Cera Sanitaryware Limited (NSE: CERA) Q4 2025 Earnings Call dated May. 10, 2025
Corporate Participants:
Devrishi Singh — CDR India, Investor Relations
Deepak Chaudhary — Vice President, Finance and Investor Relations
Vikas Kothari — Chief Financial Officer
Analysts:
Praveen Sahay — Analyst
Lakshminarayanan K G — Analyst
Moksh Ranka — Analyst
Rudraksh Gupta — Analyst
Sonali Salgaonkar — Analyst
Pranav Mehta — Analyst
Udit Gajiwala — Analyst
Samyak Jain — Analyst
Jenish Karia — Analyst
Akshay Chheda — Analyst
Shubham Padhiar — Analyst
Aasim Bharde — Analyst
Presentation:
Operator
Hello, ladies and gentlemen, good day and welcome to the Earnings Conference Call of Cera Sanitaryware 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 then zero on your touchstone phone. Please note that this conference is being recorded.
I now hand the conference over to Mr Div Rishi Singh of CDR India. Thank you, and over to you.
Devrishi Singh — CDR India, Investor Relations
Thank you. Good morning, everyone, and thank you for joining us on the earnings conference call for Cera SanityWare Limited for Q4 and FY ’25 earnings, which were announced yesterday. We have with us today the management team comprising Mr Vikas Kothari, CFO; and Mr Deepak, VP, Finance and Investor Relations of Cera Sanity. We will start with brief opening remarks from the management, following which we will open the call for Q&A.
A quick disclaimer before we begin. Some of the statements made in today’s conference call may be forward-looking in nature and a detailed note in this regard is contained in the results documents that have been shared with all of you earlier.
I will now turn the call over to the management for their opening remarks. Thank you, and over to you, Deepak.
Deepak Chaudhary — Vice President, Finance and Investor Relations
Thank you, you. Good morning, everyone. On behalf of the management team of Limited, I would like to welcome you all to our earnings conference call. I will begin by sharing some updates on the operations and strategy, following which our CFO, Mr Vikat Kothari will run you through the key financial highlights.
I’m delighted to share that we concluded the financial year 2025 on a positive note. Supported by stable margins and steady performance across key segments. Our focus on operational efficiency and disciplined cost management has been instrumental in sustaining profitability and supporting our performance. The operating environment in Q4 remained subdued with continued softness in consumer demand across end-markets, despite this, the company-managed to deliver a satisfactory performance for the quarter, largely driven by our strong business fundamentals, sustained focus on cost and efficiencies, growth and consistent execution across key verticals.
Revenue from operations in Q4 FY ’25 stood at INR578 crores, registering a year-on-year growth of 5.7%. EBITDA stood at INR121 crores with improved margins at 20.4%. Our by segment recorded a year-on-year growth of 9.6%, supported by resilient demand and good acceptance of our wider range of SKUs. In the ConnectedWare segment, while demand remains subdued, we remain optimistic that structural drivers such as urbanization, rising disposable income, desire for improved living standards as well as home renovation and upgradation cycles will support the recovery over-time.
In Q4 FY ’25, the and business contributed to 48% and 40% of the total revenues respectively. During the quarter, capacity utilization stood at 95% for faucet and 90% for. At the same time, the B2B segment continues to gain traction, contributing 40% of revenues of this during the quarter, up from 35% in Q4 FY ’24. We have witnessing strong pre-order momentum from the real-estate sector, supported by rising construction activity and higher disposable income.
Longstanding brand equity and track-record of quality and reliability has enabled us to consistently win project orders, further strengthening our B2B growth trajectory. FY ’25 demonstrated our ability to execute across multiple strategic funds despite the challenging demand environment, we enhanced our product portfolio with the launch of approximately 431 new SKUs across the and brands. And undertook a comprehensive portfolio reinvention through the establishment of a dedicated design center at our factory. This has helped drive innovation in categories such as designer basis, profile water projects and PVD coated process during the year, we also significantly expanded our retail footprint, launching over 342 new stores and expanding our company-owned CDM centres at Mohali,, Pude and, bringing the total to 13 across India.
Our retailer loyalty program continues to scale effectively and now enabling over 24,400 retailers. Additionally, we strengthened market participation in leading industry forums across cities such as Kochi, Vijawada, and. We continue to take progressive steps in evolving our brand architecture and sharpening our premium and luxury positioning. Our flagship brand, continues to perform well, while our premium brands like Nux and are poised to gain momentum in an evolving market landscape. Backed by a fairly defined product roadmap and supported by in-house design, manufacturing and R&D capabilities, we are prepared for a focus scale-up in FY ’26 and beyond. There has been substantial progress on the brand and the company’s product range has now been finalized covering process sanitarywear and wellness products to offer a full-spectrum of solutions.
