Kajaria Ceramics Limited (NSE: KAJARIACER) Q3 2025 Earnings Call dated Feb. 04, 2025
Corporate Participants:
Ashok Kajaria — Chairman
Sanjeev Agarwal — Chief Financial Officer
Chetan Kajaria — Joint Managing Director
Analysts:
Pranav Shah — Analyst
Keshav Lahoti — Analyst
Jyoti Gupta — Analyst
Onkar Ghugardare — Analyst
Yogesh Patil — Analyst
Vinamra Hirawat — Analyst
Pankaj Tibrewal — Analyst
Praveen Sahay — Analyst
Rushikesh Chandrakant — Analyst
Souvik Mohanty — Analyst
Utkarsh Nopany — Analyst
Rishab Bothra — Analyst
Pulkit Patni — Analyst
Presentation:
Operator
Ladies and gentlemen, good day, and welcome to the Kajaria Limited Q3 FY ’25 Conference Call hosted by Equirus Securities. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should need a session during the conference call, please signal an operator by pressing star and then zero on your touchstone phone.
I now hand the conference over to Mr Pranav Shah. Thank you, and over to you.
Pranav Shah — Analyst
Yeah, thanks, Mike. Good afternoon, everyone. On behalf of Equirus Securities, I welcome you to the call of 3Q ’25 both result management call of Gajaria Ceramics. From the management side, we have Mr Ashok Kajaria, CMD; Mr Chetan Kajaria, GMD; Mr Rishi Kajaria, JMD; Mr Agarwal, CFO; and Mr Neil Shah, DVP, Strategy and Hire.
I’ll now hand over the call to Ashok sir for his opening remarks, post which we’ll have the Q&A session. Over to you,.
Ashok Kajaria — Chairman
Thank you, Punay. Good evening, everyone. It gives me great pleasure to welcome you to quarter three F ’25 earnings conference call of Limited. Joining me on this conference call are my son, Chetan; our CFO, Mr Sanjiv Agrawal; and Shah, DVP, Strategy and Investor Relations. Contribute — contrary to our expectations, the sustained weakness in domestic market and sluggishness in exports has led to another subdued quarter for the tile industry. Nevertheless, our tile volumes in-quarter three ’25 grew by 6.7% year-to-year to 28.90 million square meters. We, however, remain optimistic on the demand outlook for the tile industry in the near-to-medium term.
Our consolidated revenue for the quarter stood at INR1,164 crores, indicating a 1% year-to-year increase compared to the corresponding period last year. Our EBITDA margins remained soft at 12.78% for the quarter due to lower realization and loss in division, which was largely — attributable — attributable to new unit commenced in. Our Nepal project which commissioned in September ’24 has seen a gradual ramp-up in-production and operated at 70% utilization in-quarter three ’25. On the export front, India style exports experienced a 16% fall in value in the first eight months of the current year, totaling to INR11,600 crores vis-a-vis INR13,800 crores in the same-period last year. This was largely attributed to a significant jump-in ocean freight rates due to ongoing rent sea crashes and uncertainty in the market.
Now for this quarter segment-wise financial performance. Segment grew by 3%, reaching INR1041 crores compared to INR1013 crores in-quarter three FY ’24. Segment registered 2.5% growth in revenue, reaching INR95 crores compared to INR92 crores in-quarter three ’24. The plywood revenue decreased to INR8 crores as compared to INR34 crores in-quarter three ’24. Revenue from the addition grew to INR20 crores in-quarter three ’25 as compared to INR13 crores in-quarter three of ’24. PAT for the quarter degrew by 25% to INR78 crores in-quarter three ’25 as compared to INR104 crores in-quarter three ’24. As of 31st of December ’24, the working capital days was higher marginally by one day-to 59 days compared to 31st of March ’24.
With this, I take this opportunity of thanking you for joining us today. Over to you.
Operator
So can you hear us?
Ashok Kajaria — Chairman
Yeah, yeah, you can go-ahead with the Q&A. You can go with K
Questions and Answers:
Operator
Okay, fine. Ladies and gentlemen, we will now begin the question-and-answer session. Participants wish to ask a question may press star and one on your touchstone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants request you to kindly wait for a moment while the question queue assembles we have the first question from the line of Keshav Lahoti from HDFC Securities. Please go-ahead.
Keshav Lahoti
Hi, thank you for the opportunity. Sir, it’s very heartening to see Nepal hitting 70% utilization. Is it possible to give you what was the Nepal sales in Q3? And is it a fair understanding Nepal sales are not clubbed in this quarter in total sales volume from next quarter onwards, it will be clubbed as it will become subsidiary? And initial — initial color how is Nepal margin and what are the ramp-up plans, how is the demand looking? That would be a lot helpful.
Ashok Kajaria
So the Nepal project, the Nepal sales are not clubbed in this quarter and probably will not be clubbed in the next quarter also. It should take it effect only from 1st of April, 1st of April ’25, number-one. And sales figure we don’t have right now because it is — we just get the bottom-line right now. And the plant has operated, as I said, at 70% capacity. And hopefully, as we gradually go up, the capacity will be random to about 80%, 85% by end of March of?
