Kaka Industries Ltd (NSE: KAKA) Q4 2025 Earnings Call dated May. 16, 2025
Corporate Participants:
Vinay Pandit — Investor Relations
Chintan Bodar — Chief Financial Officer
Analysts:
Mukesh Panjwani — Analyst
Tanvi — Analyst
Harleen Kaur — Analyst
Karan Sharma — Analyst
Keshav Garg — Analyst
Deep Chitalia — Analyst
Varun Ghia — Analyst
Atul Karwa — Analyst
Pritesh Vora — Analyst
Mahesh Attal — Analyst
Presentation:
Vinay Pandit — Investor Relations
Ladies and gentlemen, I welcome you all to the H2 and FY ’25 Post Earnings Conference Call of Kaka Industries Limited. Today on the call from the management team we have with us Mr. Chintan Bodar, Chief Financial Officer. 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 brief 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 floor for Q&A.
Over to you sir.
Chintan Bodar — Chief Financial Officer
Thank you. Good afternoon everyone. Thank you for joining us today on this earning conference call. It’s my pleasure to present an update on our performance at Kaka Industries Limited, share industry insights and walk you through our strategic direction for the coming quarters.
Over the last six months the PVC and UPVC profile on manufacturing industry has remained resilient despite some macroeconomic uncertainties. Despite macroeconomic challenges, overall sluggish demand, the Indian building materials more particularly interior solutions sector continues to benefit from sustained demand for durable, recyclable and cost-effective materials where PVC-based products are gaining greater acceptance in both urban and semi-urban markets. Interestingly, while the frequency of home renovation has reduced compared to earlier years, this shift present a unique opportunity for companies like ours. Homeowners are now far more intentional and selective than when they decide to renovate seeking durable, low maintenance and value-adding materials. This is where UPVC-based furniture and modular products are coming into play.
We are seeing increasing preference for UPVC furniture as a long-lasting, water resistance and sustainable option especially in kitchens, bathroom and utility spaces. Our end use sector, the real estate industry has shown encouraging momentum over the past year with continued demand in affordable and mid income housing segment supported by strong government push and improving home affordability metrics. The resulting boost to interior fittings, modular solution and door frame systems has been beneficial to our value chain.
Now let me highlight our company’s performance and milestones. As many of you are aware the commissioning of our new manufacturing facility at Lasundra was partially delayed due to awaited dedicated high tension electricity connection. Until January ’25 our operation were running below install capacity which impacted our production and capacity utilization. However, I am pleased to report that as soon as the power line was made operational, we witnessed a significant uptick in the production and we achieved highest ever monthly sales in the month of January ’25. This clearly validates the robustness of the demand and our preparedness to meet it.
On the branding front we have initiated major steps toward repositioning our brand and building awareness across building material categories. From digital campaign to targeted influence outreach, we have launched aggressive marketing initiatives focused on creating product loyalty among influencer, contractor and channel partners. A cornerstone of our sustainability and efficiency strategy is our upcoming 7.5 megawatt captive solar power plant at Lasundra, Gujarat. This INR25 crore investment expected to go live by August 25 will allow us to reduce our monthly power expenses by approximately INR40 lakhs to 50 lakhs yielding saving of around INR55 lakhs and reinforcing our commitment to clean energy. We are also making a concentrated push to expand our domestic footprint. This include both deepening presence in existing market and unlocking new ones. We are investing our distribution network and scaling up our sales force and marketing support to achieve broader reach and faster service.
Now highlights on the financials Our revenue for the year grew by 16% year-on-year. EBITDA margin improved by 71 basis point. However, the net profit declined marginally by 1%, primarily due to 125% rise in the interest expense following a INR32 crore term loan for our new facility and the HT power line. 106% increase in the depreciation, reflecting a INR26 crore capital addition in financial year ’25 and INR31 crore in financial year ’24, totaling INR57 crore over the two years. While these investments have increased short term cost, they set the foundation for the future volume growth, enhanced efficiency and year-on-year marginal cost reduction.