In a significant strategic move, we are setting up a dedicated team under the leadership of Mr Ranesh, Chief Business Officer, to exclusively drive the brand. This move demonstrates our increased commitment to developing as an independent premium retail brand. As part of efforts to deepen engagement with the architect and design communities, we have partnered with the festival of Architecture and interior designing as a powered by sponsor. This platform will enable us to showcase old range across events in electricity. Diversation includes exclusive branding, product demonstrations and direct connects with key industry stakeholders. We believe this will significantly boost visibility in the premium design ecosystem.
Our flagship already operation, its stores functional as of March 2025 and we plan to open approximately 40 to 45 stores during FY ’26. Separately, products are also be prominently showcased in over 50 stores are also set to be prominently showcased in over 50 stores by the end of FY ’24. While this scale-up will take place over-time, the initiatives underway today lay a strong foundation to capture long-term growth opportunities in the premium and luxury segments. Our advertising and marketing spend for FY ’25 stood at INR54 crores.
Our brand ambassador, Kiara Argani continues to play a vital role in reinforcing brand identity and driving consumer engagement. We executed high-impact campus during the and Delhi elections across 40 plus national and regional news channels, significantly enhancing the brand visibility. This was further amplifies through Strategic media placements on platforms such as Big Boss OTT and Big Bos tunnels, helping us deepen our connect with younger and regional audiences. We are seeing strong traction from digital campaigns across popular social media platforms with strategic influencer collaborations further enhancing visibility and deepening engagement with our aspirational consumers. We are increasingly adopting AI exit and automation and hyperlocal marketing to improve campaign efficiency and to personalize communication.
Our Unboxing smiles initiative with aligned showroom displays with biannual product launches has also helped energize the channel partners and consumer excitement around the new collection. We also launched our e-commerce platform during the year, a significant step-in our digital strategy, allowing consumers to browse and order products online by enabling fulfillment through 200 plus onboarded channel partners. This initiative strengthens our omnichannel capabilities and opens new demand and revenue opportunities across touch points.
During the quarter, Cerra began implementing a robust dealer management system to enhance billing transparency and operational accountability. The system automates invoices and integrate directly with our internal software platform. We have already our top-50 dealers and plan to expand this to 150 to 200 dealers over the next six months. This will greatly enhance the data and analysis available within the company, providing further insights on trends across products, designs, regions, micro markets, etc.
During FY ’25, we incurred a total capex of INR22.84 crores with investments directed towards enhancing manufacturing infrastructure, upgrading retail experience centers and strengthening our IT and backbone. We also allocated capital towards display enhancements and strategic band building initiatives to support our premiumization agenda. Building on these efforts, we have earmarked the capex of INR24 crores for FY ’26, comprising largely of routine investments along with targeted spending on-brand development initiatives.
To summarize, FY ’25 was a year of steady execution amid a soft demand environment, our overall market recovery was slower-than-expected, we maintain healthy margins, expanded our premium product portfolio and deepened our presence across both retail and project channels as we move into FY ’26, our focus remains on building our brand, strengthening distribution and advancing digital and customer experience capabilities. With a strong legacy, trusted brand, financial discipline and fully-integrated manufacturing operations. Is well-positioned to drive long-term growth and create sustained value for all stakeholders.
Thank you. With this, I would like to hand over to Mr Vikar Kothari, our CFO, who will present the operational and financial highlights for the quarter ended 31st March 2025. Thank you, and over to you, Mr Vikar Kuthari.
Vikas Kothari — Chief Financial Officer
Thank you. Thank you, Vika. Thank you a very good morning to everyone. I will now provide a brief overview of the company’s financial performance for the quarter and year ended 31st March ’25. In Q4 FY ’25, revenue from operations stood at INR578 crores, registering an increase of 5.7% from INR547 crores in Q4 FY ’24.
EBITDA excluding other income stood at INR106 crores as against INR92 crores in Q4 FY ’24. EBITDA margins excluding other income for the current quarter stood at 18.3% as against 16.8% in Q4 FY ’24, registering a healthy increase of 150 basis-points. The rise in the margins was primarily driven by effective cost management, enhanced operational efficiencies and favorable operating leverage resulting from increased revenues.
Gas prices increased during the quarter, the average gas price from was INR28.6 per cubic meter in Q4 FY ’25 as opposed to INR28.35 per cubic meter in Q4 FY ’24. Similarly, the average gas price from Nati rose from INR55.62 per cubic meter in Q4 FY ’25 from INR50.12 per cubic meter in Q4 FY ’24. Drawal of gas from gain was at 73% and from at 27% in Q4 FY ’25. The weighted-average cost of gas in Q4 FY ’25 was 36.03 per cubic meter, which is notably below the industry average. Gas constitutes 3.5% of our total revenue.