Keshav Lahoti
Okay, understood. Sir, how has been the domestic sales in Jan and month? Have you seen any pickup in-market and there were talked about be taking a shutdown, what have — what is the progress on that and what is your take on that?
Ashok Kajaria
See, there is a slight improvement. I think the budget will also give lot of improvement as we go along. And also so this government’s RBI policy is expected on 7th of 5, I think that should change things slightly on-the-ground. Morbi shutdown, we have no news because they have not done anything as far as the shutdown is concerned.
Keshav Lahoti
And just one last question from my side. The we are hoping to close this year with 15% growth. Still this quarter also Bathware growth has been sort of muted and has seen a big degrowth in this quarter. So what is the outlook for both this segment
Ashok Kajaria
This year we should grow roughly at about 10%, close to 10%, that’s what we are looking at. Market ground level has been very tough. And ply also we slightly slowed down for a simple reason that the raw-material prices went up very-high. So we thought let us see how things are because we were losing money. And as we go along, we will review.
Sanjeev Agarwal
The focus. The focus is as Chairman said, the focus is on less on-sale and the more on-market recovery because we are not will not compromise or we are very concerned about the working capital. So we are focusing on recovery rather than pushing sale. So once the situation — unless a situation like this, we will continue to focus on recovery
Keshav Lahoti
Understood. Got it. That is helpful. Thank you.
Ashok Kajaria
Okay.
Operator
Thank you. We have the next question from the line of Joti Gupta from. Please go-ahead.
Jyoti Gupta
Good evening, sir. Thank you for the opportunity. I’m lucky that my numbers are completely in-line. Only thing is, I know the has not gone in. They’ve been contemplating that most of action has been taken so-far. However, I’m
Ashok Kajaria
Ma’am, can you speak a little louder?
Jyoti Gupta
Hello, can you hear me? Yeah. Now am I audible?
Ashok Kajaria
Yeah.
Jyoti Gupta
So I’m saying that my numbers are in-line. So obviously, the thought process is quite well-aligned. My question is, while had been contemplating to shutdown, but nothing — more such action has been taken, how has been the outlook in 4th-quarter? How has been the situation so-far because cement has picked-up and how does it — and what about the first-quarter of FY ’26? Is there any pickup in-demand? And the other thing is, sir, is it that the tiles is suffering because while the real-estate is growing at a robust growth because of ultra luxury segment where more — basically the demand is more for Italian marbles and less of price because by the — you know the segment should have grown this second-half, but it has not picked-up. What could be the possible reasons far from the export? You know,
Sanjeev Agarwal
So answering your first point, on Morbi, also lot of plants have taken a shutdown. Yeah. So there is no actual demand happening. And yes, you read a lot in the newspapers that lot of US ship projects are coming soon. So retail — at the retail level, the dealer level, the sales is still very, very low. Right now, there is no demand, the dealer shops with is no demand. Projects, yes, projects are still happening, but as in Kajaria, we have 70%, 75% of our sale is through retail and about 25% is through projects. So retail sale is very low, the shops and selling and buying that’s still low. So that’s the reason. But we see going-in future, we see hopefully the demand should improve and things should get better.
Jyoti Gupta
So sir, in the project sales, has it been consistent, like is it the demand is decent? It’s only the retail which is struggling or is it both even the project sales is struggling?
Sanjeev Agarwal
No, project sale is still okay, but because as a company, our overall, you know, we are very heavily dependent on the retail sale as well. So retail sales also have to pick-up in order for us to grow and get our margins in-place. If you also see our realizations have fallen, so another reason is that we have supplied more in projects and projects is very, very competitive. Anybody who’s given up such big orders, they will negotiate the hardest price.
Jyoti Gupta
Correct. So which means that this quarter we again you expect that the prices might you know, be you know, no increase in the prices for tiles. You don’t — obviously because demand is still quite muted, so obviously, pricing will again take a hit this quarter as well.
Sanjeev Agarwal
So yeah, we are not expecting any price increase, but we are hoping that the retail sales improve a little bit more. So our mix becomes better and our realizations increase.
Jyoti Gupta
Okay. So on the — on the side, the power side, any response that you’ve got because you know, I mean, do we see that while the demand would still be muted and prices may not be that there’ll be some respite coming from the cost front. So anything on that front in terms of the thing?
Sanjeev Agarwal
Sorry, your voice was not audible. We couldn’t understand your question. Can you repeat the question?
Jyoti Gupta
Question is any — can we expect a decline in cost for this quarter first —
Sanjeev Agarwal
No, in this quarter, there is no decline, but we see some operating leverage happening going-forward because the sales and the sales will increase and the expenses should not go in proportion to the sale. So some margin would come
Jyoti Gupta
At fuel prices.
