Jyoti Resins and Adhesives Ltd (BSE: 514448) Q4 2025 Earnings Call dated May. 09, 2025
Corporate Participants:
Vinay Pandit — Chief Executive Officer
Utkarsh Patel — Managing Director
Analysts:
Manan Shah — Analyst
Sameer Barot — Analyst
Shubh Shah — Analyst
Keshav Garg — Analyst
Bhavin Chheda — Analyst
Mahesh Attal — Analyst
Rupesh Tatia — Analyst
Piyush — Analyst
Rajat Sethia — Analyst
Anupam Agarwal — Analyst
Vijay Shah — Analyst
Pritesh Chheda — Analyst
Vasu Patel — Analyst
Moksh Ranka — Analyst
Presentation:
Vinay Pandit — Chief Executive Officer
Ladies and gentlemen, I welcome you all to the Q4 and FY ’25 Post-Earnings Conference Call of Jyoti Resins and Adhesives Limited. Today on the call from the management team, we have with us Mr. Utkarsh Patel, Managing Director. We also have the Chief Marketing Officer, Mr. Samit [Phonetic] on the call. As a disclaimer, I would like to inform all of you that this call may contain forward-looking statements which may involve risk and uncertainties. Also, a reminder that this call is being recorded. I would now request the management to detail us about the business and performance highlights for the period ended 31 March 2025, the growth plan and vision for the coming years, post which we will open the flow for Q&A. Over to you, sir.
Utkarsh Patel — Managing Director
Ladies and gentlemen, I welcome you all to the quarter four FY ’25 post-earnings conference call of Jyoti Resins and Adhesives Limited. As you would have gone through the investor presentations uploaded to the exchanges, we have delivered nearly 15% volume growth on Y-o-Y basis, quarter four FY ’25 versus quarter four FY ’24. While on a quarter-on-quarter basis, quarter four FY ’25 versus quarter three FY ’25, our volume growth is 24%. For the full year ’25, the volume growth stood at approximate 12%. This was mainly due to a flat quarter two, as was explained also in our quarter three con-call.
Revenue on an adjusted basis grew 14% Y-o-Y, driven by this volume growth. Further, I’m happy to share that we have signed Mr. Pankaj Tripathi as our brand ambassador, which will help to grow our business, create visibility, and support in the marketing efforts for national visibility for the brand in consumers and also in dealers, retailers and carpenters. We have continued to put in strong efforts in our ground level work with carpenters and dealers, with several meets conducted during quarter four to showcase our product portfolio and improve our penetration in existing markets and create visibility in the new markets also. This activity is also expected to continue aggressively in quarter one FY ’26 as well.
While we gained market share in this quarter in some of our strong cities and states, we have witnessed good response in our new states as well as our mature markets. The higher margins of more than 30% was lead higher volumes and thereby offering us better spread and operating leverage. We have further increased the number of branches to 42 during quarter three to 48 in quarter four while we have increased our sales and marketing teams as well. In terms of our capacity expansion and capex plans, we are looking to add another 1,500 tonnes per month over end of this financial year at our existing plant. That will take us to capacity of 3,500 tonnes per month. That can generate INR650 crores of revenue in existing plant. In next two years, we will start to plan for greenfield expansion for future growth.
Now I’m opening the floor for questions and answers.
Questions and Answers:
Vinay Pandit
Thank you, sir. All those who wish to ask a question, may please use the option of Raise Hand. In case you’re unable to Raise Hand, just drop a message on the chat and we’ll invite you to ask the question. All those who wish to ask a question can use the option of Raise Hand. We’ll take the first question from Manan Shah. Manan, you can go ahead, please.
Manan Shah
Hi, sir. Thank you for the opportunity. I’m relatively new to the company. So, please pardon if you have already answered these questions in the earlier call. Can you please talk about which are the top three states for us? And I believe you’ve hinted that we have around 35% market share in Gujarat. How has this market share improved over the past two or three years?
Utkarsh Patel
Sir, we are doing good business in five states, the central and western part. And these are the Gujarat, Rajasthan, MP, Maharashtra, and Karnataka. For Gujarat, we have 35% market share and that grew by 10% in last two years.
Manan Shah
Okay. By 10%, you mean that 30…
Utkarsh Patel
25% to 30%.
Manan Shah
30-something has become 35% now?
Utkarsh Patel
Oh sorry, 25% to 35%, so 10% yeah.
Manan Shah
Okay. And the growth in the current year that we have achieved is this from these five states or this growth is driven from the newer states where we have entered?
Utkarsh Patel
So, majority growth comes from the existing five states. The reason is the volume is higher in these five mature states. And we have also taken the growth from the newer markets also.
Manan Shah
Okay. Understood. We’ve recently hired Pankaj Tripathi as our Brand Ambassador. So, for going forward, what will be our average marketing and branding spend that we are targeting for the coming year?
Utkarsh Patel
So, we are targeting 7% to 8% of revenue. And that will be led by half is trade marketing and half for the brand communications.
Manan Shah
Okay. And which are the newer states that we are targeting?
Utkarsh Patel
So right now, we are targeting into the UP, Delhi. We are also focusing more into the West Bengal and to the Chhattisgarh also and Telangana-Andhra also.
Manan Shah
Okay. And these new geographies where we are targeting, have we built a warehouse or a depot or something to quickly service these markets? Or what is the strategy? How do we go about that?
Utkarsh Patel
So, we appoint consignee and sales agents. So, basically, they are our stockists. So, we have 48 stockists right now across these 14 states.
Manan Shah
Okay, sure. I’ll get back in the queue. Thanks.
Utkarsh Patel
Thank you.
Vinay Pandit
Thanks. We will take the next question from Sameer Barot [Phonetic]. Sameer, you can unmute and ask.
Sameer Barot
Yeah, hi. Am I audible?
