Eveready Industries India Ltd (NSE: EVEREADY) Q2 2025 Earnings Call dated Nov. 13, 2024
Corporate Participants:
Suvamoy Saha — MD & Director
Bibek Agarwala — Whole Time Director & CFO
Analysts:
Nishid Solanki — Analyst
Abhi Jain — Analyst
Priyank Chheda — Analyst
Chirag Maroo — Analyst
Mithun Aswath — Analyst
Unidentified Participant
Priyankar Sarkar — Analyst
Mehul Savla — Analyst
Saket Kapoor — Analyst
Presentation:
Operator
Ladies and gentlemen, good day, and welcome to Eveready Industries Limited Q2 FY25 Earnings Conference Call. 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. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr. Nishid Solanki from CDR India. Thank you, and over to you, sir.
Nishid Solanki — Analyst
Thank you. Good afternoon, everyone, and welcome to Eveready Industries India’s Q2 FY25 earnings conference call. Today, we are joined by senior members of the management team, including Mr. Suvamoy Saha, Managing Director; and Mr. Bibek Agarwala, Executive Director and Chief Financial Officer.
We will begin the call by sharing the standard disclaimer.
Some of the statements that may be made on today’s conference call could be forward-looking in nature, and the actual results could vary from these forward-looking statements. A detailed disclaimer in this regard is available in the press release document, which has been circulated to you earlier and also available on stock exchange website.
I would now like to invite Mr. Saha to share his perspectives with you. Thank you, and over to you, sir.
Suvamoy Saha — MD & Director
Thank you, Nishid, and a very warm welcome to all of you on our second-quarter earnings call. We at Eveready are custodians of two very valuable assets, the well-loved Eveready brand and the formidable distribution infrastructure. It is the responsibility of the management team that these assets are used wisely to provide value for all our stakeholders and deliver growth in each of our business segments.
On this call today, we will try to outline the underlying opportunities across the businesses and provide an update on where we stand. In terms of financial parameters, we are stable and our margins have stayed healthy. We also remain optimistic for the balance of the year. Profits have trended well, aided by favorable input costs. But before I share thoughts on the business segments, I wish to cover the highlights of some of our key strategic initiatives.
As mentioned in our earlier calls, the RTM exercise was kicked off by us to streamline our distribution processes to deliver higher levels of efficiency and also become more contemporary. Such an elaborate exercise that encompassed the entire process of selling came with its share of challenges and risks. We made these challenges over the past few quarters, including the one under review, but now the revised system seems to be on the cusp of yielding results. We expect that the performance gains will become apparent in the coming quarters.
Just as we modernized our traditional general trade channels, we also focused on developing alternative channels where our offerings are seeing traction like in modern trade, e-commerce, quick commerce, and electrical outlets. communication is a core aspect of our growth aspirations. We have set our A&P spends at a pace for consistent consumer engagement. As a consumer-facing company, our chief endeavor is to bring quality offerings that are in tune with the times and engage our consumers with this. Our strategy involves a combination of advertising and BTL promotions in order to maintain saliency of the brand and the leading presence in the marketplace.
We have initiated steps to build a manufacturing facility for alkaline batteries in order to support growth aspirations. This is going to be the only alkaline facility in the country at this time, and we aim to drive strong gains on quality and cost with control over the production chain. Our desire to be an innovative brand will draw support from this investment. In order to derive comprehensive benefits of cost and efficiency, we are planning for this facility to be a multiproduct facility and eventually other categories will also be produced here. At this point, let me cover some thoughts on our business segments.
Commencing with Batteries. Despite some shifts in the market, we are pleased to have retained our robust 53% market share in batteries, underscoring our ongoing leadership in a highly competitive segment. The overall segment saw modest contraction, primarily arising out of weak demand from the rural segment. However, our diversification within battery types showed positive momentum. Our Alkaline Battery segment saw an impressive 62% growth in value. This demonstrates a promising trend as consumer preferences gradually shift, and we are well-positioned to meet this demand with the quality and reliability of our products.
The marketing traction that our alkaline range has seen has been good. This has emboldened us to take the bold step of putting up the manufacturing facility that I referred to a little earlier. Also, the headroom to grow is fast as India catches up to the global trends in terms of per capita usage. In the carbon category, which still services the bulk of the country’s domestic demand, we are the de facto leaders in both volume and value. This gives us the right to play and win. Batteries being the dominant contributor to our top line and margins. Naturally, all possible efforts are made to create strong leverage in this space.
Let me now come to Flashlights. I am glad to share that the pace of degrowth in the battery-operated category has abated to single digits. It may be recalled that the level of degrowth was at a much higher number at a year ago. On the other hand, the Rechargeable segment is maintaining growth as has been the trend in this category. The battery-operated flashlights have a strong correlation with monsoon, although not very uniform, the monsoon this year was somewhat abundant, thereby translating into healthy demand within the target market in rural settings. The rechargeable flashlights grew on the back of unique and innovative models introduced by us.
Introduction of new models with rich feature functionality by our design group as per identified consumer needs is the core of this business. Two new launches during the quarter appeal to the people’s imagination significantly. One was called the Siren with a panic button for the vulnerable at times of distress. Beam Light is the other one with a differentiated offering designed for farmers who need to keep night vigil to protect their crop. Backed by these tailwinds, the category had a decent 16% revenue growth during the quarter and 7% for the half year. We intend to deliver a healthy growth for the full year and maintain this momentum. As the leader in the organized space, we aspire to balance presence in both Battery-Operated and Rechargeable categories.