Sanjeev Agarwal
Fuel prices. No fuel prices, there is no change. No change. There was no change.
Ashok Kajaria
There was no change in-quarter three. There is no change expected in-quarter four. Okay. As you know that in-between the full oil prices have went up, but still the gas prices have been more or less constant.
Jyoti Gupta
Okay. Okay. Okay. Thank you so much, sir. That is it from my side.
Ashok Kajaria
Thank you. Yeah.
Operator
Thank you. We have the next question from the line of Onkar Gudgari from Shree Investments. Please go-ahead.
Onkar Ghugardare
Yeah. Yeah. Given how the nine months have performed, you had earlier given a three-year guidance. Do you think you would have to revise that guidance.
Ashok Kajaria
We will not try to revise that guidance. We hope that’s a year which has won by. You are absolutely correct, but I don’t think at this stage, we are looking for any division of the guidance. We’ll put our best efforts as things should improve. Everybody says so. So we will look at a scenario where the guidance remains the same and we do our best to make-up in the next two years, next two financial years.
Onkar Ghugardare
Okay. And what about the EBITDA margin, sir? Do you think there is scope to move upwards from here on or it would be somewhere in similar range of 13% odd.
Ashok Kajaria
EBITDA margin will definitely improve for a simple reason. We made some losses in the new plant. The moment that plant sets a price, every quarter things will start looking up and EBITDA margin has to improve. Two things, what my — our CFO said Mr that with the volume, some improvement will be there, some operating lever. Some operating leverage will be there as plant, new plant approved, which we have already committed. So with this, the EBITDA margin will improve gradually, quarter-to-quarter.
Onkar Ghugardare
Okay. And what would be the assetance for the Nepal joint-venture.
Ashok Kajaria
Nepal joint-venture now with this — after this quarter-four, once it becomes part of the company, part of the power of subsidiary, it becomes subsidiary. We’ll get more details. Right now, we are only getting the bottom-line because of the 50-50 thing. And as we go along, right now, the plant is operating at 70%. And I’ve said that in the next two months, we try to raise it to 8%, 85%, so things will start looking better.
Sanjeev Agarwal
No, but now it has made profit, but it is so small quantity that it is not a track — it is not a number I can put for the future sale. So we have to wait for another quarter to give a proper guidance and revise as to what the margin would look like. And one thing has happened very positive for Nepal that interest-rate which used to be 13% 14% when we conceive this plant is now around 8% to 9% and we have locked all our interest liability at 9%. So the — when we conceived the plant, it was 14%, it’s a 5% is a big saving and it is — it is not going to go since we have lost this number. So that is going to be a help to us. And as the plant capacity move, the margin will improve. And it’s already making profit, but the is not much. When the opex is more than will result in good summers.
Onkar Ghugardare
Okay. The last thing is on the payout, you have gradually increased your payout in last one, two years. So with that, do you think it will continue and how that would impact your ROCs?
Ashok Kajaria
In our dividend policy, we have clearly stated that it has to be around 40% to 50%. So sometime it can be 40%, it can be 50, it will be near to that unless any special circumstances come where we have some big capex or some other things. Otherwise there is no change. We don’t see any change going-forward in near-to-medium term. As far as-is concerned.
Onkar Ghugardare
Okay. Thanks.
Operator
Thank you. Participants who wish to ask a question with star and one on your touchstone telephone. We have the next question from the line of Yogesh Patil from Dolat Capital. Please go-ahead.
Yogesh Patil
Thanks for taking my question, sir. Sir, as you mentioned, domestic demand weakness and the challenges in the export market, particularly because of the freight rate? My first question is related to the freight rate for the export. As the Israel and the Palestine situation is at a ceasefire and at roof level, when do we expect that freight rate will come down, come down and will it help you or exports that much?
Sanjeev Agarwal
So your question was not absolutely clear. But as you said, as the freight rates come down, then the exports will definitely increase from to the rest of the world,
Yogesh Patil
Correct
Ashok Kajaria
Which is how much Israel problem being solved it is temporary right now but all indications are that it should be positive. It will — it will give us stability in the Gulf market and export will pick-up again. And the freight rates have already started coming down with this development.
Yogesh Patil
If we compare with the last year in the same-period, how the freight rates are right now, you can give us a ballpark movement.
Ashok Kajaria
I can give you certain numbers like let’s say for UK, the freight, which was INR1,600 before this problem had gone up to INR4,000. It has now come back to INR1,700 and 50, 1750. So this much change has already happened.
Yogesh Patil
Okay. So sir, okay, thanks. Thanks. Sir, second question is related to what are the major reason behind the domestic demand slowdown and how many months it will take to revive this demand or weakness. So sir, as per your experience, what would be the big trigger for the demand revival in medium-to-long term?