For the quarter under review, revenue contributions were as follows: at 48%, faucets were at 40%, times at 9% and wellness at 3%. On a Y-o-Y basis, revenues increased by 9.6%, tiles by 4.7%, wellness increased by 46.7%, while sanitarywear revenue marginally decreased by 1.6%. Our core segments, sanitarywear and contributed 88% of the total revenue. In Q4 FY ’25, 42% of our sales were in seasonal category, 35% in category and 23% at category. Profit-after-tax for the quarter stood at INR86 crores, registering an increase of 14.1% from INR75 crores in Q4 FY ’24. EPS for the quarter stood at INR66.36 versus INR57.69 in Q4 FY ’24. Okay.
In terms of the working capital management, inventory days increased from 70 days to 79 days. This year days from 34 to 44 days and payable days decreased from 44 days to 43 days. Consequently, the net working capital increased from 60 days to 80 days in-quarter four FY ’25.
Regarding the sales distribution, Tier-1 cities accounted for 35% of our total sales, Tier-2 cities, 21% and Tier-3 cities led with 44% of the total sales. For FY ’25, the company reported net revenue of INR1915 crores, registering an increase of 2.4% from INR1871 crores in FY ’24. EBITDA excluding other income was at INR291 crores, a slight decrease from INR294 crores in FY ’24. Profit-after-tax stood at INR247 crores as against INR239 crores in FY ’24. Overall, the company maintained stable revenues and profit on a Y-o-Y basis. As on March 31 March 2025, our cash-and-cash equivalents stood at crores.
In conclusion, we remain confident in financial resilience and long-term growth potential. With a strong foundation in-place, we are well-positioned to benefit from improving market conditions as demand gradually recovers. Our focus will continue to be on prudent financial management, efficient capital utilization and sustain margin discipline to drive value-creation in the quarters ahead. Going ahead, going-forward, Cerra remains focused on consistently improving its financial performance and is well-poised to create greater value for all its shareholders.
With this, I would now request the moderator to open the line for Q&A. Thank you very much.
Questions and Answers:
Operator
Thank you. Thank you. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press R&1 on the touchstone telephone. If you wish to remove yourself from the question queue, you may press R&2. Participants are requested to use handsets while asking a question and to restrict to two questions at a time. Ladies and gentlemen, we will wait for a moment while the question queue assembles. We’ll take our first question from the line of Praveen Sahai from PL Capital. Please go-ahead.
Praveen Sahay
Yeah. Thank you for the opportunity and good margin improvement in the quarter. So the first question is related to the margin improvement only, sir. And so there is a — as you had already mentioned that the operational efficiency and some cost management that led to the margin improvement. Can you give us some of the way forward the margin to be, how sustainable this kind of a margin? And what kind of a specific cost management you had done? One, I can understand related to the advertisement, which has done on Y-o-Y side. But apart from that, what else you had done and pay forward is that sustainable or not?
Vikas Kothari
Thank you, Pravin ask you the question. So as we have rightly told, the margins have improved in the quarter — in the 4th-quarter. And overall, if you see the margins, what we generally say is between the range 15% to 16% and that has been proven through our past performances also. So way forward is also very clear that margins will be within these ranges. Now coming to the part of what has played a role in terms of the improvement. So it is this 1.5% improvement which is there, which is contributed by the improvement by 0.1% by 0.10% of improvement of gross margin, then we have the publicity savings, which has contributed 0.5% and the cost-effective measures mainly in-production overhead and sales and marketing expenses that has contributed 0.9% overall, leading to 1.5% in terms of improvement in the margin.
Praveen Sahay
Okay. And the next question, the second question is related to the working capital, which has increased and especially the receivable. So is it because your institutional business is increasing, that is the main reason or something else to read on and where you will see the way forward to be?
Deepak Chaudhary
As you mentioned in the conquer script, quick like their inventory days has increased from 70 to 79, the receivables from 34 to 44, the payable days reduced from 45 to 43. So the net working capital days have gone up from 60 to 80 days. Now your question was specifically related to your receivable days. The receivables have not gone up on account of the project business. Our project business last year constituted 35% of our total sales.
If you look at the previous quarter, Q3, it was in the region of 37%. In this quarter, it has gone up to something like 40%. So we are in the same range, 35%, 37%, 40%, 35% to 40% on a year-on-year basis and 37% to 40% on a sequential-quarter basis. So this increase that we are seeing is not on account of the project business. This is mainly on account of a change in the credit policy. The cash credit policy that we used to have earlier that has undergone a change in the recent past. This has resulted in — we’re talking about the cash discounts that we offer in except of for somebody who is paying enough at before time.
In this context, like earlier our total discounted sales constituted something like 74% and in Q4, it has gone up — gone down to 67%. So this is the primary reason why the receivables have gone up. If you look at a slightly higher age for more than three months, we are at the same levels which were there in Q3 as well as what we were there in financial year ’24. So as of May, this has already come down from 44 days to 38 days at the end of April. So going-forward, we don’t anticipate this to be a challenge. It’s more of a kind of an adjustment which is happening between a change in the CD policy. Going-forward, we can expect the same level of data which were there earlier.