On the operational front, we have significantly improved our supply chain capabilities. Our aim is to bring down the order fulfillment time from the current 10 to 12 days to just two to three days, dramatically enhancing our dealer experience and the customer responsiveness. Looking ahead, we are targeting 40% volume growth in the current financial year. With the infrastructure now in place, expanding market opportunity, aggressive influencer marketing and full production ramp up underway, we are confident in our ability to achieve this goal.
In conclusion, Kaka Industries is at the inflection point. We have laid the groundwork for long-term growth through capacity expansion, renewable energy integration, brand development and deeper market penetration. The future holds great promise and we look forward to delivering enhanced value to our stakeholders. We have uploaded the investor presentation on the exchange website. Please go through the presentation in case of further information or you may contact our IR agency or the management.
Thank you once again for your trust and continued support.
Questions and Answers:
Vinay Pandit
Thank you, sir. [Operator Instructions] So we’ll take the first question from Mukesh Panjwani. Mukesh, you can go ahead.
Mukesh Panjwani
Yeah. Hello sir. Am I audible?
Chintan Bodar
Yes, sir.
Mukesh Panjwani
Sir, what is the current capacity utilization?
Chintan Bodar
Sir, it is 50% to 60% in the different categories.
Mukesh Panjwani
Okay. Overall around 50% we can say.
Chintan Bodar
Yes.
Mukesh Panjwani
Okay. Okay. And right now what is the current run rate in the terms of revenue? As you said in January it was the highest turnover ever.
Chintan Bodar
Yes.
Mukesh Panjwani
So after Jan like Feb, March, how were these months?
Chintan Bodar
Month-on-month, I mean January, February, March was the same and the April was the higher than the January.
Mukesh Panjwani
Okay. Okay. So easily we can — in that run rate we can easily touch like 40% growth?
Chintan Bodar
Yeah. Yeah. 40% in the volume growth. Yes.
Mukesh Panjwani
Okay. And what is the, like what would be the maximum revenue we can generate from this current capacity?
Chintan Bodar
It is around INR400 crore.
Mukesh Panjwani
Okay. Okay. And…
Chintan Bodar
But we have the space and we can also improve the existing machinery also.
Mukesh Panjwani
Okay. Okay. And as you have mentioned that we are putting some capex for solar. So what would be the impact on bottom line from this solar capex?
Chintan Bodar
So it will be around monthly — month-on-month basis, INR40 to INR45 lakhs, INR50 lakhs around. Because it is based on the generation and the consumption of the electricity.
Mukesh Panjwani
Yeah. But there would be interest expense also. It will also increase our interest expense.
Chintan Bodar
Correct. Correct. So after that I am saying that it is INR40 lakhs monthly.
Mukesh Panjwani
That is interesting. In that case like we can add around INR4 crore to INR5 crore in our bottom line.
Chintan Bodar
Correct. Correct, sir.
Mukesh Panjwani
That is very interesting. So it will also enhance our PAT margins in that case?
Chintan Bodar
Yes, sir.
Mukesh Panjwani
Okay. So going ahead what kind of PAT margin we are targeting?
Chintan Bodar
So for this one — for this year also it will be around 6.5% or 7% maybe. Because the interest and the depreciation will also come into play in this year also because it is on the higher side.
Mukesh Panjwani
Right, right. But your EBITDA margin should improve, isn’t it?
Chintan Bodar
Yeah. It is also improved in this year also compared to last year.
Mukesh Panjwani
Because operating leverage will kick in and it should improve.
Chintan Bodar
Yes.
Mukesh Panjwani
Okay. So next year, what kind of PAT margin we should expect?
Chintan Bodar
6.5% and between 6.5% to 7% and this solar, solar PAT will also come into play.
Mukesh Panjwani
Okay. Okay. Okay sir, that’s all from my side and all the best. I’ll come in the queue.