I move forward to the Lighting business. The industry continues to witness price erosion in the Consumer segment, particularly in bulbs and batteries, though at a somewhat reduced pace, but still pronounced compared to the same quarter of last year. We have now a respectable lineup of SKUs in the retail market, comprising of not only bulbs and batteries, but also emergency lamps, luminaires, and accessories. We are under-indexed in the consumer luminaire space, and our focused attention is now being provided to see higher traction.
While we managed to grow volumes in most product types, the overall top line for the business remained muted on account of price erosion. We are confident of seeing significant growth coming in the coming quarters as the pace of quarter three last year onwards already captures a very significant part of the price erosion. The BU team is also focusing on the segment of Professional Luminaires catering to institutions. Professional Luminaires is the higher growth segment of the lighting market, and we are under-indexed there as we inherently tend to focus more on the consumer side. However, this being our new trust area we will make amends to that. We have assembled a team with the requisite expertise and with the necessary connect to this market. The results have started coming in. And though from a small base yet, this segment is showing good growth. In summary, Lighting is an area of focus, and we expect to exceed the year on satisfactory level of growth.
I want to bring a quick review of the quarter’s results. We reported revenue of INR362.4 crores during quarter two relative to INR364.9 crores previously. I have already explained the dynamics from the respective categories contributing to this revenue. While the top line is muted, EBITDA and PAT stood strong with significant improvements over the previous year. EBITDA reached 13.2% and 13.7% of revenue for the quarter and the half year, respectively. Similarly, PAT stood at 8.1% and 8.3%, respectively. All three business verticals, including Lighting had positive EBITDA for the half year with Batteries [Technical Issues].
A&P spend for the quarter stood slightly higher than those of the previous years, but as per plan. Manpower cost also showed an uptrend at 12% from the — for the quarter as compared to 11.3% of the previous year. This is on account of investments made in manpower, particularly for the Lighting segment and more specifically for Professional Luminaires. This will get neutralized as we start seeing revenue growth in the forthcoming quarters. These impacts were softened by initiatives to contain costs in other aspects of the operation and favorable RM prices.
At this point, I would like to share our thoughts on the outlook for the year. The year is shaping up by and large as expected with an improved growth outlook for the second half. In Batteries, we are fully geared to charge ahead with our zinc-carbon and alkaline offerings across distribution channels, suiting requirements of consumers across price points and needs. One should expect stable performance relative to the past year as we exit the year given the muted situation in the carbon-zinc space.
The margins should hold as we are covered for our requirements on key input materials. Flashlights should deliver positive growth on the back of differentiated SKUs that we have launched. Similarly, we shall see healthy accretion to growth in Lighting, given the many initiatives, which I have mentioned earlier. Overall, we see a year of modest growth for the full year, but exiting the second half at far more enhanced levels with a positive impact on margins.
With that, I would like to invite you to pose your queries, which we will be more than happy to answer. Thank you.
Questions and Answers:
Operator
Thank you very much. We will now begin the question and answer session. [Operator Instructions] The first question is from the line of Priyank Chheda from Vallum Capital Advisors. Please go ahead. Priyank, may I request you to unmute your line and go ahead with your question, please. Priyank Chheda, if you can hear us, can I request that unmute your line and proceed with your question? The line for the participant dropped.
[Operator Instructions] Next question is from the line of Abhi Jain from AJ Associates. Please go ahead.
Abhi Jain
Good afternoon, sir. Am I audible?
Operator
Yes, you are.
Abhi Jain
Sir, I have three questions. The first question is that since you’re saying that our price erosion started from Q3 of last year and you are seeing — you are hoping for an uptrend going forward in the following quarters. Do you see that the revenue run rate will be maintained at this INR350 crores, INR360 crores kind of a level for Q3 and Q4, which obviously dropped last year significantly due to the price erosion?
Suvamoy Saha
Did you understand the…
Bibek Agarwala
Yeah. So see, generally, our quarter one and quarter two are the big quarters. Quarter three and quarter four are generally sub-350 quarters. So as we have indicated that we’ll have a growth momentum. So we’ll try to be closer to that, but it may not be equal to the quarter one and quarter two numbers.
Abhi Jain
But it will definitely be better than Q3 and Q4 of FY24, right?
Bibek Agarwala
Definitely, definitely because that is why we stated that our all the exercises, RTM identification all has been done, and that is the growth momentum will come from H2.
Abhi Jain
Second is more of a hygiene question on the financials. Now if you look at your PBT, given that the revenue was flat year-on-year, and if you look at your other expense items, more or less they were PAT or there were some increases, for example, in other expenses, et cetera. The EBITDA growth has predominantly come from the increased end-of-period inventory that we have. If you look at your change in inventory because that is a big negative number, hence, the EBITDA is higher.
So I just want to understand that — I understand that it was a flat quarter as compared to last year, hence, PBT would not have increased. And whatever PBT increase is coming is from the increased inventory that we have at the end of the year.
In Q3 and Q4, what are the things or what are the levers that you’re seeing, which will actually generally help in increasing the EBITDA margin? Because this EBITDA margin is not a real EBITDA margin increase per se. This is just end of inventory increase because of which the EBITDA has increased.
Bibek Agarwala
I did not get your point. Why don’t you think that is a real margin?