Praveen Sahay
Okay, okay. Great help, sir. Thank you. I’ll come in the queue.
Operator
Thank you. We’ll take our next question from the line of Lakshmi from Tunga Investments. Please go-ahead.
Lakshminarayanan K G
Thank you. Sir, when I just look-back, the last four-quarter calls, you have been alluding to slowness in-demand. So when we started last financial year till now, now why there has been a slowness in the demand, is it — can you just elaborate as to what led to this? What is — what has been your read and how it is going — it is different now than earlier?
Deepak Chaudhary
The smaller thing demand is mostly in the retail sector, like in the project sector, we have, as I mentioned earlier that it has been going up. If that look at the proportion of project sales vis-a-vis the total sales, it has gone up from — if you have to go back two years, it would have been 30% — 70% being retail sales, went up to 35% in FY ’24 and by end of FY ’25, at quarter-four, we are looking at something like 40% being coming from projects. So there has been a slowness in-demand in the retail sector.
Now the factors have been many over a period of time like inventory real started by, let’s say, Q3 of FY ’24. And since then that trend has continued due to various factors, the seasonal factors as well as the elections, etc., which had happened in the last year and it has continued to. Now exact cause for that slowness in-demand is very difficult to pinpoint, but we are hoping that once that slowness in the retail demand improves, we can expect greater momentum in our total revenues also.
Lakshminarayanan K G
That’s on it. Now is it more prevalent in the sanitary segment for retail or is it prevalent in the faucet fair segment in retail?
Deepak Chaudhary
The slowness in-demand is across both segments, but we have been experiencing that smallness in the segment. In faucets, we have typically grown by 10% in FY ’24 as well as in FY ’25. But that is essentially because of the fact that we are a much smaller player in the case of faucets as opposed to the largest player in the industry. So with season in a snow condition, it enables us to gain market-share from others. In using a one of the larger players over there, that becomes anything more difficult to sustain the improvement in growth in the demand — growth in the revenue once the demand is.
Lakshminarayanan K G
Sir, on the sanitary we…
Operator
You to join back the queue please as we have other participants waiting for their turn. Thank you. We’ll take our next question from the line of Moksh Ranka from Aurum Capital. Please go-ahead.
Moksh Ranka
Hello. I wanted to understand our scale-up of the tides business. Are we asking — can you just help me understand that currently freight rates are down to so the old supply which was there for the segment should not be an issue. So is my understanding correct?
Vikas Kothari
So regarding the tiles business, if you see the composition of the Pera, in Perra we — the and faucet player contributes almost 88% of our total revenues and contribute 10% of our total revenue. And in case of our business model, business is fully outsourced and where we operate at a zero inventory level model. Our largest focus is in terms of including this as part of our portfolio is to provide a full solution to the consumer. So whenever there are consumer request in terms of process along with that, these offering — the tile offerings are also driven. So largely we have different range, which constitutes 50% of our total time sales. So ideally our focus is largely on sanitary and process. And in case of tile business, the — this is offered in terms of the complete package solution to the consumers.
Moksh Ranka
Okay. And our margins in the tiles business should be lower than to be there and.
Vikas Kothari
Correct.
Moksh Ranka
Okay. And are you? Could you give me some color on exactly what the margins going to be? For the time?
Vikas Kothari
Can you repeat?
Moksh Ranka
What exactly would be our margins like how low would be compared to our average 15% to 16% EBITDA margin for the time business?
Vikas Kothari
So we — should today we provide the complete financial performance. In terms of the individual segmentation, we do not disclose the margins. But the margins are lower as we as you rightly do, the alty were in positive way.
Deepak Chaudhary
So it will be a single-digit. You find that the margins in price in single-digit.
Moksh Ranka
And just one last question…
Operator
Back the queue please as we have other participants? Thank you. Okay. We’ll take our next question from the line of Rudraj Gupta from Family Office. Please go-ahead.
Rudraksh Gupta
Hello, sir. Good morning. Thank you for offering me this opportunity. I have two questions. I would request you if you can throw some light on export opportunity referred to in the earlier call of quarter-four FY ’24. Is this arising out-of-the tariff situation and supply-chain realignment or does the company see it as a strategic focus area and exports?
Deepak Chaudhary
As of now, the export constitutes a small portion of our total revenues. With the tariff situation which is today right now, we do feel that there is an opportunity for us to kind of grow a little, but it is not something that we anticipate will grow by and bounds like we are currently, I think it is at 3.5% of our total revenues. We don’t anticipate it to go to double-digits or something like that, but this actually presents an opportunity. Let’s see how it goes forward. More time will enable us to gauge the real impact of the tariffs and what kind of opportunities actually present.