Vinay Pandit
Yes, you are.
Sameer Barot
Thank you for taking my question. Sir, new to the company, so slightly basic. But, sir, what is the hindrance this company has in growing much faster from a base of — because you have a low base of around INR250 crores? Is it a sacrifice some margins and grow faster? And if you’re not ready to compromise on your high margins, then you grow at a more measured pace? Is that the way the market is? If you can just explain that dynamic?
Utkarsh Patel
See, actually, the distribution market is always — I believe that is always a 15, 20 years of investment of entire team to make this type of network. So, we have invested 18 years into this journey. So, now in that scenario, we have experienced so many things. And now the speed has become more faster compared to as earlier. So, right now, as we have explained, that 14 states network, we have established, the 48 branches we have established, the team of 430 people of sales force now working to make this family, Euro family, much bigger than right now. So, the expansion is on that mode. And right now, we have associated with 350,000 carpenters among those. Almost 200,000 carpenters we have registered into our loyalty program. And we have also increased the base of the retailers also. So, that are now 12,500 retailers we are working with them. So, it is the journey and so we believe that into the tertiary sales, the profit always depends on that only. So, we are not only primary focused company. We always believe that tertiary pull should be there. So, maybe we are taking the time for that. But the fundamentals will be strong by this journey.
Sameer Barot
Sir, so what does it take for you to move from, let’s say, 12,000 retail distributors to, I don’t know, 25,000 or 30,000? Is it that this process just takes time and it’ll take two, three years for you to double your reach?
Utkarsh Patel
Yes, you can say that because, see, right now we are taking at least two to three years to make one state as a mature level. So, that was earlier four to five years, six years we have taken. But that time we had not a strong base, and we were very new in earlier stage. So, no experience and no team were there. But right now, we are in that situations and that positions that we have now enough matured our team and matured enough and experienced in our business and strategies. So, we took at least two to three years to take that state at that level. So, yes, we can say if we want to go for the 25,000 or 30,000 retailers, it will require at least four to five years from here.
Sameer Barot
And sir, your consignee agents and your retail touch points, what are you offering them which makes them switch to Euro instead of, let’s say, whatever other brand they were selling earlier? What is it that — are you giving more commissions? Is the product quality a differentiator? [Foreign Speech]. What all do you need to do to get penetration once you have — or why does he move to you?
Utkarsh Patel
[Foreign Speech], it is a journey of that trust, what we need to build to the retailers first. If we talk about the stockist, then stockist, the CSA is the dispatch partner. So, they maintain the stocks, delivery, dispatch and accountings mainly. And for the retailers, yes, of course, there is experience of the services and the quality should be on the regular basis that we need to do that particular transactions to get that trust for that. So, in retail business, always that takes time. It is not like that we do one placement of 100 kg or 200 kg and then that’s it, done, and now the retailers move to the Euro. No, that is not like that. So, initial that is basic placements, then we need to prove ourselves by giving them the best service and ease of doing policy, what as a Euro we are always as a preferable brand with the retailers. So, that different policies and not only pricing or discount or credits, but mainly the commitments, the promising what we are giving to the retailers, how we fulfill that promises, how we deliver that commitments that matters and consistently you prove yourself by then you can gain the more market share for that.
Sameer Barot
So, sir, like-for-like, let’s say for the like-for-like product, if Pidilite is priced at INR100, just as an example, what would be your pricing and what would be your commission into the full channel, including consignee and retailer versus somebody like a Pidilite.
Utkarsh Patel
So, for the consumer MRP level, we are almost same. For the dealer pricing wise, we are almost same. But for the landing of — total landing of the price that is more attractive in Euro as compared to the others.
Sameer Barot
Sorry, didn’t understand that. Landing for whom?
Utkarsh Patel
To retailers and to carpenters also. So, for retailers, as an example, we are passing 8% to 12% of margin to retailers.
Sameer Barot
Right. And what would your competition be doing, at least Pidilite for that matter?
Utkarsh Patel
I cannot disclose in this investor call for particular company name, but I can guide our margin to the retailer. So, that is comparatively to 8% to 13% that is more attractive than what others are offering that is almost 4% to 6%.
Sameer Barot
Understood. And now, last question, would you feel confident that now you’re getting a brand ambassador, so there will be much more traction for the brand on the retail end, on the carpenter end? Is it likely that we will now see a much faster growth over the next two, three years, not asking for the next one or two quarters, but more like a medium-term objective? Can we grow at a much faster pace than we have in the past?
Utkarsh Patel
Yes, we can go for that because as now we are in that position that now we have onboarded Mr. Pankaj Tripathi as a brand ambassador. So, we want to create more visibility, we want to give more confidence to our retailers, to our consumers, to our carpenters. And yes, we are very optimistic with this journey and these three years of associations may be put this brand into the next level, what we are targeting for that.
Sameer Barot
Thank you, sir, and all the best. Thank you for answering my questions.
Utkarsh Patel
Thank you.
Vinay Pandit
We’ll take the next question from the line of Shubh Shah [Phonetic]. Shubh, you can unmute and ask.
Shubh Shah
Sir, do you have any comments on realizations for this quarter, how have they changed?
Utkarsh Patel
Realization has not changed much into this quarter.
Shubh Shah
And from one year back?
Utkarsh Patel
One year back, it is also not much, maybe 1% to 2%. I have to look into the exact data, but it is not much that changed because the pricing and the raw material pricings are more or less same since one year.
Shubh Shah
Understood. And second question is, I see we have both distributors and branches. So, how exactly these two play different roles in our supply chain? Do we also employ distributors in all states or it’s only a particular few states where we use distribution model, others we use only CSAs?