Abhi Jain
So if you see our PBT, right? All our expenses, all the line items, they all are either flat or increased. Now there is only one line item, which is the change in inventory of finished goods, right? Which is a minus INR16.2 crores. That figure because it is negative INR16 crores, that is adding to your PBT. If you take that out, your ending inventory would not have increased. This is on account of end of period inventory increase, right? Because of which it is reflecting in the PBT.
And no other cost lever has reduced. So year-on-year, I don’t see any improvement in any cost levers. The material cost is same, finance cost is down a bit, employee cost has increased by almost 7%, 8%, other expenses are up by almost 10%. So what cost-optimization, where is it showing? I just want to understand that in the financials.
Bibek Agarwala
So I think your reading of the P&L has to be. The changes in the inventory part of cost of material only. It’s not that year-end inventory because what happens, you have to see the entire change in inventory along with the cost of material as well because sometimes you consume from opening stock, sometimes you may consume the lesser from opening stock.
So isolation change in the inventory is not a real reflection of what is the cost saving. It is not the cost saving that whatever differential you are seeing quarter two that this year, INR16 crores last year, INR5 crores. You have to see entire three line item of cost, cost consume, material and the credit line, all three together actually give you cost. This is why we maintain that this period, the profitability improvement is mainly because of the favorable material cost we had because this period, our zinc prices, especially is a key product for us is having a much better pricing. That is why we got a margin improvement there.
Abhi Jain
So basically, just — so the RTM, the optimization that was to be achieved from the RTM, obviously, not — that has not probably kicked in quarter two, given that other expenses and employee benefit costs, et cetera, are still elevated. Do you see that the optimization from RTM will start kicking in Q3 and Q4? Or do you still think that there are some few quarters away from that?
Bibek Agarwala
I’ve already told that from the Q3 onwards, the benefit will start tipping on, and of course, Q3 starts showing that and Q4 will have the full scale here. So H2 will have the benefit and what intended objective of the RTM exercise.
Suvamoy Saha
And which I might just add that is not to sort of look at lower cost, but increased efficiency, which results in growth. When we started, we never started with the objective of reducing cost.
We started with the objective of improving efficiency as a result of which we can spark growth. And that is what is going to happen from quarter three.
Abhi Jain
Just a final question on the pricing in terms of the Lighting segment, right? As a retail customer, I have done certain market deep dive. And I understand that especially in terms of tube lights, Eveready pricing is almost 20% to 30% lower than other competitors like Havells, et cetera.
So are you still in market share — are you still — this pricing is still because you want to gain market share? And do you think that you can increase your pricing in the near term? Or do you think that it will still take some time for you to charge more favorable pricing, at least in terms of Lighting because that is where we are seeing industry where there’s a price erosion?
Suvamoy Saha
So you are right to the extent the percentage is not correct. You are right to the extent that Philips and Havells, they sit at the highest level on pricing. But there are a host of other competitors who are by and large, similarly priced, we are one of them. So I would say we would put ourselves at number three along with a few others.
So I don’t think that pricing taking order is going to change very significantly. What’s going to change is that because we are going to offer a significantly higher range of products, our portfolio is increasing, our distribution breadth is increasing, we should be able to spark growth. So as I said in my speech, I mean, remarks earlier that we are under-indexed on Consumer Luminaires. We are under-indexed on Professional Luminaires. So once we get our act together in these aspects of the business, that should give — it is not going to come by increasing our prices suddenly and trying to get — because they are far ahead of us, Havells and Philips.
Abhi Jain
As concluding that, I would just like to comment that your distribution strategy is working because most of the retailers and distributors are now placing Eveready products, especially lighting and they are pitching those products to the customers. So I just want to congratulate the management that you’ve done a good job in terms of ensuring that the distributors and retailers are pitching your products and showing the benefits to the customer, especially in relation to your other highly priced competitors. So good job on that.
Suvamoy Saha
And I just thought I would clarify on that, that we are really sort of focusing on some of the under-indexed part of our business, which should provide us with further levers of growth as we go forward. Thank you.
Operator
Thank you. [Operator Instructions] Next follow-up question is from the line of Priyank Chheda from Vallum Capital. Please go ahead.
Priyank Chheda
Yeah. I hope I’m audible. Sorry, last time my line was not audible. Sir, my question is, have you spelled out segment-wise revenue and EBITDA in case I have missed out? For H1, it would be helpful.
Suvamoy Saha
Okay. So segment-wise revenue for the H1, Batteries for us is INR456 crores, Flashlight INR108 crores and Lighting is INR166 crores.
Priyank Chheda
Flashlight is INR108 crores and Lighting is?
Suvamoy Saha
INR166 crores.
Priyank Chheda
INR166 crores. And on the EBITDA side, sir?
Suvamoy Saha
EBITDA side as a percentage you can take. The percentage for H1 will be 17.5% for the Battery, 11.5% for the Flashlight, and 2.5% for the Lighting business.
Priyank Chheda
Perfect. Perfect. So now sir, coming to Battery segment, the industry dynamics clearly show that alkaline is gaining share with all the macro tailwinds with respect to the higher usage of the electronic products. And then we are also gaining share. So in this, if you can highlight further, what different are we doing which is leading to such a strong market share gain?
What I remember is a market leader in alkaline battery had launched a value battery, which was at the same price of carbon zinc, so they could gain. What has been the steps taken by Eveready to gain market share in alkaline batteries?
Suvamoy Saha
So it’s like this. First of all, I would just like to clarify that the value segment of alkaline is still at a premium of about 20% to the premium carbon zinc product. So the cornerstone for our strategy is that we are available in nearly 5 million outlets, whereas the value alkaline of the competitor, the so-called competitor is available only in about 500,000 outlets.