Rudraksh Gupta
Okay. And my second question is that the coming has guided for the revenue — for the potential revenue of INR2,900 crores by FY ’27, given the aspect, are you still comfortable and confident to able to achieve the same?
Vikas Kothari
And also the guidance what we have given that guidance was given in the scenarios where the market will perform or the market conditions will be positive. So as we have seen, market conditions have remained subdued for almost six consecutive quarters, primarily due to the weak retail demand. So the projections what we have made, those projections were made with the anticipation that the market growth of what we expected was 78% in case of territory waste segment and 12% to 13% in case of faucet Ware segment and we had expected to outperform the market by 6% to 7%. However, in the actual scenarios, the market growth has consistently fallen short of our expectations.
But to — to be on the positive side, in-spite of this challenging environment, which is there, our project pipeline remains very good. We are confident to meet our growth targets as the retail momentum improves. So the idea here is that we — the market — it is dependent on the market conditions, market conditions once they improve, basis that we will outperform the market by 6% to 7% through our strong execution and focused the strategic initiatives.
Rudraksh Gupta
Thank you. Okay, sir. Thank you so much.
Operator
Thank you. We’ll take our next question from the line of Sonali Sagakar from Jefferies India. Please go-ahead.
Sonali Salgaonkar
Sir, thank you for the opportunity. Sir, my questions are on the industry basis. So real-estate cycles generally have been steady over the past four to six quarters, a bit weakening probably over the last one or two quarters. So overall in the industry and I’m talking about your competitors as well, could you please probably shed some light as to why the volume growth is coming slower? Because if we were to look at the real-estate launches, which happened about two to three years back, then intuitively that demand should come in the system right now, probably in FY ’25. So that has not really happened over the industry. Any particular reasons why you feel that is? And also any pricing pressure you have seen either in sanitary or in FY ’25.
Deepak Chaudhary
Is your second question first, the pricing pressure. There has been some pricing pressure in FY ’25 of with the slowness in the demand that has been predicting in the current year, the industry has been overcoming good over and overcapacity. With the result that most of them are offering higher discounts. So account of the fact that you find that even our discounts have gone up slightly in the last one year and which has not enabled us to take price increases over a period of time. So we have kind of tried to balance that by way of better efficiency and cost management so that our profitability and margins will remain intact. So going-forward also, like we don’t anticipate that as of now in the immediate near-future, we don’t intend to increase our prices. That is based on-again the is continuing in the current quarters also, in the current Q1 also.
In respect of your first part of your question, when you’re talking about the industry and real-estate, but your typical cycle, as you mentioned for real-estate would be nearing completion should be in the range of three to four years. So ideally projects which have got started in FY ’21 ’22 should have been started and nearing the completion cycle by ’25 and ’26. So we have started seeing that upswing in our project business in the last one financial — in the last one year. And we anticipate that FY ’26, the numbers will be translating even in higher numbers.
Sonali Salgaonkar
So what is the quantum of price, the cuts that you have taken or rather discounting that you have taken in FY ’25? And my last question is about the tiles. I understand you outsource a majority of your tiles business. But what are your views on the Morbi exports and also going-forward in FY ’25, do you expect the exports to resume?
Deepak Chaudhary
I’ll talk about the price cuts first, which you asked on the first part. We — we don’t have price cuts in our business. What we do is the amount of quantum of discounts which are being offered, they typically go up. So over the last one year in the retail sector, the discounts would have gone up by something like 0.5% to 0.75%. So that is on the retail side. In the credit, this year, it is a little more complex because it depends upon the size of the business. And on an average, the same level would have gone up in the business as well. So that was in effect of price cuts. In exports, we don’t have too much of exports as Mr mentioned, we are mostly in the business of trading and the business within the domestic market. So we will not be the right people to comment on the exports position, which is on an industry-wide basis.
Sonali Salgaonkar
Sure. Thank you, sir.
Operator
Thank you. And we’ll take our next question from the line of Pranav Mehta from Equirus Securities. Please go-ahead.
Pranav Mehta
Yeah, good morning, sir, and thank you for taking my question. Congratulations on good operating profitability improvement. Sir, my first question related to the breakup of breaker if you can share for sanitaryware, faucet and tiles and other categories for 4Q ’25 and versus 4Q ’24. That was my first question. And sir, my second question was related to the INR34 crores of credit balance write-back that we have seen in the cash-flow. So the previously this has been taken yeah. So what I was saying, the second question was related to the INR34 crores of credit balance write-back in the operating cash-flow. So wanted to understand where exactly the — in the P&L this effect has been taken?
Vikas Kothari
So Pranav, so regarding the first question, the breakup of the revenue. So largely if you see the quarter-four, in-quarter four wear was 48%, the faucet wear was 40%, wellness was 3% and was 9%.
Pranav Mehta
And sir, if absolute if you can give, that would be helpful.