Ashok Kajaria
First trigger will be the rate cut, which we are — everybody is expecting, which should happen on 7th of Feb with the Reserve Bank policy. I think that’s a rate is a — rate cut is a very important thing for housing and for a home buyer because it affects him in many ways, number-one. Number two will be money being released to the individuals in the heads of the individuals in the budget, I think that should give a lot of buying power to the people at last. I think these are the two things. And let’s the infrastructure investment by government because as we all are aware, in this financial year, lot of infrastructure investment by government got affected because of elections and because of rains in August and September. So I think things should start looking up as early as quarter-four quarter — quarter one next year.
Yogesh Patil
Lastly, we are reading that the ceramic plans are facing challenges of receivable days, it has been consistently increasing. Is it a real issue, sir? Can you throw some light on that question?
Sanjeev Agarwal
Can you repeat the question?
Ashok Kajaria
Hello, that is their problem. We have to solve what do I do. See that’s why you know every two months they talk about a shutdown, nothing about managed. So it’s a scenario which goes on and on. So we can’t answer that.
Chetan Kajaria
A lot of plants are shutdown in money.
Ashok Kajaria
Yeah. Those are those plants. No, just for information. Those plants who are old, they are not able to manage it for a simple reason. Energy-efficient plants have come and old plants are shut up.
Yogesh Patil
Okay. And sir, if you allow me the last question related to cost of gas. Sir, propane prices are much cheaper compared to the PNG industrial prices. So any thoughts on that side, will you switch to the propane side?
Ashok Kajaria
Propane prices are not much cheaper, they are cheaper by about 4%, 5%, 6%. And in Morbi, whenever the propane prices are cheaper, even our plants convert to propane instead of gas and it happens with everybody. But the difference is not more than 5%, 6%.
Yogesh Patil
Thanks a lot, sir. This was really helpful.
Operator
Thank you. We have the next question from the line of Vinamra Hiravat from JM Financial. Please go-ahead.
Vinamra Hirawat
Hi, sir, am I audible?
Ashok Kajaria
Yes.
Vinamra Hirawat
So sir, it seems difficult of — to meet our guidance of a second-half recovery, 9%, 10% volume growth with realizations bottoming out. Kajaria has done better than peers. But do you think this real-estate cycle will be significant — significantly different for tile players compared to the last where you had multiple years of double-digit sales growth because whether it’s a weaker consumer, more competition, which have access to large amounts of capital or for any other reasons.
Sanjeev Agarwal
See, as we mentioned earlier, our focus is primarily retail, which is 75% and projects is 25%. Now projects is a very competitive space where major — where multi-brands are compared for the pricing for the buildup. So also the real-estate cycle has a lag with the time usage, it’s 24 to 30 months. So definitely the outlook is positive, but our primary focus is retail, which gives us better margins versus the project basically. Said that in the years when the real-estate was not doing well, we have come with better volume growth of better margins, better volume growth. [Foreign Speech], in reality, if you ask, real-estate boom or increase in prices have not been beneficial to us for two, three reasons. One, in first year — first one where we sold their inventory and the construction started. Now that impact should start coming in and multiple factors are positive, which is coming out. One is the budget, which we also. Second is expected rate cut in the reserve Bank policy. I think this will help us in driving the sales growth effective first-quarter of next year — financial year.
Vinamra Hirawat
So sir, I can expect this real-estate cycle despite higher competition in every price point to give us that same double-digit growth for consistent years going-forward.
Sanjeev Agarwal
We’ll do our best. I can only assure you that.
Vinamra Hirawat
Of course, of course, sir. Of course. Just another question. So in the last call, you had stated that there’s some margin pressure in the faucets — faucets segment because of increased cost of metals, which will be passed on. Have we taken any price increases in faucets this quarter? Is it around the corner? And just any color on that?
Ashok Kajaria
That happened in-quarter one and we passed on that benefit that time itself. After that, the prices of brass has been very constant. They have not moved much. This happened in — if you recall that happened in May-June of ’24, ’25 and after that the price prices have been very constant.
Vinamra Hirawat
Okay, sir. Got it. Thank you.
Operator
Thank you. We have the next question from the line of Pankash from IKIK Asset Management. Please go-ahead.
Pankaj Tibrewal
Yeah, good evening, Shobjee. One thing which was a little bothering me on the overall results was the employee cost. So when I look at last year versus this year, the sales is absolutely flat, but almost 150 basis-point has got increased on the employee cost, now 13% of sales. And when I look at all the companies in India with a gross margin between 35% to 40%, we have one of the highest employee cost. How do you address that? Because if market tends to be sluggish, then this is a sticky cost which can remain with us for a long-time and margins could be under pressure. Just wanted your thoughts on that, right.
Ashok Kajaria
You are absolutely correct. And we have a lot in the past. And I thank you all-the-time for the guidance which you have given in the past when you were with this quarter. But let me tell you honestly, and it’s a very good question. I appreciate. We are working on that front and I can assure you next year that we see next financial year that is 25 26, it will be at par with ’24-’25 at ’23, ’24. That numbers in terms of percentage will be as far — at par with ’23 ’24.