So that makes a difference. So we go to every look and corner of the country, whereas the alkaline has still not penetrated that deeply. Now we still recognize that alkaline is something that is for the future, and we have to play in that area. So we have taken this kind of bold state of putting this manufacturing facility, which we have talked about.
And we are sort of ramped up our distribution to ensure that all alkaline-friendly outlets get our coverage. So that is exactly where we are — we have not compromised on our distribution or the placement of our carbon zinc products. So there is really no flash. There will be some little cannibalization here and there, but I don’t think that is of any great significance.
Where we have suffered this quarter and the half year is that the rural part of our business has gone down somewhat, which we are trying to see how to sort of recoup over the next two quarters.
Priyank Chheda
Right. Sir, carbon zinc decline in volumes is also to do with the Flashlights segment underperforming. Is that understanding correct?
Suvamoy Saha
Yeah, it is partly correct. While there are — the rural part used to use a lot of these carbon zinc batteries for their flashlights as they have moved into rechargeable flashlights, obviously, they don’t need the batteries. But there are other usages.
Priyank Chheda
Got it. Now coming to this whole Battery segment, which is a market of 300 crore batteries roughly sold at INR10 MRP. What would be this for the similar metric for alkaline industry?
Suvamoy Saha
Come again, what is this 300 crores?
Priyank Chheda
So there are roughly around 3 billion batteries which are sold annually as an industry size, which is sold at MRP of INR10. So somewhere we come to a market size of INR3,000 crores. What would be the same dynamics for alkaline battery? How many units? And what is the average selling price of alkaline battery?
Suvamoy Saha
Okay. So first of all, let me — okay, so you are talking of the company price of selling to the retailer — to the distributor.
Priyank Chheda
Yeah — yes, correct.
Suvamoy Saha
Yes. So first of all, the size of the — volume-wise, the size of the carbon zinc battery is 3 billion pieces, okay? And at a consumer level, it is about INR3,000 crores, which is again that if you take a blended consumer price of about INR10 to INR12. These are all very rough numbers. The equivalent of alkaline, the value alkaline particularly because it has a slight blend of also the premium alkaline that would be higher.
That would be something closer to the consumer level, it is INR22, as I said, the value alkaline. If you look at the company price, it would be about INR15, INR16.
Priyank Chheda
And what would be the volume demand in terms of annual sales?
Suvamoy Saha
Roughly, I would say that it will be roughly around 300 million against 3 billion. So volume-wise, it is still about 10% of the total carbon zinc batteries. And 50% of that goes into OEMs and 50% to the retail market.
Priyank Chheda
And OEM, you mean which industry, sir?
Suvamoy Saha
It goes into usages like particularly one prominent one is electronic voting machine, the EVMs.
Priyank Chheda
Okay. Okay. Got it. And sir, in terms of this industry size, which is around INR450 crores for the value alkaline batteries. How do you see this [Speech Overlap] Sorry, sir?
Suvamoy Saha
You take the whole alkaline. I mean that INR450 crores is correct. It also comprises our part, which is the premium alkaline, which sells to the consumer at about INR50.
Priyank Chheda
Got it. So now talking about the total alkaline industry segment of INR450 crores, how do you see this evolving? Is this industry also growing at 30%, 40% where you would be growing because you have such a large distribution strength, you are growing 3 times of the industry.
How has been the growth? And any particular consumer segments, which are witnessing a solid nonlinear high demand growth coming for alkaline batteries?
Suvamoy Saha
So typically, alkaline battery is taken by two types of consumers. One is one who wants to buy higher-priced products. It’s typically richer people who think that if the price is higher, it would mean that the product is better. And another segment of people who are a little more discerning who take these batteries for higher drainage devices like toys or camera.
So these are typically the types of consumers who would take alkaline batteries, and they are obviously in Tier 1, maximum Tier 2 towns, but not below that. That people would be more sort of price conscious and would prefer carbon zinc batteries.
And because some devices simply do not require the alkaline batteries, but if you look at the global market situation, most of the countries show heavy skew towards alkaline because as people become prosperous, they tend to go towards pricier versions of the product.
Priyank Chheda
And on the industry growth, anything that is firing out according to you? Or is it that your growth is far superior than the industry?
Suvamoy Saha
What you pointed out is right. Our growth because we are just now coming off a smaller base, our growth is about 3 times the level of the market. So the market is growing at around 25%. We, last quarter, grew at 62%. So you have seen we have sort of saturated ourselves a little bit more. I see that growth trend remaining similar.
Priyank Chheda
Got it. Just last question, again on — sorry to ask more on the alkaline battery because that’s the excitement. On the industry players, anything that you have seen in terms of market share gains, losses that you can comment with respect to number 1 player, number 2, number 3, number 4. I think the other few smaller players have also started becoming a bit aggressive in terms of their distribution and everything.
So anything on the competitive landscape, if you can highlight?
Suvamoy Saha
So as you know, I’ll just give you the landscape both for carbon zinc as well as alkaline because we must not forget that the replacement market of carbon zinc battery is still about 94% of the total market. I mean you must not forget that.
Alkaline replacement market, if we ignore the OEM part is about 6%, 7%, right?
Now in the carton zinc space, Eveready is obviously the market leader holding something like 60% share. And our two competitors, significant competitors are Nippo and Panasonic. On the alkaline, which is the 6%, 7% of the total battery market, and we are very excited about that market just as much as you are excited about it, and which is the reason why we are putting up a plant. We are still very small.