Vikas Kothari
It is INR269 crores. Where it is to INR22 crores, wellness it is INR16 crores and tiles it is INR53 crores.
Pranav Mehta
Okay. And sir, similar in 4Q ’24?
Vikas Kothari
For the full-year?
Pranav Mehta
Sir, for 4Q ’24, if you can share for full-year, it would be…
Vikas Kothari
For the for the previous year’s quarter, the figure was INR273 crores. Profit there was INR202 crores. Wellness was INR10.96 crores and times was INR50.7 crores. Is that okay?
Pranav Mehta
Yes, yes.
Vikas Kothari
Okay. And regarding your question with respect to the write-back what we are saying. So there is what we have seen that there are some excess provision which was provided earlier, they have been taken back, they have been written back. So the amount what we are saying is reflecting in the balance sheet.
Pranav Mehta
Sir, no, no impact on the P&L or is that of the INR34 crores?
Vikas Kothari
Yes.
Pranav Mehta
Okay. Sure, sir. That’s it from my side. Thank you.
Operator
Thank you. Ladies and gentlemen, in order to ensure that management is able to answer queries from all participants, kindly restrict your questions to two at a time. Thank you. We’ll take our next question from the line of Udit Gajiwala from YES Securities. Please go-ahead.
Udit Gajiwala
Yeah. Hi, thank you for taking up my question. Sir, in terms of the real-estate demand that you mentioned in your opening remarks, so I mean, what is the kind of traction you are seeing there? And is it an order book kind of a business for you?
Deepak Chaudhary
As I had mentioned earlier, like we were earlier doing that as a part of a total proportion of our total sales project constituted 30%, which has gone up to 35% and then 40% in Q4. And the way it functions is that depending upon the number of which are being offered, it’s classified as a project business. If it is classified as a project business, the kind of discounts which are typically offered is higher.
Normally what you are saying is right. Depending upon the size of the project or the delivery could be varying over a period of time, like for larger projects of any different states find that it is different, but let’s say we talk about Gujar and you find that in the larger projects, the builder would typically have a sample on constructed, but just at the time when he has started the project and he would take an order at that point of time, so that deliveries would happen maybe after some time. It will not happen to start immediately, and it will only happen over a period of time. And typically the deliveries are spread over a period of two to three years, normally two years, two.
And for the smaller projects, it will typically find that once we the orders within a very short timeframe, the deliveries pattern will get completed also. So it depends upon the kind of winter and the size of the project. Typically, you can say that the 50%, 50%, 50% of these divisions happen in first year and 50% in the rest of a larger project.
Udit Gajiwala
Understood. Understood. And sir, the capex that we had deferred for the sanitary wear. So there are no plans on it as yet or you are still considering any timeline.
Deepak Chaudhary
So as of now, it is on-hold, like we have purchased the land that you have communicated earlier also. The acquisition is complete, but the construction activity will keep on on a quarterly basis, they depending upon the demand scenario. As of the end-of-the year, we have not been to start with the construction.
Udit Gajiwala
Understood. Thank you, sir. All the best.
Operator
Thank you. We’ll take our next question from the line of Sameyak Jain from Marcellus. Please go-ahead.
Samyak Jain
Thank you for the opportunity. My first question is, sir, while you gave us some color on the discounting aspects, just wanted to understand whether you see the discounts have peaked out or going-forward, you expect them to increase on account of the slowdown in-demand. So just your thoughts on that.
Deepak Chaudhary
And the discounts have kind of now flattened like if you look at the — as I mentioned earlier also, the package in Q3 of FY ’24, so in the first few quarters, it was an increase in discount. But in the last couple of quarters, the discounts have stabilized and are remaining at that levels, which had already reached by let’s say, Q2 of FY ’25. So now they are stable, we are not seeing an increase in fact, we expect them to improve, like the discounts will again become lower going-forward.
Samyak Jain
Got it, got it. And my second question is on the faucets. So like in-quarter two of F ’25, there were some channel risk of due to the price increase and that led to some liquidation in last quarter. So has the liquidation of such restocking been done or completed in-quarter four or you think some — or some destock — some reduction in-stock is still pending?
Vikas Kothari
So as you have rightly told, means the price rise was taken, I think from October onwards, there was an impact what we have seen in-quarter 3/4 two where the growth has come higher because of the price rise taken. Now if you see the quarter-four figures, so the growth is now 10% and if we need to characterize this growth of the increase what is there, the volume has increased by 2.8%. The product mix has improved by 3.5% and the price impact, which is now stabilized in terms of liquidation being completed, that has given the impact of 1.7%.
Samyak Jain
Got it, sir. Thank you so much.
Operator
Thank you. We’ll take our next question from the line of Janish Karia from Union AMC. Please go-ahead.