Utkarsh Patel
Yeah. So, our model is basically a CSA stockist model. So, that are the stockists. And as I mentioned that they are the partner for the dispatch and the stock maintain and the billing partners. So, the model is the same. In distributor, when it is a tier 3, tier 4, small villages town, we appointed distributor where he can take care of 70, 80 or 100 retailers. But if we talk about the metro, mega or any major cities, then we go with these channels only. So, the market can be the open, and we can put our entire strategies, the marketing, branding, advertising or sales strategies as a universal lever. So, these are the reasons. So, right now, 90% of revenue is generated by these 48 stockists and 10% by the small distributors.
Shubh Shah
Understood, sir. And can you share in which geographies we added the new branches?
Utkarsh Patel
Sure. So, in UP we do, and in UP we have done Agra and Gorakhpur. And then one Chhattisgarh branch is there. And in Punjab we have added Patiala and Chandigarh.
Shubh Shah
Understood. That’s all from my end. Thank you.
Utkarsh Patel
Thank you.
Vinay Pandit
Thank you. We’ll take the next question from the chat. The question is from Vishal Pandya [Phonetic]. As I understand, VAM, a crude derivative is our key raw material, which as per my understanding is majorly imported in India. With the fall in crude, what is the impact on VAM prices and any scope of margin expansion? Also, is there any impact of tariff war on VAM prices globally?
Utkarsh Patel
Sure. So, VAM prices generally is stable since three years. Recently in last quarter, little rise in the VAM around 3% to 4%. So, as an industry leader has also declared the price rise of just 1.5% to 2% and also we have declared. So, in the current scenario, it will be not much different into the margins because as it is a matter of one month, and we can take the price rise in the next month. So, yes, VAM is totally 100% imported and there is no manufacturing in India. And generally, VAM is very stable nowadays, just little bit higher side that increase the things here, 2% to 3% only.
Vinay Pandit
Thank you, sir. We’ll take the next question from the line of Keshav Garg. Keshav, you can unmute and ask.
Keshav Garg
Sir, what was the volume growth for FY ’25 year-on-year?
Utkarsh Patel
That was 14%.
Keshav Garg
Sir, so our revenues — sir, this you are talking for the full year, right?
Utkarsh Patel
Full year.
Keshav Garg
Sir, so our revenues increased by around 10%. So, that means there was a realization degrowth of 4%. Is that understanding correct?
Vinay Pandit
No, just one correction. The quarter four versus quarter four is a growth of 14%. The annual is around 12%.
Keshav Garg
Okay. Sir, but despite that, so that means there is a marginal 1.5%, 2% price degrowth?
Vinay Pandit
It is flattish over last year.
Keshav Garg
Okay. Now, sir, the concern is that the receivables have jumped from around, if we see, INR94 crores last year to around INR126 crores, which is like an increase of almost 34%, whereas revenues went up by 10% only. So, now we are giving, it seems, 5%, 6% credit to the channel. So, sir, it’s like for a retail product, mostly it’s the cash is done on — cash and carry basis, if you see majority of the companies, the distributors hold the inventory and they. So, here we are giving 5%, 6% of credits. So, it’s really concern. So, what’s your thought on this?
Utkarsh Patel
So, yes, you are very right that from INR94 crores to INR125 crores in this March balance sheet. The reason is we have generated a very higher volume in March month and that was around INR47 crores. So, this is the reason that this jump at this level. But this will be again came back within these two months because it’s — see in B2C, in this trade business, it is generally 70 to 90 days, 100 days is expected by the retailers. So, that is the scenario that is set up into the mind. So, in our mature states, we are offering them 75 to 80 to max 90 days of the credit cycle. And that as we can see, as Jyoti Resins is always debt free. So, this is the reason that we rotate that cycle in a proper timeline since long years. And we have right now 17 years invested into this business, and that model, I have explained about that 48 stockists. That 90% revenue is generated by this channel partner. So, it means that the debtors are spread into the 14 states into the 12,500 retailers. So, it creates a lower risk by this model. So, I don’t think so there is much risk and that Jyoti Resins has proved by delivering that below 1% bad debt. So, it is just a matter of just one or two months, then that will become again in the routine cycle for that. Because in B2C business, every dealer wants to finish the deadlines of the volume growth and the schemes of yearly basis, the trips or gold, silver, etc. So, in March month we have taken the higher growth. So, that is the reason that growth to the INR94 crores to INR125 crores.
Keshav Garg
Sir, now you think that next year we will be able to achieve our target of INR450 crores to INR500 crores revenue?
Utkarsh Patel
So, yes, we have given the guidelines of — we have targeted INR500 crores FY 2027. But we are very optimistic. Yes, we are working hard. Our team is much focused. Yes, the last quarter two was not at that par, at that level, because due to the rain and festival constraint and all over strain into the demands and that gives us little back of 5% of this year what we have expected to grow by 20% CAGR. But yes, we are aiming that for the 20%-25% and so that’s why we have onboarded the celebrity to gain the major pull for our brand. So, yeah, so we are targeting for the INR450 crores or INR500 crores of revenue in 2027.
Keshav Garg
So, in FY ’26, what should we expect?
Utkarsh Patel
We are targeting, as I mentioned that 20% to 25% of revenue growth. So, we can say that INR360-crores, INR370 crores we are targeting for that.
Keshav Garg
Okay, sir. Great, sir. Thank you very much and best of luck to you and your team.
Utkarsh Patel
Thank you.
Vinay Pandit
We take the next question from the line of Bhavin Chheda [Phonetic]. Bhavin, you can unmute and ask.
Bhavin Chheda
Yeah, good morning, sir. Good set of numbers in quarter four and good recovery. And as you mentioned, March sales of INR47 crores, so looks to be a very good exit. Just coming back to the strong guidance, which you are guiding basically. Also, last year quarter two, quarter three was a little off and so your sales were lower [Phonetic]. So, what gives you confidence? Are you seeing recovery across industry and you are participating or basically your base effect was low and something happened in last year first half. So, your growth would be higher this year?