So in that market, Duracell is the big player because they have been around for a long time. We have communicated they have been around for 20 years, pushing alkaline day in, day out. So they are about 85% of that market, and we have just come to a stage of coming to just cross the double-digit number. So we have a huge headroom to grow.
Priyank Chheda
Perfect. Perfect. Perfect. And any other new player that is that you have found getting aggressive in alkaline battery other than…
Suvamoy Saha
No. So sorry, I did not respond to that part. So Nippo and Panasonic also do a little bit of alkaline, but not significant yet and no other players. But there are a host of players who also play in the OEM part, like supplying to EVMs and stuff like that.
Priyank Chheda
Got it. If I can squeeze in one last question on the gross margins, which the earlier participant was asking. So what has happened is over the last six months, we have seen almost a 400 basis point of margin expansion. And I believe a maximum of it has come in the Battery segment.
And our key raw materials tends to be zinc and electrolyte manganese, which constitute almost 60% of the raw material. So anything that has gone significantly lower on the raw materials or any price increase that we have taken on the Battery side or with the mix changing, our ASP has gone up, which leads to also a gross margin gain. So roughly, if you can help us crack down the gross margin gains that we have seen in the last six months?
Bibek Agarwala
This is mostly on account of material margin. So there are very hardly any price change because these are MRP-driven market. So this is mostly — that is why I was trying to explain to the earlier gentleman who has raised the point on the cost part. So this is mainly — you have rightly said the 60% of the component from the EMD and the zinc, and they are a little bit softer during the quarter, and that is why the gain has been flowing there.
Priyank Chheda
Okay. And so we did not ask this…
Operator
Sorry to interrupt you, sir. Kindly come back in the question queue for a follow-up question.
Priyank Chheda
Sure, thank you.
Operator
Next question is from the line of Chirag from Keynote Capitals. Please go ahead.
Chirag Maroo
Yeah. Hi. Am I audible?
Operator
Yes.
Chirag Maroo
Thank you for the opportunity. I have a couple of questions from my side. One is what — is there any update on the KKR arbitration case?
Suvamoy Saha
So the status remains the same. So there is no further update on the KKR thing. As we have said that in the past that from the KKR, it has moved to some other party called [indecipherable] and from [indecipherable], it has now moved to some NBFC companies. So we are waiting for the next hearing.
Chirag Maroo
Is it possible for you to give a bifurcation of Flashlight revenue mix? Earlier, it was around 65-35 battery-operated and [indecipherable]. Has that changed drastically now?
Suvamoy Saha
You want the split of the Flashlight revenues between the two segments? It is nearly 50-50 for the half year.
Chirag Maroo
And what is our revenue from the alternate channel?
Bibek Agarwala
Alternate channel, the alternate channel revenue for the quarter will be around…
Suvamoy Saha
Alternate channel or alkaline, what did you asked? You wanted what?
Chirag Maroo
Alternate channel, alternate channel.
Bibek Agarwala
Alternate basically constitute to 16% of the total revenue. So around INR60 crores in the total mix.
Chirag Maroo
Okay. Finally, sir, I wanted to have an update on the CAPEX that you are planning for alkaline. Has the location for the project being planned?
Suvamoy Saha
So we have not yet finalized the exact location. We are sort of drawing between two locations. I think we should be able to take a final decision on this. We are just trying to see which ecosystem serves us better. So we should be able to take a call by middle of December or thereabouts, a final decision.
While our work on machine building and on many other parameters or other equipments has already started, and they are in fairly advanced stage of progress.
Chirag Maroo
So generally, as you said earlier that this project would take a year time after the location being planned. So can I say that in H2 FY26, this plant will commercialize and you can see revenue started coming in and the benefits due to cost saving of manufacturing can come into picture after H2 FY26?
Suvamoy Saha
Yeah. I think H2 would be a good target to take because what you said is right, we did say that it will take one year from the time we settle on the land. But because we have now progressed quite significantly on the main part of the project, which is machine building, we feel that even if we decide, by 15th of December, we should be able to go live latest date is by 1st of October.
Chirag Maroo
Fair point sir. And sir, just last one from my end. What would be the expected debt levels after the CAPEX that we would do? Would it be around approximately about INR480 crores, INR500 crores level?
Bibek Agarwala
So see, as of now, if you see our debt levels are INR456 crores — sorry, INR256 crores, and we are continuously reducing. So we are looking for around INR150 crore debt for this project. So while the existing debt will keep reducing as per normal repayment schedule, and there will be additional INR150 crores added to that. So you can fairly see it will be INR400 crores at a peak.
Chirag Maroo
Got it. Got it. One last question, if I can squeeze in.
Bibek Agarwala
Carry on, please.
Chirag Maroo
Sir, just wanted a broad thought like we are going to be the only manufacturer of alkaline battery after our capacity commercializes. Any scope that we would be doing some kind of white labeling for other players, too?
Suvamoy Saha
That’s a possibility. I mean we do the same for even carbon zinc. So of course, the whole premise for the alkaline plant is to sell Eveready Ultima, not to make private label business, but it is part and parcel of any business today. So of course, we’ll be open to that.
Chirag Maroo
Thank you.
Operator
Thank you. Next question is from the line of Mithun Aswath from Kivah Advisors. Please go ahead.