Pankaj Tibrewal
Okay. Okay. So about 150, 200 basis-points, which is looking higher right now. Probably.
Ashok Kajaria
Correct. That will be corrected. That will be corrected. Two, one, we are doing that cost-cutting exercise and number-one, the sales will go up as I have already said. So with this a percentage-wise, it will be on the level of ’23, ’24.
Pankaj Tibrewal
Okay. That’s happening to hear there. And the second part is on the price realization side. How do you see it moving forward because your other expenses have also gone up when I look at. So from a realization perspective, over the next 12 months, even if the demand remains sluggish, is there a way in terms of premiumization or product mix which can help us on the side?
Ashok Kajaria
Now two things. You said raise two points, let me answer you the point number-one. The other expenses are flat this year. They are ’23, ’24 vis-a-vis ’24, ’25, the other expenses are flat. There’s no increase. Point number two, why the realization has gone down as said earlier by Rishi. We — this year because of the sluggish demand in retail, we had more focus on projects, which is not normal for. So percentage, as you recall is 70% retail through the network and 30% is through institutional sales. This year, it slightly varies because we had to keep our plants going. And as you are aware within data which is there that all the plants have — overall the plants have operated 95% plus. And with retail improving, this realization will be back to what it was in-quarter one — quarter one, I would put it like that. It will — it will not go down because the decrease in realization is only 2% and that will be made-up the moment retail picks up.
Pankaj Tibrewal
Okay. Okay. So the margins which have come to a almost a very low-level, you believe that it could move to, 14% 15% next year?
Ashok Kajaria
It will. It will. It will sir. It will.
Pankaj Tibrewal
Okay. Okay. Okay. Fair enough. And last but not the least on the distribution side, the PIN codes that there is a large market still untapped and we have to move from 350 370 pin codes to 540. Where-is that distribution-led strategy? How is it working? Because as a market like this, you have to make sure that you enter new areas, take-away market-share. So can you sir,
Ashok Kajaria
It is already happening for the last three, four months and we are entering new areas and now we are not talking about 350 to 3 but if you recall earlier I had said the numbers that 542 is the now we are talking about the numbers, which is 4110 all over India where we have to penetrate and go to the smallest town where can be there. Either of the degens can be there, but we penetrate to the smallest town. Okay. And just to tell you and see, currently, we have 18 80 dealers across India and out of which 460 are exclusive.
Pankaj Tibrewal
Okay. Okay. And last but not the least, in times of slowdown, always in every sector, we see the leader doing better and taking away market-share. Somehow for us it’s not happening, do I appreciate on the balance sheet, you and Sanjeev Ji has done a great job in controlling the working capital cycle. But from a growth perspective, if you are having such a hard time, I’m sure the smaller players in the industry must be having a tough time. So we must be taking away market-share from a balance sheet perspective, the strength which we have. How should we look at this scenario right now from — from our understanding perspective because you are the leader of the sector.
Ashok Kajaria
So the growth of the industry has been flat because if you look at the numbers, every now and then they have been talking for the last three months taking a shutdown. Why they are taking a shutdown? They are thinking of taking a shutdown because the — they are overcapacity. So basically, we have taken a market-share, the industry per se has not grown. And as you rightly said, being a leader, we have to take the market-share of others, which we are doing, but that number will be speeded as we go out. The moment we penetrate more to the smaller market, that number will be speeded up.
Pankaj Tibrewal
Okay. Thank you. All the best. I should entire team. T
Ashok Kajaria
Hank you. Thank you.
Operator
Thank you. Participants who wish to ask a question repress star and one on your touchstone telephone. We have the next question from the line of Praveen Sahai from PL Capital. Please go-ahead. MR. Praveen Sahai, can you hear us?
Praveen Sahay
Hello. Yeah. Thank you for the opportunity. Can you give a bifurcation of the ceramic PVT GVT for a quarter?
Sanjeev Agarwal
You wanted the split basically?
Praveen Sahay
Yeah.
Sanjeev Agarwal
So the volume mix is ceramics is 42%, PVT is 25% and GBT is 33% and revenue by the ceramics is 37%, PVT is 26% and GBT is 37%.
Praveen Sahay
Okay. And also if you can give the gas prices Northwest and south and aggregate
Sanjeev Agarwal
So for the quarter the North, gas price is INR38 rupees per SCM. South is also 34%, the fuel price correct, which includes biofuel, LPG and coal. South is 38, West is 37 and the average is 37. For the current quarter, quarter three.
Praveen Sahay
Okay. Okay. So — and the next question is related to the Nepal project. There the increase of 1%, but there is a capex has increased significantly. So why is it so?
Sanjeev Agarwal
So the capex is INR31 crore. We are building a which is a warehouse and I shed for stocking the inventory. That is where the capex is being required right now.
Praveen Sahay
Okay. So — and even the working capital capex has increased there quite significantly.
Sanjeev Agarwal
Yes. So some inventory has increased because the plant is running full and we are selling 70% of the capacity. So inventory has gone up, that is the working capital has also increased, which would come down in the coming months as the sales pick-up.