Utkarsh Patel
So, I don’t want to give that type of excuse that because of the flattish things or — because the industry growth is 8% to 9% as we have seen. But the opportunity is very vast in our segments as INR7,500 crores of market, and we have achieved just INR300 crores near number for that. So, aiming INR12,000 crores [Phonetic] is not wrong, what I believe, because we are totally focused, and we want to stay focused till this INR1,000 crores of journey, what I have explained. So, that is the plan and yes, we are on it. And I think the very detailed things we have now put into our organizations, and we are now into the micromanagement, and we are using our CRM and improving our ERP, CRM systems, data works and team building and induction training program, new hirings, new onboarding of new people, new talent also. So, we are on it. And I think that is the reason that I believe the journey has started now and now we have that experience and the strong base with this INR70 crores of PAT. So, I don’t think so that there are more challenges now. We need to just become the very streamlined into very well focused. So, maybe we’ll deliver maybe one year around, maybe we can late, but that I believe on the strong fundamentals business only.
Bhavin Chheda
Sure, sir. And sir, we will be — since the raw material prices are largely stable, so do we expect to maintain over 30% EBITDA margins for next two years at least?
Utkarsh Patel
So, as I mentioned that we have now target for the 7% to 8% into the brand communications and trade marketing. So, I have always guided for the 22% to 25% of EBITDA in a longer term. So, this year, maybe if the gross margin remains same and raw material prices remain same, so we can come to the maybe 25% to 28% of EBITDA we can say.
Bhavin Chheda
25% to 28%. Okay. And sir, our 1,500 tonnes expansion will be at what cost and when would it commission?
Utkarsh Patel
We are targeting for actually this end of the years. And maybe early than this. It will cost around INR5 crores to INR7 crores max.
Bhavin Chheda
So, except this, there is no other capex, right?
Utkarsh Patel
Right now, there is no other capex because we are adding 1,500 tonnes per month by doing these facilities in a brownfield. So, that will create a revenue of INR650 crores into the existing plant.
Bhavin Chheda
So, I think you are now 2,000 tonnes. So, 1,500 will make you 3,500 tonnes, which will have sales potential of INR650 crores, assuming a seasonality in the business, right?
Utkarsh Patel
Yeah. So, 85% capacity utilizations is what we can expect. So, if we do for the 3,500 tonne, then 3,000 tonne we can expect. So, it is INR650 crores of revenue.
Bhavin Chheda
Sure. And this year, which new states — are you adding any new states? Because I think when we last met, you said you are targeting nine states and to replicate your successful model already there in the five states. So, what is the progress in other four states and what was the sales or market share if you can share in the other four states over and above the core five states?
Utkarsh Patel
Sure. So, we have do much deep dive. As an example, I mentioned that we opened new branches into the UP. So, UP is the state what we are expecting our new journey and more penetration into UP, Delhi is also there. So, this is parallel all the states what we are looking to grow for. So, the nine states is the UP, Delhi, the Punjab, West Bengal, Telangana, Andhra. So, efforts are ongoing and all the cities are very good into the real estate infrastructures. [Foreign Speech] And that replica, the formula now we have got by working so many years into the these five states. So, it is on pipeline for that. Yeah.
Bhavin Chheda
Thank you, sir. And best of luck. Yeah.
Utkarsh Patel
Thank you.
Vinay Pandit
Thank you. We’ll take the next question from Mahesh Attal [Phonetic]. Mahesh, you can unmute and ask.
Mahesh Attal
Hi Utkarshji. Am I audible?
Utkarsh Patel
Yes.
Mahesh Attal
[Foreign Speech]
Utkarsh Patel
[Foreign Speech]
Mahesh Attal
[Foreign Speech]
Utkarsh Patel
[Foreign Speech] So, right now, we have a team of almost 50 people of team. [Foreign Speech] So, this is a B2C business and that always takes time. [Foreign Speech] Jyoti Resins as a Euro brand, we always believe in the strong fundamentals business that can create a good profitability and good long-term future plans. [Foreign Speech] We don’t want to come back for that. [Foreign Speech]
Mahesh Attal
[Foreign Speech]
Utkarsh Patel
[Foreign Speech] As we all know that the single dominant player since 65 years and Euro is the only brand who has generated this INR300 crores of revenue after that. [Foreign Speech] If you talk about the Amazon or Flipkart or Domino’s, [Foreign Speech]. So, it is always that. [Foreign Speech]
Mahesh Attal
And…
Vinay Pandit
Mahesh, I’m sorry, but I’ll request you to…
Mahesh Attal
Sure, sir. Thank you. All the best.
Utkarsh Patel
Thank you.
Vinay Pandit
We’ll take the next question from the chat. It’s from Vatsal Dhairya [Phonetic]. I have a question on volume growth for upcoming three years. Considering our volume grew flattish or 2% to 3% in FY ’24 and 12% in FY ’25 as compared to the guidance of 20% for FY ’25, how much volume growth do you expect for upcoming three years?
Utkarsh Patel
[Foreign Speech]
Vinay Pandit
Thank you, sir. We’ll take the next question from the line of Rupesh Tatia [Phonetic]. And I request everyone to please keep the questions to two, because we have a long queue.
Rupesh Tatia
Hello, sir. Am I audible?
Utkarsh Patel
Yes, you are audible.
Rupesh Tatia
Yeah. Congratulations on good set of numbers. All my questions are number related, sir. So, first question is FY ’25 what was our total volume that we sold?
Vinay Pandit
It was approximately 12,400 tonnes.
Rupesh Tatia
12,400. Okay. Another question, sir, is this other current liability is INR95 crores. Can you give a split between how much is the carpenter program and the rest?