Mithun Aswath
Sir, I just wanted to understand, obviously, your competitor does not have a plant in India and has continue to grow. I remember in the last con call, you mentioned that even if — even after putting up the plant, your margins are not going to go higher in the Alkaline segment.
So I’m just trying to understand the viability of putting up a plant in India. Just wanted your thoughts on that. And what sort of return on capital do you expect from that facility?
Suvamoy Saha
Okay. First of all, I think you might have misunderstood us. Again, the whole premise of putting up the plant is not only will it sort of spark growth in this particular category, but also with the objective that it would improve our margins. But I would leave Bibek to answer to that and the return of capital…
Bibek Agarwala
Yes, definitely. Today, our position is that we import the material from outside and there is a duty impact, then the importer add a lot of profitability to that. So when we’re manufacturing in India, definitely, there will be a very substantial margin gain, especially on the alkaline B2C side. And that is in our objective. And of course, any investment has to have a proper IRR and ROI. So we have taken a fair chance of the very decent ROI, especially for this alkaline project.
Mithun Aswath
Right. And just wanted to understand still in the Battery business also, are we seeing the same sort of kind of cannibalization, which we saw in the Flashlight, and hence, the overall growth does not appear? In the Flashlight as well, you saw the Battery segment kind of degrow and the Rechargeable Flashlights are growing. Now even the Battery segment is a much larger part of your business. And if you are saying that the Carbon Zinc business is sort of dying business and the alkaline is where the growth is, but 93% of your business comes from carbon zinc. It’s going to take a lot of time and effort for you to grow revenues.
If you see over the last couple of years, despite your efforts, the revenues at a total company level have been quite flat. So I just want to understand, you had very high aspirations of doubling your top line. But I’m just trying to understand where are we in that trajectory? You’re also looking at stepping up — looking at a new product line.
But I just want to understand where we are? And do you see a lot more difficulty than what you saw maybe 18 months back?
Suvamoy Saha
Okay. So first of all, let us talk a little bit about the flashlight side. The flashlight side, it is quite clear that the battery-operated one has been de-growing for some time. This company did not, for whatever good/bad reason, I mean, there is no point in going back to the history, did not enter this and consumers were taking on to rechargeable flashlights.
This company did not go enthusiastically into that. It is only in the last two years that the company decided that, I mean, we need to play in that as well. So from a zero-level contribution, today, we have come to a stage where we are 50% from rechargeable flashlights into the overall turnover of flashlights. This half year and this quarter, we grew, as I mentioned, by about 16% and 7%, respectively, and we hope that this will be maintained.
The flashlight market has a play-of-a lot of unorganized players. We are also trying to take necessary, if I may say, action to neutralize because when there is an organized market where there is less bit of tax compliance, then less adherence to metrology rules, et cetera, et cetera, it becomes a bit of a mixed bag. We are trying to also navigate that particular part.
So flashlight, I think, is going to remain a growth driver for the company in the times to come. Now let us come to Batteries. I must once again highlight that carbon zinc, still, for the whole Indian market is 94% of the market, right? Where we hold 60% of the market. We are a small player in the 6% of the market, which is the alkaline market, and we have just become a 10% plus player in that area. But we identify that with growing prosperity, people will shift to alkaline as it has happened in all other countries.
So we have taken this preemptive step, if I may say, or let us say, somewhat adventurous or say, aggressive step of putting up a manufacturing facility that provides us with higher level of margin and gives us control on the production chain. So we would play in both because there would be price-sensitive consumers who would continue to and they don’t require the alkaline because people go into flashlights and wall clocks and stuff like that, which does not require alkaline.
We will put alkaline into the hands of the people who can afford to pay higher price and they may have higher drain devices, costlier devices, which require alkaline. So I think there can be peaceful coexistence. It has happened in most countries. But with growing affluence, people do tend to shift to alkaline and then there is a cannibalization. Obviously, I mean, a battery is something that people need for their device.
They can only use either an alkaline battery or a carbon zinc battery. Now if you are using a carbon zinc battery and he replaces that with an alkaline battery, obviously, there is no case for the carbon zinc battery. But I think India is still far away from that conversion, while there is very, very decent tailwinds behind the alkaline category at this point of time. So I don’t think overall — see, this year, the problem we have faced is nothing to do with alkaline cannibalizing carbon zinc.
It has come because there has been very poor offtakes right through the half year from the rural part of our business where we have suffered. So that is something that we are analyzing why that took place and what is — what are the countermeasures that we need to do? Is it just a temporary market problem? Or is it something to do with us or whatever. So that part is what we are focusing on. It has no reflection on the overall market.
Mithun Aswath
But just wanted your thought on the Carbon Zinc category, would the market itself have declined in the first half?
Suvamoy Saha
Yes, it did. As I told you, it declined from the rural part of the market.
Mithun Aswath
I’m just trying to understand the trend. If there’s a number, do you see that even growing at low single digits? Or do you see it being stagnant?
Suvamoy Saha
No. So if let us say alkaline maintains this growth, I think carbon zinc is going to grow at very low single digit. If we have — it has degrown the first part, but it has come specifically from a geography which is unaffected by alkaline. So we are trying to sort of understand that particular phenomenon.
One would have understood, let us say, there is a lot of alkaline purchase in a particular area and as a result, carbon zinc has suffered. That has not.
In fact, our premium carbon zinc batteries have grown. They have actually kept a very decent pace. The pace of growth varied between, say, 4% to 10%, which is very good for us because they are very profitable products. And they coexist with alkaline. The rural part doesn’t coexist with alkaline and that has where that degrowth has taken place. So this particular hypothesis is not applicable in the current year’s case.
