believe, right? I mean, it’s not going to come back next year because of this change now, there is I don’t know very well, but I think there’s some change now. So maybe we’ll expect this to bounce-back. But it’s not clear to me yet. Proof of putting it in the. So when we get orders, we’ll tell you. Sure. And second, you mentioned that the capacity utilization is already at 85%, right? I mean — and we know that it takes lot of time for a glass facility to come on-stream . So theoretically speaking, I mean, I mean it’s — shouldn’t we have already started building a new facility or is it that the channel level inventory in Opalware is right now at a higher-level and it might take more time for that — that capacity to get absorbed base. So firstly, we are we are doing debottlenecking for our current capacity. And when we re — so our furnaces — one furnace will be down this quarter, one furnace will be down next quarter for rebuilding. When we rebuild these furnaces, we will increase our capacity by roughly 10% as it is, okay? So our capacity will go from 100 units to 110 units this — in this coming year just by simple debottlenecking. Then we have another potential to further debottleneck, which could maybe increase it from 110 to 120 units about two years out, okay. So effectively, we have room to go from 85 to 120 in the next two years, okay. In this interim, we do see competition maybe increasing here. So we should then evaluate whether we want to focus more on this category or look at other categories within the dinnerwear segment. We see some opportunities there as well. So at this moment, we are not ready to commit to any further open capacity increase except for the 100 to 120 say journey, which will happen just with very minimal capex and will happen organically in the next couple of years. Okay. It’s a bit surprising to hear that competitive intensity has gone up in Opalware, because we always thought that it’s very difficult to have Opalware capacity and the business is very complicated and the — and the market size is not big enough for the other players to kind of enter into this segment. Would you be able to comment which are the players because our channels just in past like a year back were indicating built-in probably starting to enter into this segment. So is that — is that correct or maybe if you can throw some more light on competitive intensity, I think? So your — as no, your assessment is right in that there is very few players can play in the segment because of the challenges that you already mentioned. But there are at least five players in India who can do this, out of which three already playing. So we have — our understanding is that a fourth player is coming in this segment. Okay. Okay. It’s coming, is about to come. Okay. Okay. But if we don’t expand in open where I mean, my ballpark assumption is that 50% of our operating profits are coming from openware segment as a percentage of total. And if you don’t grow in that segment, our margin trajectory won’t — won’t it get impacted because of that? No, that’s not correct because glasswear also will actually may have even better margins than that. And we are growing aggressively in glassware. And glasswer capacity utilization, as already mentioned, is 55%, 60% long way to grow and we can further expand capacity quite organically over there in a, I would say in a relatively low capex manner. So I would not jump to that conclusion that is the only one that’s, you know a profitable glasswire also will drive that. So we have other levers also. They are — in non-glasswer also there are other product categories, which we can start working on and then also get into manufacturing there. So there are many levers to increase the margin. Is one, Glasswear is the second and the BIS implementation will also open up at least one, if not two more avenues for margin expansion. Again, the reason I don’t talk much about it is we should prove it and then talk about it. So no point in giving something and then every — everything takes time. So anything new we do does take 12, 18, 24 months-to see results. So in the very short-run, which you know that’s — it’s not likely to happen. But in the medium-term, all these all these market changes may give big opportunities to existing players. Sure, sure. And just two last question if I can squeeze in. One is, so capacity-wise, like glassware and openware is completely in-house sourcing, right, right? And non-glass is completely outsourced at that point-of-view. Broadly yes. Okay. And in the facility, this — the end-product would be drinking glasses or with the glass large box boxes. Okay, okay. And these are largely imported at this point of the time, if I’m not mistaken. We make it all here around, it used to be now it used to be. I mean, so it’s more of an import substitution because domestic growth, I mean, that’s what I’m of saying. That’s right. That’s it. Okay. Great. Nice speaking and best wishes, Thank you so much. Thank you. Ladies and gentlemen, that was the last question. I now hand the conference over to the management for the closing comments. Thank you. Okay. Well, thanks everyone for their interest in the company and I just want to-end by saying that we — as already mentioned, revenue growth has been good. Our margins definitely, as you can see, there are some challenges. But from a — from organization perspective, our concern is always three, five, 10 years out. And in that — in that particular thing, we do things to grow the organization from that perspective, even at the cost of short-term decision-making which can improve margins or which can help you in the short-run to show, let’s say, better numbers, but it may hurt growth. So our focus has been on growth, on communicating to customers what we’re all about, on spending money on developing teams and definitely when you have quarters such as the couple of ones that have just gone by where demand has not been so robust, then you do see some short-term impact on the margin. I’m not too worried about it. I think we have to build a company which is very strong and market customer-centric for the future. India’s opportunity is vast and that’s how we look at the business, not specifically too worried about quarter-on-quarter from a margin perspective. So it’s just a kind of thought I would like to leave everyone with. But really thank you for your support and engagement and look-forward to speaking with you next time. Bye-bye. Thank you very much of the management team. Ladies and gentlemen, on behalf of ICICI Securities, that concludes this conference call. We thank you for joining us and you may now disconnect your lines. Thank you