Utkarsh Patel
80% is the carpenter loyalty program, 20% are the dealers, yearly volume programs, trips, then this gold, silver, or home appliances. So, 80% we can say.
Rupesh Tatia
And last year, what was this proportion?
Utkarsh Patel
That was INR88 crores, I think.
Rupesh Tatia
Yeah. So, INR88 crores out of that, what is the bifurcation between carpenter?
Utkarsh Patel
20% around.
Rupesh Tatia
Similar, sorry?
Utkarsh Patel
Similar, 20% around.
Rupesh Tatia
Okay. And then, sir, third question is this you said this 8% we want to do spend on Pankaj Tripathi and other marketing spend. I wanted to tie that up with the accounting. So, in the annual profit and loss report, I see sales promotion expense INR46 crores and sales commission expense INR seven crores. So, INR46 crores plus INR7 crores is roughly INR53 crores. So, that number is very high, right? on INR284 crores, it’s roughly 17%, 18% number. So, can you just help me reconcile this? And where will this number be? This INR55 crores number, INR53 crores number, what would this number be for FY ’26? It will be INR60 crores, INR70 crores?
Utkarsh Patel
So, this is actually sales promotions offers lies into this. [Foreign Speech]
Rupesh Tatia
[Foreign Speech]
Utkarsh Patel
Advertising and branding.
Rupesh Tatia
[Foreign Speech]
Utkarsh Patel
That is around 2% around. So, INR5 crores to — I need to look for that, INR5 to INR6 crores.
Rupesh Tatia
[Foreign Speech] that number will be roughly INR25 crores next year.
Utkarsh Patel
Yes.
Rupesh Tatia
So, from INR5 crores to INR25 crores is where that number go. [Foreign Speech] Maybe Vinay, if you know, where is this number captured in accounting?
Vinay Pandit
Yeah, yeah. So, it comes in the advertising and marketing expense in the annual report. So, if you see over there, it’ll be approximately 2% of revenue. So, this is expected to go up to almost 5%, 7% of that.
Rupesh Tatia
Okay. Best of luck, sir. Congratulations for a good set of numbers.
Utkarsh Patel
Thank you.
Vinay Pandit
We’ll take the next question from the line of Manan Shah. Manan, you can unmute and ask.
Manan Shah
Yeah, hi. Thanks for the follow up. So, my question was again relating to this loyalty liability that we have created on this balance sheet. So, I wanted to understand how can the carpenter community and how can they encash this loyalty benefit that they want?
Utkarsh Patel
So, we have given them the digital app, and we have registered them. So, it’s one kind of shopping mall for them. So, they can choose the different home appliances, Honda Activa, for example, refrigerators or TVs or what they are needed. There are tools also, ply cutter machines, drill machines, etc., the bags. [Foreign Speech] And we have a separate team for this marketing and these promotions and loyalty program to handle. So, we have onboarded 200 people who are looking for the dispatch and the redemptions and the things and for carpenter programs.
Manan Shah
So, for purchasing these items, they can use 100% loyalty programs or they have to give some cash also to purchase these goods?
Utkarsh Patel
No, they don’t have to give any cash. That is 100% points.
Manan Shah
Understood. So, now, since we have this large liability on our balance sheet, what is the company policy to create a similar asset on the balance sheet as well to service this liability as and when it crystallizes because there is no asset in terms of, say, a debt or liquid investment that the company seems to be creating to service as and when this liability crystallizes because, as you mentioned, there is no limit on spending or redemption of these points within a year. So, very high chance that this liability can crystallize within a year as well, right? So, what is the company’s thought process on creating an asset on the balance sheet to service this liability as and when this crystallizes? Thanks.
Utkarsh Patel
[Foreign Speech] See, we want to focus more into the — to give the best delivery and services to the carpenters that can differentiate our brand into the market. So, right now, we don’t think that we need service partner for that. But yes, we can definitely think about in future. And so, right now, for 48 depots we have created, that is also the redemption centre for our carpenters. So, partial delivery is done by our carpenter team and partial they collect from our these 48 depots also. Carpenters do direct collect from this redemption center also. So, right now, we are focusing on to give the best immediate service to our carpenters. And as the model is like that [Foreign Speech] But we have started some small reductions program [Foreign Speech]. But that liability will remain same, around INR90 crores to INR95 crores.
Manan Shah
Is there any expiry to these points?
Vinay Pandit
Manan, I request you to join the queue again.
Manan Shah
It’s just a follow-up. Is there any expiry to these points that they have earned?
Utkarsh Patel
Right now, we don’t have put any expiry, but we have started the auto redemptions, and we have started to acquire the talent for the tele caller type and that females call to our carpenters to do the redemptions for this experience. So, that we have started, but we cannot push them for that [Foreign Speech]. So, it’s a regular process for that.
Manan Shah
Okay. Thank you.
Vinay Pandit
We’ll take the next question from the line of Piyush. Piyush, you can unmute and ask.
Piyush
Hello. Am I audible?
Utkarsh Patel
Yes, Piyush.
Piyush
Yeah. Thank you for giving me this opportunity. So, I just want to know that many new players are entering into this segment like Astral and Asian Paints. So, can you give your view on the same?
Utkarsh Patel
So, both companies are in multiple solutions of building materials. So, as Euro, I can give you the comparison that, as Euro, we are totally focused into the white glue. And I believe that is our strength of our team. And for other players, what you name that they have multiple products and they have their own challenges also into their core products. So, that is the reason that we can differentiate Euro as compared to them.
Piyush
Okay, thank you.
Vinay Pandit
We’ll take next question from the line of Rajat Sethia [Phonetic]. Rajat, you can unmute and ask.
Rajat Sethia
Hi. Thanks for the opportunity. Am I audible?
Vinay Pandit
Yes, Rajat.