Praveen Sahay
Okay. Okay. And also related to the sanitaryware, in the last four quarters, we are seeing your growth is, you know, going down continuously. So even at this size, you are not able to grow in the market because of a demand is not there or is there a build-out of a competitive intensity which restricting you for a growth?
Sanjeev Agarwal
So as I mentioned, basically because the retail demand is slow, so in sanitary we are mostly our 95% would be sales in this retail market and the project market is very, very less because still a newer brand in the market, care of it. So because the retail sales being slow, that’s why we can really grow this year. But hopefully, as the demand increases, if the things look better, I think next year should be a much better year. Also, we had some issues with our sanitaryware plant, which has now stabilized and the real impact will start coming from next — from every quarter here you see an improvement in that.
Praveen Sahay
Can you give some color what happened in the sanitaryware plant? Sorry.
Sanjeev Agarwal
So the sanitaryway plant, you set-up a new plant. It takes about six to 12 months-to stabilize production, unlike a plant which happens in a month. So we were stabilizing production and at the same time, now production is quite stabilized and the demand is also coming up and we see a much better from here on, every quarter the sales should be much better.
Praveen Sahay
Okay. Okay. Got it. Last question, sir related to the institution versus the retail mix. Definitely you maintain 70%, 75% retail but over the last couple of quarters, as you had also highlighted that the institution sales has increasing. So can you give a color in the last nine months and this quarter, how has been the mix change? And also some more color on the institution like a direct to the large builder or how much is contribution coming from that kind of businesses?
Sanjeev Agarwal
So we supply to a lot of large builders like LNT Reality,, even in North, a lot of these guys. So the mix has become a little higher in the last nine months so that we didn’t want to — our factories are running, we didn’t want to lose out on our sales, right? So we are selling to them at a, let’s say, a more competitive cost, whereas compared to what used to be earlier. And as the retail sales pick-up, that mix will start getting better.
Praveen Sahay
Any number you want to highlight, like how much is institution right now got say 30% earlier.
Sanjeev Agarwal
So generally the norm is 70%, but as we said earlier in the earlier question, this quarter the sales — the proportion has been more in favor of the project. So we don’t know exact number, but maybe to where we — there is no exact number. Exact number we have.
Praveen Sahay
Okay, got it, sir. Thank you and all the best.
Ashok Kajaria
Thank you.
Operator
Thank you. We have the next question from the line of Rishikesh Chandrakan from Kotak AMC. Please go-ahead.
Rushikesh Chandrakant
Hi, good evening. So first is, thanks for clarification on the employee cost, but is there any non-cash ESOP cost also that is sitting in the employee cost?
Ashok Kajaria
Non-stop? Not much. Not much. Not much to be quantified.
Sanjeev Agarwal
No, of course, no. No, there is non-cash lease of cost basically.
Chetan Kajaria
In this quarter.
Ashok Kajaria
In this quarter now.
Rushikesh Chandrakant
Yeah, I’m talking about
Chetan Kajaria
Other overheads are more you’re looking for that? Yeah.
Rushikesh Chandrakant
Sorry.
Chetan Kajaria
You’re looking for other expenditure are more?
Rushikesh Chandrakant
No, no, only employee cost because there is a ESOP cost also generally that sits in there. So just clarifying on that.
Chetan Kajaria
It’s not because of
Rushikesh Chandrakant
The second is a lot of discussion on-call happened on clearly institutional mix being higher this quarter. But just from the product mix in sense that we supply to institutional, is there change also intent and that is getting reflected in realization or is it higher discounting only?
Sanjeev Agarwal
See, in institutions, definitely is more preferred, but all the divisions are selling to projects also and discounting is happening a little bit as we said earlier, because it’s a very competitive space. So that is a reality of projects and as the retails pick-up, the project sales will start coming down a little bit.
Rushikesh Chandrakant
Okay. Okay. And lastly, in terms of the reported segments that we have, clearly the non-tile segment, other segment there, the EBIT — EBIT losses have come off. It’s more to do with plywood sales in reduction in plywood sales, right, ramp-down of plywood sales, lower sales in plywood. The bathware losses seems to be — have gone up.
Sanjeev Agarwal
Yeah, what is the question?
Rushikesh Chandrakant
So in other segments, the non-tiles — segmental margins that we provide in the — in our press release P&L.
Sanjeev Agarwal
Correct.
Rushikesh Chandrakant
So in that the — if I look on the EBIT losses there, I think that has come off. But clearly, is it more to do with lower plywood sales? That’s how we should read it. The losses persist, right?
Chetan Kajaria
Mainly because of the losses, there is not much change in plywood. Plywood we sold less, but there is no much change in the losses of plywood.
Rushikesh Chandrakant
Okay. Okay. Okay. Thank you.
Operator
Thank you. Participants who wish to ask a question may press star and one on your touchstone telephone. We have the next question from the line of Sovik from Nuvama Wealth Management. Please go-ahead.