Mithun Aswath
Sure, thank you.
Suvamoy Saha
Thank you.
Operator
Thank you. Next question is from the line of Radha from Guardian Investments. Please go ahead.
Unidentified Participant
Yes, thank you for the opportunity. Sir, my question was, can you please provide product-wise volume, value, and EBITDA number for this quarter?
Bibek Agarwala
So Battery, you can see that for the quarter, our revenue is INR240 crores. Flashlight is INR48 crores and INR85 crores is the Lighting business. EBITDA percentage is 17.5% for Batteries, 8% for Flashlight and 2% for the Lighting business.
Unidentified Participant
Volumes, sir?
Suvamoy Saha
Volumes, they are not sort of — there are different types. In lighting, there are very many product SKUs which are not sort of — you kind of count them and they make no sense by counting them.
Unidentified Participant
For the Battery segment, sir?
Bibek Agarwala
Battery segment. So for quarter two Battery segment, it is at 316 million.
Unidentified Participant
Okay, and Flashlight?
Bibek Agarwala
Flashlight 4.2 million.
Unidentified Participant
Alright. Second question is that we have introduced some new products like Siren torch, mosquito bats, calling bells, et cetera. So where are we capturing these products under which product vertical?
Bibek Agarwala
So this mosquito bat is under the Battery and Siren is under the Flashlights.
Unidentified Participant
And calling bell, sir?
Bibek Agarwala
It will be for Lighting — Accessory business or the Lighting Equipment.
Unidentified Participant
Okay. Third question, sir, since there is a lot of correction in the prices in the LED market. So at what level of revenue can we reach breakeven on a PBT level?
Bibek Agarwala
We have maintained the annual level we showed — we said INR400 crores is a very good number to become a breakeven for organization seeing the past trend. And last year, we ended up at INR310 crores. We are looking for how can we — this year, actually, year-end, we are targeting to make it breakeven. So INR400 crores is a good level to do a business breakeven for Lighting business.
Unidentified Participant
And when do you plan to reach — when do you think we can reach 5% EBITDA margin?
Bibek Agarwala
So first, we have to definitely cross the INR400 crore benchmark. And then, of course, if we see that, I think the 5% would be between INR500 crores to INR600 crores company can easily target 5% plus EBITDA margin.
Unidentified Participant
Alright, sir. Just one last question. With current price, when do you think we can reach $100 million revenue in the LED business?
Bibek Agarwala
See, it is not only LED is the entire lighting portfolio. What the disturbance has happened, as you know, that industry every last two years, continuously 15% to 20% value erosions are happening. This period also, if you see our Lightings are flat despite a very healthy volume growth. Now over a period of, it is becoming very unpredictable. We have not anticipated that the severe value erosion will happen in this quarter.
So if you see at least — if you ask me at this current stage, it will take at least four to five years to reach to $100 million of revenue for Lighting business.
Unidentified Participant
Understood. Thanks and all the best to you.
Suvamoy Saha
Thank you.
Operator
Thank you. Next question is from the line of Priyankar Sarkar from Square 64 Capital. Please go ahead.
Priyankar Sarkar
Yeah, good afternoon sir. Sir, our reach is close to 5 million outlets, I think, as you rightly mentioned in the call earlier. So sir, why are we not using this super distribution to launch newer products in newer categories?
I mean, honestly, it has been more than 2.5 years since the new management has taken over. And so by when can we expect to enter, at least indicate to the street what is the fourth category that we will be targeting? I think the large part of the investor community is actually eagerly waiting to hear this from the management.
Suvamoy Saha
Okay. So Priyankar, it is like this. We are — last two years, we took a very bold initiative of changing our distribution. I mean it may seem pretty sort of modest to an outsider, but it was a huge challenge internally because it involved the entire ecosystem of our selling personnel, distributors, channel partners, everybody. So we naturally face a lot of challenges, and we have overcome thankfully, all of that.
And so we could not focus on this diversification efforts. Today, because things have now come under control, we are looking at adding adjacent products. We are looking at adding newer categories. We have already started that work. I think it will take us another maybe two quarters before we can meaningfully articulate on the same, but you would see a lot of adjacent products being added to our business.
Like for example, we have added the mosquito racquets. We have added a lot of accessory items in our Lighting side.
We are — so similarly, we would keep adding. We would shortly be out with power banks. So these are adjacent products. These cannot be treated as categories per se. They will add heft to our overall turnover, but we really need to also look at, as you very rightly said, a fourth product category, which we will be able to articulate in the course of the next two quarters.
Priyankar Sarkar
For enough. Thank you, sir. Good to hear that from you. Thank you.
Suvamoy Saha
Thank you. Thank you, sir.
Operator
Thank you. Next question is from the line of Mehul Savla from RW Equities. Please go ahead.
Mehul Savla
Hello? Good afternoon.
Suvamoy Saha
Good afternoon.
Operator
The participant dropped. We move on to the next participant.
Next question is from the line of Saket Kapoor from Kapoor & Company. Please go ahead.
Saket Kapoor
Namaskar, sir and thank you for the opportunity. Firstly, sir, a very small suggestion. If you could provide the revenue breakup between Battery, Flashlights, and the Lighting in your press release or the opening — in the press release as a document that would suffice a lot of our queries. And if you could give that number for H1 also, sir, what is the breakup between — in percentage terms only between Battery, Flashlights and the Lighting.