Rajat Sethia
[Foreign Speech]
Utkarsh Patel
It is a parallel process. Still, more penetration should be there. So, it is not like that [Foreign Speech]. But more penetration is the key to get the volume because percentage-wise [Foreign Speech] at least Euro should be 25% to 30% in each retailer or in each territory.
Rajat Sethia
[Foreign Speech]
Utkarsh Patel
[Foreign Speech] and more penetration to the existing market. [Foreign Speech] always tertiary and the existing penetration works. [Foreign Speech]. That is the plan, actually.
Rajat Sethia
Sir, to answer my question. So, in terms of the mix, are you targeting anything specific [Foreign Speech]?
Utkarsh Patel
[Foreign Speech] The other nine states, what we are assuming to target more and to give the deep dive into that. [Foreign Speech]
Rajat Sethia
[Foreign Speech]
Utkarsh Patel
[Foreign Speech] I think that’s a good growth into the mature market for the 5% because the volume is already there in that. So, that’s why.
Rajat Sethia
[Foreign Speech] you will say that a new state has become a mature state. What kind of revenues a state has to do to become a mature state? Revenues, margins, retailers?
Utkarsh Patel
For any city, it is INR25 crores of revenue we are targeting. [Foreign Speech]
Rajat Sethia
[Foreign Speech]
Utkarsh Patel
400 to-600 retailers you can say.
Rajat Sethia
All right, sir. Thank you, sir.
Utkarsh Patel
Thank you.
Vinay Pandit
Thank you. We’ll take the next question from Anupam Agarwal [Phonetic]. Anupam, you can unmute and ask.
Anupam Agarwal
Yeah, hi, sir. Thank you for taking my question. Sir, just reconciling the math, you talked about your capacity earlier. You mentioned that incrementally with the 1,500 tonnes per month and at 80% utilization, we’ll be able to do about 3,000 tonnes per month, which will lead to INR650 crores revenue. So, sir, just doing a reconciliation of realization per kg, it comes to about INR185 INR compared to FY ’25 we closed at INR230 INR a kg. Am I missing something here, sir?
Utkarsh Patel
[Foreign Speech] so that will be 36,000 tonnes and INR230 INR per kg. So, that will become INR650 crores.
Anupam Agarwal
[Foreign Speech]
Vinay Pandit
No, sir. I think Anupam is correct. We’ll be doing more than INR700 crores, INR700 crores to INR750 crores.
Utkarsh Patel
[Foreign Speech] So always, I have added for the conservative. Because see, it’s a chemical plant, and maybe the plant maintenance. [Foreign Speech] So, that is a conservative guidance what I have given. So that can go to the INR700 crores.
Anupam Agarwal
Understood. And are these expanding the incremental 1,500 tonnes, is this new product grade, existing products into new markets? What are we looking at? Any ballpark color on new product addition, R&D, what we are doing in terms of better grades of products, if you can touch some points there.
Utkarsh Patel
So, in the past years, we have added these products as applications-wise. [Foreign Speech] So, I don’t think so in the right now current situations, there is any product needed. We have enough basket to grow from here. So, we will focus more into the market spread and more penetration and more network to build for that..
Anupam Agarwal
I understood. So, sir, FY ’25, as you mentioned, we closed at 14 states. How many states in FY ’25 would have turned profitable?
Utkarsh Patel
It’s a different thing that profitability. See as an example, [Foreign Speech]. But that is not the goal plan. The goal plan is always like that [Foreign Speech]. So, this is how it works. It’s not like that each and every state is how it has become profitable. But all over, three years is the plan what we are expecting [Foreign Speech]
Anupam Agarwal
Understood. So, every three years, new state should break even?
Utkarsh Patel
Yes.
Anupam Agarwal
Okay. Understood. Sir, last question was, you have INR150 crores of cash in the balance sheet. Any plans for utilization since you don’t have any big capex announcements. Are we looking at some acquisition? Why do we have such huge cash reserves?
Utkarsh Patel
So, as I mentioned that right now, as we have onboarded Mr. Pankaj Tripathi and right now we are moving into that journey for the consumer branding also. So, we are planning for 7% to 8% utilizations of that liquid what we have generated. And as this model has the beauty of that less capex [Foreign Speech]. And mainly investment is into the market. [Foreign Speech]
Anupam Agarwal
[Foreign Speech]
Utkarsh Patel
Right now, it is tough to say exact number of states, but we are also planning for new three, four states in near journey. But for one year, it is very tough to say because as I mentioned that we [Foreign Speech] So, just we want to create this INR500 crores, INR600 crores of revenue with these existing states only.
Anupam Agarwal
Sir, entering new states is just — how do you enter new state? Is it just that you sign contracts with your retails, touchpoints, and stockists, or is there some regulatory certifications or anything that you need to enter into a new state?
Utkarsh Patel
There is no any regulatory triggers. We focus for the stockists first, the inventory, stock availability, and then after that channels we need to set for that.
Anupam Agarwal
Understood. Got it. Thank you so much. That also answers all my questions. Thank you so much.
Utkarsh Patel
Thank you.
Vinay Pandit
Thank you. We will take the next question from the line of Vijay Shah [Phonetic]. Vijay, you can unmute and ask.
Vijay Shah
Hi. Thank you. So, just two questions from my side. One is first, I know we have already discussed the debtors’ part. But sir, whilst you said we did have a push in the month of March, I’m sure we would have had a similar push in the month of March last year also, right?
Utkarsh Patel
Yes.
Vijay Shah
So, the fact is that, sir, debtors have gone up from 36% of sales to 44% of sales. Effectively, sales this year has grown by INR27 crores and debtors this year has grown by INR31 crores.
Utkarsh Patel
[Foreign Speech] that will be covered within two months because [Foreign Speech] so that support we need to do. [Foreign Speech] So, I think that is manageable, and we have managed this in so many years. So, I don’t think so there is any much risk. We are very confident to cover this in our timeline.