Chintan Bodar
Thank you.
Vinay Pandit
Thank you, Mukesh. We’ll take the next question from Tanvi. Tanvi, you can go ahead please.
Tanvi
Yeah, just a quick question. So first following up the previous participant’s answer. So the savings in electricity cost, will that be offset by the increase in depreciation interest?
Chintan Bodar
So it will be. I think in rupee terms I have calculated that this will be the saving, this INR40 lakhs around on month-on-month basis. So we have to, I mean check whether it will offset the depreciation, increasing depreciation.
Tanvi
Okay. Okay. And sir just one thing. With the new capacity have we fully ramped up? I mean the new capacity that we’ve started.
Chintan Bodar
See what happened in the last year was that up to the December we were not able to utilize it. Right. And after that we have started utilizing it. And we try to get the optimum capacity utilization. But somehow we were not at the top to use that full capacity. Right. But now from April onwards we are achieving that 60%, 65% of the install capacity.
Tanvi
This 60% is for the new plan that you’ve set up. What’s the overall…
Chintan Bodar
Total. Overall, overall.
Tanvi
Overall 60%. And sir just one thing. You’ve said that February and March was in line with January and April was better than January. So can we expect a run rate of INR20 crore per month for the coming year?
Chintan Bodar
Yes, yes. That is our target for this year.
Tanvi
Okay. Okay. Thank you.
Vinay Pandit
Thanks, Tanvi. We’ll take the next question from Harleen Kaur. Harleen, you can go ahead please.
Harleen Kaur
Hi, sir. Sir, can you please share how has your realization per tonne gross margin and EBITDA per tonne has moved over last 3.5 years?
Chintan Bodar
So gross margin is around 35% for the financial year ’24-’25.
Harleen Kaur
In this quarter at margin level it is lower due to I presume new overheads of the new plant where there is a lag in revenue. Where do you see it sustaining on a gross margin per tonne and EBITDA per tonne basis.
Chintan Bodar
So EBITDA per tonne is around 14,500 as of now and the gross margin is 35%.
Harleen Kaur
Okay, sir. Sir, one more question. Post reaching close to INR400 crores revenue what is the scope for expansion at the new plant? And what will be the cost of the brownfield expansion?
Chintan Bodar
So ma’am with the current facility in place we can achieve INR400 crores from these machineries and the infrastructure. In case we need to enhance the production capacity we can place the new machinery in this plant itself and we can improve the old machineries with the new one.
Harleen Kaur
Okay, sir. Thank you, sir.
Chintan Bodar
Thank you.
Vinay Pandit
Thanks, Harleen. [Operator Instructions] So there’s a question in the chat from Mr. Deepak Juneja. How is the competitive scenario currently?
Chintan Bodar
The competition from the domestic we have the Chinese import and the manufacturer from the different region also they are giving the competition. But what we have the age is of — we have established presence for last year 20 years. We have the wide product portfolio and the new plant. This giving us the age to compete with them.
Vinay Pandit
Thank you. There’s a one more question in the chat that. Hello, sir. Can you please tell us what is your current order book and what will be our target for FY ’26 and FY ’27?
Chintan Bodar
So we do not work on the order book because we operate through dealer and distributor. So they put the monthly requirement. So there is no order book as such. And for the next two financial year we can grow the 30% year-on-year.
Vinay Pandit
Okay. So we’ll take the next question from Karan Sharma. Karan, you can go ahead please.
Karan Sharma
Hi, sir. Thanks for the opportunity. Sir, like one of the previous participant asked, can you share revenue per tonne, gross profit per tonne and EBITDA per tonne since the answer we got was not clear when she was asking. And how it has moved over last 1 to 1.5 years and how was it in H2 and where do you see it coming in the coming year?
Chintan Bodar
Okay. So the EBITDA per tonne is around INR14,500.
Karan Sharma
Okay. Yeah. Gross profit per tonne?