Sorry if you have given the number, pardon me for that.
Suvamoy Saha
Okay. Saket, we note your suggestion. It is a positive suggestion. We actually have been articulating these breakups in these calls, but we take your point that we can even articulate it in the press release that we give out. Thank you. Thank you for the suggestion.
Saket Kapoor
Okay, sir. Can you give the breakup for the first half, sir?
Bibek Agarwala
[indecipherable] So our Batteries is INR456 crores, Flashlights INR108 crores, and INR166 crores is Lighting.
Saket Kapoor
INR456 crores, INR108 crores, INR166 crores.
Bibek Agarwala
Absolutely right.
Saket Kapoor
Okay. And you are looking for closing the year for the Lighting segment at INR400 crores?
Bibek Agarwala
No, not really. I have not told. I think the point [indecipherable] to me that where we can have the breakeven as an industry in the standard.
Suvamoy Saha
It is like this. We are currently at a breakeven level, but the previous person who asked the question says that what level you can see breakeven on a sustained basis to which Bibek answered that it is INR400 crores. He didn’t say that this year, we are attempting to go INR400 crores. But for the historical fact, we are breakeven, actually slightly positive even for the first [indecipherable].
Saket Kapoor
Sir, and you mentioned about the fact that H2 is generally softer than H1. So can you explain the key factors that attribute and which categories to generally softened out for H2?
Suvamoy Saha
So H1 has a seasonal pull in the Flashlight business and to some extent in the rural part of the Battery business, which did not happen this year. But the Flashlight business did happen. And that generally gives a kind of a little bit of, I say, I would say, 5%, 6%, or 10% skew to the first half turnover.
Second half to that extent is a little muted.
Saket Kapoor
Okay. And sir, when we look at the finance cost, it is lower significantly and congratulations to the team. Do we have any FOREX impact also in our numbers for the quarter in the first half?
Suvamoy Saha
Not really.
Saket Kapoor
Okay. So these are operational numbers and the savings will continue for the second half also?
Bibek Agarwala
So saving in the sense, if you see we are continuously reducing the debt, right? And getting the interest borrowing at a very cost-effective way. So that is why more and more we do the rate reduction, the interest cost will automatically come down.
Saket Kapoor
And the CAPEX part, you mentioned that we will be finalizing the same by middle of December. And when we will be drawing the money for the same?
Bibek Agarwala
Similarly, that point of time because major things will be requiring for the machines and all. So probably mid of December onwards, we’ll start drawing the money.
Saket Kapoor
Right. And lastly, sir, on the other expenses part, do that line item have any one-off? Or are those variables in terms of the increased revenues?
Bibek Agarwala
So this is basically other expenses are basically advertisement promotions and all other expenses are there. So the routine expenses are there.
Saket Kapoor
Okay. Because that has been increased by 10% year-on-year also and Q-on-Q also.
Bibek Agarwala
Our commitment to advertisement is high. So — and out of INR7 crore absolute increase, we see INR6 crores increase in the advertisement only.
Saket Kapoor
Okay. And lastly, sir, when we speak about RTM coming into play for H2, what can be the increase in margin or the incremental margin that are expected to flow into the P&L when RTM impact benefits will be fully absorbed?
Bibek Agarwala
See, RTM will help us to increase the revenue, which is the need for the hour, right? We are currently having a very decent margin. If you see quarter-by-quarter, yes, we are giving a decent margin and of course, the way we are doing material hedging.
Now of course, the margin may not improve much, but your absolute values will keep increasing as our revenues keep going up. And that is the focus first stage. And of course, whatever will come from the efficiency, it will be coming in there. But more and more revenue will be giving us a very higher absolute value of the profitability and may not to that extent margin barring the efficiency factor.
Saket Kapoor
And this route to market is the bank capital interest thing that we have done earlier?
Bibek Agarwala
Yeah.
Suvamoy Saha
It helped us formulating the plans and so they were with us.
Saket Kapoor
Thank you for all the elaborate answers sir and all the best in the future.
Suvamoy Saha
Thank you, Saket.
Operator
Thank you. Next question is from the line of Mehul Savla from RW Equities. Please go ahead.
Mehul Savla
Yeah, thanks. Sorry, the line got cut earlier. And congratulations on a good remarkable show in a tough market. Sir, I just wanted to check, I was not sure that you mentioned that the CAPEX is towards a multiproduct facility. So I just want to check, this multiproduct will be within the Alkaline category? Or are there any other products also that might come up in that facility?
Suvamoy Saha
No. So basically, this plant is for alkaline. But in order to make it more economically viable, we are also thinking of adding some other product lines. Those are not within alkaline. They could be others like the carbon-zinc facility because the more you develop scale, you get more efficiency out of sort of normal stuff.
Mehul Savla
Okay. But it will be within batteries only, predominantly?
Suvamoy Saha
Also to Flashlights.
Mehul Savla
Okay, alright. Got it. So that was the only question, I think everything else is answered and thanks and all the best.
Suvamoy Saha
Thank you so much. Thank you very much.
Operator
Thank you very much. As there are no further questions, I will now hand the conference over to the management for closing comments.
Suvamoy Saha
Okay. Thank you, everyone, for taking time out to join us on this earnings call. I hope we have adequately answered all your questions. If you still have more queries, please reach out to our Investor Relations team, and we will be happy to address those. Thank you once again, and look forward to connecting with you again in the next quarter.
Operator
[Operator Closing Remarks].