Vijay Shah
And Utkarshji, this should not be in any way saying that we wanted to book March sales at the expense of Q1. [Foreign Speech]
Utkarsh Patel
[Foreign Speech] See, it’s about the tertiary and about the pull. [Foreign Speech] the main business rely on the pull, how we can generate the tertiary business. So, we are very well focused. And right now [Foreign Speech] carpenter meets what we have already executed in quarter one. So, we are on it and no need to worry about that.
Vijay Shah
Sure. Sir, last question, sir, is that out of the growth that we expect in FY ’26, how much do you think will come from mature states and how much will come from new states?
Utkarsh Patel
Percentage wise, it is tough to say, but [Foreign Speech]
Vijay Shah
[Foreign Speech]
Utkarsh Patel
That is really tough to say with a number right now on call. But we can definitely come back with the details for that.
Vijay Shah
Thank you. All the best.
Utkarsh Patel
Thank you.
Vinay Pandit
We’ll take the next question from the line of Pritesh Chheda [Phonetic]. Pritesh, you can unmute and ask.
Pritesh Chheda
Yes, sir. Thank you for the opportunity. So, first I want to check what portion of our territory is profitable, how much portion of our revenues is profitable, and how much portion of our revenue is breakeven or not profitable. So, when you say it takes three years for a state or for a territory to become profitable, so in our, let’s say, INR280 crores revenue, what is the proportion which is not profitable or breakeven?
Utkarsh Patel
[Foreign Speech] majority states are profitable, otherwise all over profitability [Foreign Speech]. So, 80%, 85% is profitable states. But in a newer state, the volume is not much higher and also overhead is not much higher. [Foreign Speech] So, it’s a parallel process to investing. So, this is the business to invest in people. It’s not like a capex [Foreign Speech] So, it is a journey that we recruit the talent, and we onboarded [Foreign Speech]. So, that’s why this is not a risky model what we have created.
Pritesh Chheda
Okay. The second question is between the 0% volume growth in ’23 and ’24 and the 14% volume growth in ’25 and expected plus 20% volume growth in ’26, what is the swing factor? So why is it that those two years where generally things were fine, the volume growth was zero, and last year where generally the things were a little difficult but your volume growth was 14%. So, what is the swing factor?
Utkarsh Patel
So, it’s not only one swing factor. There are so many factors. I can explain. See, it’s a B2C model [Foreign Speech] So, it is a B2C model and that always took time to set the ERP, CRM, consumer behaviors, the survey, the team building, the marketing, the branding, and retail business always is — I always say that B2C is always one career that demand, at least 20 years that demand. And as we know that what the giant has created this type of business like Pidilite or Asian Paints, they had that benchmark what they have created. So, it’s a number of years of investment into that. So, it’s the patience game always the B2C business. So, it is like that. So, this is the reason that we took this time and that consolidated period we have improved our CRM, ERP systems, few channel partners we replaced, few team we replaced, we onboarded new talents, the induction training programs type of.
Pritesh Chheda
My last question is on this marketing spend and the marketing ambassador selected. So, I must congratulate you for selecting a fairly amazing marketing and brand ambassador which can have a good connect with the carpenter. So, congratulations for this selection.
Utkarsh Patel
Thank you. Actually, that is feedback actually we got from almost all the people we know and what we have onboarded that Mr. Pankaj Tripathi is the face we can cover the both categories actually.
Pritesh Chheda
He can well associate with the carpenters. So, my question is this, his engagement is for how many years and this 6% extra spendings will flow in immediately with effect quarter one, right?
Utkarsh Patel
Yes, immediately effect but that is a different strategy for that and the contract is for the three years. So, the 6% to 7% what we are targeting for the yearly wise for that.
Pritesh Chheda
So, this 2% of sales which is your A&P expense will head to 8% of sales as A&P expense between quarter four and quarter one, right? Because your presentation says he is already live across TV, print, OOH, digital in May 2025, right?
Utkarsh Patel
So, it’s not that in Q1, Q2 only. That is yearly numbers, so what we have given actually. Depends upon the different strategies. It depends upon the strategies basically.
Pritesh Chheda
Okay, done. Thank you very much and all the best to you, sir.
Utkarsh Patel
Thank you.
Vinay Pandit
We will take the next question from the line of Vasu Patel [Phonetic]. Vasu, you can unmute and ask.
Vasu Patel
Hello, sir.
Utkarsh Patel
Hello.
Vasu Patel
Can you hear me? Yeah. Sir, my question is what the percentage of sales come from the carpenter, retailers, and from the distributors? Can you give me some percentage on that?
Utkarsh Patel
This is the channels actually. So, actually, I didn’t get your questions how the percentage defined.
Vasu Patel
Let’s take an example. 15% of my revenue comes from carpenters?
Utkarsh Patel
No, we are not giving the carpenters actually. Retailers only. Total sales come from the retailers only.
Vasu Patel
Okay. Total sales come from the retailers. Okay. And my second question is, sir, are we doing any planning for B2B business?
Utkarsh Patel
We have created this model already, and that is the modular furniture makers. So, right now, 5% of our revenue come from this model and maybe it will go to the 10% to 15% B2B will get in the next two, three years.
Vasu Patel
Okay. And for the B2B, the margins will remain same, right?
Utkarsh Patel
No, B2B is a little suppressed margin for that.
Vasu Patel
Okay. So, can we expect 15% to 20% of margin?
Utkarsh Patel
Yes.
Vasu Patel
Okay. Thank you, sir. That’s all from my side. Thank you.
Utkarsh Patel
Thank you.
Vinay Pandit
Next question from the line of Moksh Ranka [Phonetic]. Moksh, you can unmute and ask.