Jenish Karia
Yes, sir. Thank you for the opportunity, sir. Sir, first question is with regards to the premiumization that we are planning. So considering we are planning to ramp-up the Sanitor and List brand, which will largely be in-house manufactured and considering we are still guiding for INR2,900 crores of revenue in next two years. Hoping that retail demand will revise. So why do not we go-ahead with the capex and rather than delay it? I understand we still have capacity and we can outsource it, but considering the premiumization and hope of demand revival and the capex, if we announce next quarter also, it will take two years to commercialize. So just your thoughts on whether we’ll be missing out on upcycle in-demand because of short-off capacity or not be able to properly capture the premiumization that we are trying to do because of shortfall in capacity, just your thoughts on that front.
Deepak Chaudhary
You are right that we are taking a premiumization drive. As Mr Vikas mentioned in his questions that answered earlier, like and, we had mentioned in our previous calls also that we mentioned that over the next three years, we would be constituting something like 10% of our revenues of system and the production, the product which comprise in and last are a mix of management, out manufacturing as well as outsourcing. Some products are always outsourced. If you see these claims, you find that most of the showers, stars, et-cetera, which are being offered over there will always be on an outsourced model only. It will never be in-house.
So the if you see is not something which will be kind of driving the manufacturing capacity. The manufacturing capacity is primarily driven by our — the main core segment of Terra. So over there, till the time that we don’t start seeing an improvement in-demand or it is not really making sense for us to start with these expansion projects. We are currently monitoring the situation.
As we mentioned, if you take roughly 18 months from the start of the project will get completed to be operational. So once we start seeing the kind of demand improvement, we can start and completely within 18 months. In the meanwhile, we have adequate inventories and outsourcing arrangements, which will take care of any incremental demand or upsurgent demand which happens in the incident period. So we don’t see it as a challenge of within that 18-month period that we will result in any loss sales.
Operator
Janesh, does that answer your question?
Jenish Karia
Yes, that answers my question. Second question is on the marketing spends. So although your premium products will be 10%, 12% of the revenue over the next three years, can we see an agree aggressive marketing expense going-forward maybe 2.5% to 3% is the range, but additional 50 60 basis-points for the premium products that we are driving?
Vikas Kothari
And so as far as our marketing spends are concerned, so we are strategically reviewing the scenarios in terms of the current market position also and we are focusing on those particular spends where we think that in the current scenario, the ROI is in terms of reaching out, the share of voice is higher. So like you have told, now Senator and, these are the new added — new brands which are added in our family. There are — so definitely there is an allocation of the budget will be there in FY ’26 also and the spend will be done considering the market and how we want to target each of these brands.
Operator
Thank you. We’ll take our next question from the line of Akshay Cheda from Mutual Fund. Please go-ahead.
Akshay Chheda
Yeah, sir. Sir, thank you for the opportunity. Sir, two questions from my side. So sir, first is on this B2B side, sir, you said that it was 40% in 4th-quarter. So can you give the contribution for the full-year that is FY ’25? What was the B2B share? That was one. And related to that is, what is the ratio the company is okay with? Would it be company be okay to take it to 50-60 or what it is? That is one.
Sir, secondly, on this retail field, sir, is retail actually remaining flat for us or it is de-growing for us?
And thirdly, sir, what is the reason for a sequential decline in the gross margin because that is a steep at around 250 basis. Of course, it remains in the guided range, but still if you can talk a bit on that. Thank you.
Deepak Chaudhary
Share too many questions at one-time if I tried to remember and-answer them one-by-one. First, you ask B2B what 40% at the Q4, what was there for the full financial year. For the full financial year, the project composition was 38% of our revenues. This was for B2B FY ’25. So if you can repeat the balanced part of your question, the retail, why is it degrowing.
Akshay Chheda
Sir, on the retail side, sir, is it actually remaining flat for us or is it de-growing?
Deepak Chaudhary
If you see our total revenues, we have been kind of growing at 5%, 6%. And if you look at the proportion of these project business, they have been growing as a proportion of our total revenues. So retail has been kind of believe mathematics will find that it is more or less remaining constant. So I think you also asked whether we anticipate the project business to go further in the coming years, that will totally depend upon how the retail business picks up because we are seeing that traction in the project business.
And as I’ve mentioned in our — in my earlier calls also that we do not have the two higher difference between the margins in the project and the retail business. The gap would be something like 10% 5% to 6%. So the difference in the margins, even if the proportion increases, as you have been mentioning, if it increases from let’s say, 40% to 50%, it could impact the margins by, we can say 10% of 5% of the differential which is there between projects and the retail business.
On an overall basis, it will impact us by 0.5%. So we are not too worried about that because we are hoping that the retail business would be picking-up in the future and this should ideally remain at 40% to 45%. But even if it increases, the impact on our EBITDA margin would not be great.
Akshay Chheda
And sir, the thought question on the gross margin, I mean sequential decline. So any specific reason you would like to call-out?