Souvik Mohanty
Hi, sir. Thank you for taking my question. I just had one question in terms of — can you help me understand how much — how many months of inventory do the distributors hold? And has there been any major change in the last one year?
Ashok Kajaria
So distributors don’t hold that much inventory, let’s say, we put up dealers. So we have about 1,800 dealers all over and there must be hold — hold. They hold about a month of inventory or something, not more than that. It’s not that actually
Sanjeev Agarwal
It has come down significantly and we also encourage them not to hold much inventory because our supply-chain is very robust.
Operator
Thank you. If participants who wish to ask a question may press star and one on your touchstone telephone. We have the next question from the line of Utkash Nobani from BOB Capital. Please go-ahead.
Utkarsh Nopany
Yeah, hi, good evening, sir. Sir, my first question is like whether our understanding is clear that we are mainly dependent on outsourcing model to grow our sales volume as our domestic capacity operated at 105% rate in previous December quarter and our outsourced sales volume grew by 17% on a Y-o-Y basis in December quarter. And what could be our maximum capacity utilization for our domestic plant on an annualized basis as per you.
Sanjeev Agarwal
So all our plants are running at full capacity and selling all the material of our plants and now the rest is — the rest is what we are outsourcing in 2023. That’s only about 20% 25% of our total sales.
Utkarsh Nopany
No, sir, my point was that like our manufacturing sales volume is going to remain flat only going-forward because what we are noticing that whatever the incremental volume is coming, that is mainly coming from the outsourced model and is that going to continue going-forward also?
Sanjeev Agarwal
Right. So we have enough capacities built-in, we are not rightly looking to put any new capacity and the news — this further sales will come from outsourcing.
Utkarsh Nopany
Okay.
Chetan Kajaria
Going-forward, the capex is going to be — next year capex is going to be very low. We are not contemplating any future capacity utilization. The endeavor is to sell this capacity well and at a better price. And if the need be, we’ll be doing meeting that from outsourcing.
Utkarsh Nopany
Okay. Sir, second question is like we are planning to acquire 75% stake in a group entity called Kajaria Private Limited as we are planning to put up a plant in Tamil Nadu. So wanted to know why we are not acquiring the entire 100% stake in that company.
Chetan Kajaria
So we’ll be ultimately acquiring 100% — no, it’s 90%, 10% is.
Sanjeev Agarwal
[Speech Overlap] Basically Private Limited, the share capital is 4CR in that. Three is Kajaria Ceramics and one is one of our biggest dealers in the country called Lashmi Ceramics based in. So he is a 25% partner in that. He has 17 showrooms in Tamil Nadu. So we wrote them in as an equity partner because of two reasons. First, he helped us promote our sales of and Tamil Nadu. And secondly, any local issues which comes up in the plant we are looking to acquire will help us manage that also as a local entity out there. That was our thought process behind this, giving him that stake.
Utkarsh Nopany
Okay. And sir, like what would be our advertisement cost for December quarter?
Sanjeev Agarwal
Yeah. So basically last year we saw roughly around INR131 crore. December should be in the range of roughly INR30 cr as advertising cost. 30, 32 basically.
Utkarsh Nopany
And sir, lastly, like if you can provide the EBIT margin guidance for the tiles and non-tiles segment for FY ’26.
Sanjeev Agarwal
Right now, we are not giving any guidance. We give the guidance at the end-of-quarter four — next year. Next year, we talk about it at the end-of-quarter four because things are still to hook-up in the country. And as you know, all building material products are under pressure. So keeping that in mind, it’s not the right time to give any guidance. We review as things go up and at the end-of-the quarter-four, when we meet, we’ll give you — try to give you some guidance.
Utkarsh Nopany
Okay. Thanks a lot, sir.
Sanjeev Agarwal
Thank you.
Operator
Thank you. We have the next question from the line of Onkar jee from Shree Investments. Please go-ahead.
Onkar Ghugardare
Yes, sir. My question is regarding you earlier mentioned that you will be trying your best to achieve the guidance which you had given. But I mean, even if you do around INR4,700 crores of sale this year considering a 10% growth in the 4th-quarter, you would still have to grow around 17%, 18% to meet that guidance and you had earlier given a CAGR of 12%.
Ashok Kajaria
So we are not looking at that. Our overall volume growth this year should be close to between 8% to 9%. That’s what will happen. That’s a reality on-the-ground. And we are not looking at anything beyond that at this stage because things are very tough on-the-ground. You are all aware of what is happening on-the-ground. So if I give you anything which is not correct is not right. So current scenario, we are looking at a scenario where ceramic should grow 8% to 9% in volume terms by for a full-year.
Onkar Ghugardare
And similarly, you had given 15% to 17% guidance, how realistic is that in next two years to achieve that?
Ashok Kajaria
We will talk about — we will talk about next two years at the end-of-quarter four. It’s too early to talk about next two years.