Moksh Ranka
Hello, I wanted to ask, we are entering certain states like Delhi and UP, which are in the northern India, and I wanted to understand our products are generally high margin products compared to if I compare with Jivanjor. So, what is the product difference which makes our product high margin?
Utkarsh Patel
So, as Euro, we have differentiated ourselves as a multifunctional glueing solutions what we are on that. So, the elements what we have added that differentiate ourselves. [Foreign Speech] So, we are giving the waterproof, anti-termite, weatherproof, fast drying, high coverage solutions. So, the furniture has not only the requirement of jodna, not only the strength. With the strength, we are giving this type of elements also. So, that differentiate ourselves.
Moksh Ranka
Okay. So, other brands like Jivanjor and all they are — you mean to say that their quality is inferior to us? And that is because they only provide the strength and not other benefits like waterproof.
Utkarsh Patel
On this call, I cannot give this detail clarification of the other company or their brands or companies into that.
Moksh Ranka
Okay. No issue. That’s it from me.
Utkarsh Patel
Thank you.
Vinay Pandit
Thank you. We will take the last question from the line of Rajat Sethia [Phonetic].
Rajat Sethia
Hi, thanks for the follow-up. Just one or two quick questions about the carpenter business that we do. So, how do we measure the sales that are done by carpenters?
Utkarsh Patel
Sorry, can you come again?
Rajat Sethia
How do we measure the sales or the business that is done through the carpenter channel?
Utkarsh Patel
Okay. So we have the loyalty programs and digital platform. So, by the points they have scanned, we can measure the carpenters for that. So, that CRM, the customized CRMs we have developed.
Rajat Sethia
Okay So every carpenter will have a unique ID in a way?
Utkarsh Patel
Yes.
Rajat Sethia
Okay. And sir, any particular reason why are they not spending this money? INR95 crores is a big number. They are just accumulating these points.
Utkarsh Patel
See, as an example, in Gujarat, if we talk about the Gujarat, [Foreign Speech] In the earlier stage, it was not like that. [Foreign Speech] Then when he finds the better solutions of his work, the applications, the quality, the service, the entire things, and then slowly the customer move into that particular products. [Foreign Speech] they have the plan, we need to understand the behavior and mindset of them. [Foreign Speech] So, that emotions is related to our business and Euro provides the Activa. [Foreign Speech] So, we are not stopping to them to do this. [Foreign Speech] So, that’s why I always say that [Foreign Speech] So, it’s not liability, I think, because we have created the INR147 crores of cash against into that. So, this is how it happens.
Rajat Sethia
[Foreign Speech] Out of this INR95 crores, [Foreign Speech]
Utkarsh Patel
[Foreign Speech]
Rajat Sethia
[Foreign Speech] So it fair to say [Foreign Speech]
Utkarsh Patel
Vinayji, can you explain this?
Vinay Pandit
No. Rupesh, what’s the question? Because…
Rajat Sethia
Sorry to interrupt. I’ll just lay out my whole question. So, is it fair to say that this expense or this liability that we are talking about INR95 crores, it hasn’t been passed through the P&L yet?
Vinay Pandit
Yeah. So, as per Ind AS revenue recognition, as and when these points get redeemed, all of this eventually will come in the revenue as well as other expenditures.
Rajat Sethia
When they get redeemed.
Vinay Pandit
Yeah. As and when it gets redeemed. So, it is effectively an absolute EBITDA neutral event when it gets redeemed.
Rajat Sethia
Okay. So, INR95 crores will also be shown in revenues you are saying?
Vinay Pandit
Yes, yes. In proportionate as and when, let’s assume INR20 crores gets redeemed, INR20 crores will get added to revenue, INR20 crores gets added to other expenses.
Rajat Sethia
Okay.
Vinay Pandit
On redemption.
Rajat Sethia
Understood. So, it will be basically a pass-through entry.
Vinay Pandit
Yes, yes. That’s how the accounting is. And when it gets redeemed against that, the cash flows out.
Rajat Sethia
Why will it be shown in the revenues?
Vinay Pandit
Because this is deferment of revenue. Proportionate expense, is related to deferment of revenue. So, proportionate revenue, proportionate expense moves out to liability for expenses, right? It stands on the receivables on the other side of the balance sheet. And when it gets redeemed, it flows back to the revenue and expense in the same size.
Rajat Sethia
So, expense getting deferred being shown as liability is fine, but what about revenue? Where are we showing it in the balance sheet, deferred revenue?
Vinay Pandit
It stands in the receivable.
Rajat Sethia
Receivable. Okay. In a way, our true margins of the business which we are reporting right now is 30% will get reduced to that extent, right?
Vinay Pandit
See, in absolute terms, it’s an EBITDA neutral event. Now, if I keep doing this adjustment every quarter, so there is some redemption and some creation happening every quarter, right? So, what you’re seeing is the net result of that only. Because like we’ve said in previous calls also, the total creation versus total redemption, the net impact in revenue will not be more than INR5 crores to INR10 crores per year, right? So there is something getting redeemed and there is something getting created. So, the margin that you’re seeing today is a result after that exercise.
Rajat Sethia
So, can I request for a one-on-one call to understand this concept in detail?
Vinay Pandit
Yeah, yeah. Sure, sure. Definitely.
Rajat Sethia
Thank you so much. Thanks for your time.
Vinay Pandit
Thank you. Sir, since that was the last question for the day, would you like to give any closing comments, Utkarshji?
Utkarsh Patel
So, thank you very much, all of you. And I hope what we have guided, and we are on it and we’ll try our best as Euro team to make this brand most preferable brand into the white glue solutions and we’ll keep continue growing. Thank you very much for believing us and supporting us. Thank you.
Vinay Pandit
Thank you, sir. And that brings us to the end of today’s con call. Thank you to all the participants and the management team for joining on the call. Thank you.