Vikas Kothari
As such if you see the gross margins for the — for the — for the quarter or if you see in terms of the quarter — you’re talking about quarterly means quarterly it was which first-quarter it was 55% and now it is 50%. Your question is why it is declining, correct?
Akshay Chheda
Yes, sir.
Vikas Kothari
In terms of the gross margins, if you see the full-year basis if you see for the financial year ’25, our gross margin is 52.51% and the previous year, if you see financial year ’24, it is 52.86%. So there is a slight decline — a slight decrease you can say in terms of the overall gross margin on the overall full-year basis.
Akshay Chheda
Okay, perfect. Thank you.
Operator
Thank you. We’ll take our next question from the line of Shubham from Investment Managers. Please go-ahead.
Shubham Padhiar
Hi, am I audible?
Operator
Yes.
Vikas Kothari
Yeah, I can hear me.
Shubham Padhiar
Yeah. Thank you for the opportunity. Thank you for answering my question. So my question is on the strategy side. So how are we going to strategize ourselves in the market being entry-level — entry-level brand and positioning ourselves as a premium brand going-forward?
Deepak Chaudhary
And your voice was not too clear, if you can just repeat the question.
Shubham Padhiar
Okay. So I’m asking about the strategy aspect. So as of now, we are positioned as an entry-level brand. So how are we going to differentiate ourselves and compete in the market as a premium brand going-forward.
Vikas Kothari
So I think your understanding in terms of positioning is not correct. So we are a mass premium brand with the — with portfolio or with the products we are focusing. So as we have seen over a period of past few years, we have seen there is a steady increase in-demand for the premium products also. So now we are strategically introducing our two new brands, and, which will show our premium pace and that is going to be the — that we have already told that these two will be contributing around 10% of our total turnover in the coming next two to three years.
Shubham Padhiar
Okay. And how are we going to compete with the existing players in dark segment, like any — so that is table…
Vikas Kothari
What the for the for the lux and senator, I mean we are now completely having focusing on how we can compete with the competitors. So as a step-wise things what we have did is there is a separate team which is going to focus on this senator part, which will be — which will be under the leadership of Mr Ramesh has told in our phone call, then we are separately focusing on the separate flagship scores. So as on March as on by 31st March, we were — we have already having 17 stores for the senator. And this year we have targeted roughly 40 to 45 more stores to add-on to this.
Apart from that, we complete portfolio, which is which is premium in nature is almost now finalized and it is going to be displayed across all these flagship stores. We are also connecting with our architects, the Architect Connect and the other influencers which will lead-in terms of showcasing the product and the its technical strength, which is going to be there to compete with the competition.
Shubham Padhiar
Thank you.
Operator
Thank you. Okay. Yeah. We’ll take our last question from the line of Asun from DAM Capital. Please go-ahead.
Aasim Bharde
Yeah, hi, good morning. Just one question. I couldn’t quite pick-up the reason for sequential gross margin decline, declined 53 down to 51%. Is it due to higher discounting of another major the push sales because the reduction in cash discounts on debtor should ideally have improved gross margin sequentially?
Deepak Chaudhary
So the discounts reduction have not happened, we are anticipating it will happen in the future. As of now, the discounts have in the current financial year have improved vis-a-vis the previous year. So what happens is that the gross margin is a composition of both the kind of discounts which are being offered as well as the efficiencies which are going into the composition of the cost of the product, both on the procurement side as well as the manufacturing side. So the discounts have increased over the last one year. The decrease in the gross margin is only to the extent of 0.4%. The response maybe would have increased by higher margins than 0.4%, but the cost efficiencies have also kind of made a good increase in discounts. So what’s the part of saying was that on an overall basis from F4 to FY ’24 to FY ’25, the decrease in gross margin is only there to be extent of 54%.
Aasim Bharde
Is it also a mix-led thing then faucetware might have done better Q-o-Q, could that also be a reason?
Deepak Chaudhary
It could be because the gross margin is a composite of so many factors. So this small will keep on happening on a year-on-year and a quarter-on-quarter basis. It is very difficult to give you any point as to what reasons have gone into the quarter one to quarter two, quarter two to quarter three of which has happened of 1%. But on an overall yearly, it is more or less remaining question from 52.860%, 52.5%.
Aasim Bharde
Sure, sure. Thank you, Deepak.
Deepak Chaudhary
Thank you.
Operator
Thank you. I now hand over the call to the management team for closing comments. Over to you, sir.
Deepak Chaudhary
Thank you. You everyone for attending this call and for showing your interest in Serra Limited. Should you need any further clarification or would like to know more about the company, please feel to reach-out to me or to CDR India. Thank you once again for taking time to join the call. Thanks a lot.
Vikas Kothari
Thank you.
Operator
Thank you, sir. On behalf of Serra Limited, that concludes this conference. Thank you all for joining us. You may now disconnect your lines. Thank you.