Onkar Ghugardare
So you had given this guidance a year back. That’s what I’m asking.
Ashok Kajaria
I’m doing nothing right now as I said.
Chetan Kajaria
See that was the full-year vision we had at last year. So we are not changing much in that vision as of now. When we will — after the year, we will sit back if there is a major deviation, we’ll come back as of what Chairman wants to say. At the moment, we have not examined whether to revise this guidance at to what extent. So that we will do. It is not — it’s a very careful process. It is — it cannot be answered on every quarter. See, the three-year mission was made on a certain assumption. The assumption, some quarter it happens, some quarter doesn’t happen. That doesn’t mean every quarter I’ll be changing my three-year guidance. Post this year-after seeing all the economic scenario of the general economy in the country and the tile industry, if need be, we’ll change our guidance and at that time we’ll unveil our revised guidance if need be.
Onkar Ghugardare
Okay. Thank you.
Ashok Kajaria
Thank you.
Operator
Thank you. Participants who wish to ask a question may press star and one on your touchstone telephone. We have the next question from the line of Rishabh Bothra from Rathi. Please go-ahead.
Rishab Bothra
Hello, sir, good afternoon. Just wanted to understand whether we track residential, commercial and infra consumption where which segment is the fastest-growing for us
Ashok Kajaria
Again, when it comes to — when it comes to retail, it’s a combination of real-estate and commercial. When it comes to projects, it’s more of commercial, less of retail. That’s how it works basically. And focus has been on retail more because as we said that we are 70% retail, that’s what we have been doing for the last so many years. 30% institutional sales. So that’s what the focus would be.
Rishab Bothra
And lastly, sir, in residential, do we try for large housing projects or standalone projects as well? Both are our focus.
Ashok Kajaria
It’s a combination of all, combination of all.
Rishab Bothra
Okay. Thank you.
Ashok Kajaria
Thank you.
Operator
Thank you. We have the next question from the line of Pulkit Patni from Goldman Sachs. Please go-ahead.
Pulkit Patni
Sir, thank you for taking my question. I mean, most of the questions are answered. I just wanted to pick your brain on, has anything changed in the industry in the last four, five years, whether it is in respect of competition, whether it is in respect of technology, are your peers now being able to produce the same product as you or is there some change between marble and ceramic? I mean, I just wanted to get a sense because multiple people have asked this question in different ways. But if real-estate sale is strong, eventually it has to result in some bit of retail sale, right? If the builder is making the lobby, the flat also is required to be made. So any sense on if anything has changed in the industry in the last four, five years based on your experience and expertise?
Chetan Kajaria
Right. So first we talk about industry, in terms of industry, in terms of machine technology, the latest machines, whatever the latest technology is Continua plus technology, but your company already has two of those plants. So you are with all the technology, right? And as compared to product also, we are making all the products which — so there is no differentiation in terms of that somebody else is doing and we are not doing. What we are saying is that at this tough market, if you are growing at 7%, 8%, when the retail market increases, the volume will be much better. But we don’t want to comment we don’t give any guidance right now. We’re not going to leave the projects which you’re already doing. And we are waiting for the market to revive. The retail market revives are automatically our volumes will be better and our realization will also get better. But there is nothing new in the new in the industry, which we are doing and nobody else is doing or somebody else is doing and we are not doing.
Pulkit Patni
No, not fair. I mean, you’ve always been the leader. So my question was more about something that you were doing, which competition is doing. Maybe let me just extend that one-step further. But do you think the supply situation is much worse, i.e., this much more excess supply today than it was a few years back-in this industry?
Chetan Kajaria
Yeah. So if the demand slows down, the supply will be excess, right? We already have built-in capacities. We are the number-one where our production is very-high. So yeah, we have to make sure that the — and the factories should not be shut-down. So the supply will always be high. And yes, today, the supplies are a little excess as compared to what is used to be earlier. General industry, everywhere is supply is high. Okay, everywhere is supply high. Okay, this particular year as we have been talking, what has happened is exports have come down. So that INR4,000 crores of exports, partly has come in the domestic market. I wouldn’t say fully, but partly has come to the domestic market. So that has kept the market under pressure. Number-one, demand has not gone up because of various reasons. We are all aware in the most of the building materials segment. So this is what the reason is that the pressure has been there. With things looking up, I think things going ahead should be better.
Pulkit Patni
Sure, sir. This is helpful. Thank you
Ashok Kajaria
. Thank you.
Operator
Thank you. Ladies and gentlemen, that was the last question. I would now like to hand the conference over to the management for closing comments.
Ashok Kajaria
Thank you, Pune. I think it’s been a good introduction. Lot of good questions were asked. I hope on behalf of the management and on my own behalf, we have been able to answer it to this satisfaction. But if anybody has any queries, you can come back to Sanjiv and Neil for further clarification. Thanks a lot everybody for joining us today.
Operator
Thank you. On behalf of Kajaria Ceromics Limited, that concludes this conference. Thank you for joining us and you may now disconnect your lines.