Chintan Bodar
Gross profit, see gross margin is around 35% and per tonne, it will be…
Karan Sharma
Like average realization per tonne.
Chintan Bodar
Yeah. Wait a minute. So gross margin is around INR30, INR38, INR39.
Karan Sharma
Your gross profit margin basically?
Chintan Bodar
Yes, yes. Per kilo.
Karan Sharma
So okay. So can you just share average realization also per tonne, because from there we can I think derive the gross profit.
Chintan Bodar
Yes.
Karan Sharma
Okay. All right, sir. Thank you.
Operator
Yeah.
Vinay Pandit
Thank you, Karan. We’ll take the next question from Keshav. Keshav, you can go ahead please.
Keshav Garg
Hi. The EBITDA per tonne of INR14, 500 is for the year or for the half year?
Chintan Bodar
For the year. For the year.
Keshav Garg
Okay. And is it the right understanding that inventory has gone up because we have scaled up and therefore we should take it — take the inventory days as a percentage of recent sales.
Chintan Bodar
Correct. Correct. Actually, there are lots of SKUs in our product portfolio that we also want to reduce the SKUs because the number of SKUs compel us to keep the stock in hand to serve the customer in time. So as of now it takes around 10 to 15 days and to serve the customer in the — I mean in the minimum time we have to maintain the stock.
Keshav Garg
Okay. But on a fully scaled up basis when our utilizations go up, what should be the overall cycle, working capital cycle and also the inventory days?
Chintan Bodar
So in inventory, we want to keep it around 50 days, so it will reduce drastically in the coming time.
Keshav Garg
Okay. And sir, what were — so I’m new to the company, so I just wanted to know the commercials or the capex we’ve done. So how much we spent and how much capacity it has added in the past one year?
Chintan Bodar
We have added around INR60 crores in the last two years in the civil construction and the machinery. So in the different categories we have increased the capacity and PVC profile it was doubled from 15,000 to 30,000 tonne per year, 200% in the WPC manufacturing, 100% in UPVC window. So that is what we have added in the last two years, the production capacity.
Keshav Garg
Okay. And what is the utilization for the compounding facility and how should it impact the margins this year?
Chintan Bodar
So compounding it is being utilized at fully and that the integration of this compounding will give us the edge in the margin efficiency.
Keshav Garg
Okay. But sir, the compounding facility I presume is lesser than the profiles that we make. So should we see some margin reduction in this year when we grow by 30%, 40% as we’re targeting.
Chintan Bodar
So this is a bit of a technical part because what we have installed in the compounding that will be utilized for the particular product and for the colored or the different, I mean other than the standard product in PVC profile we will use the normal method for the production. So this compounding is for the standard product only to save the time and the efficiency in the production.
Keshav Garg
Okay. Sorry to circle back on that again. As we are at this level also doing a 100% utilization on compounding. So as the overall PVC profile sales and everything also goes up what will lead to margins improving? Because I presume that we are already fully utilized on compounding front.
Chintan Bodar
Right. So behind the logic of this compounding we wanted to save the manpower cost and the reduction in the wastages. Because what was happening earlier that at the time of composition and the mixture of the product at the individual each machine level there was a problem with the manpower also and the mixture also. So mitigate the problem of this we have installed the compounding. So we are looking forward that we will save in the manpower cost because still it is around two to three months and we are using the — at the best of this compounding facility. Right. So ultimately it will save us the — I mean manpower. Because I cannot comment on the exact numbers but definitely I will give you the numbers in the coming time.
Keshav Garg
Okay. So just lastly. So even for the scaled up capacity our EBITDA per tonne should remain or improve? That’s the correct understanding, right?
Chintan Bodar
Yeah. It will improve. Definitely it will improve.
Keshav Garg
Okay. Okay. Fine, sir, thank you so much, sir. And all the best.
Chintan Bodar
Thank you.
Vinay Pandit
Thanks, Keshav. We’ll take the next question from Pritesh. Pritesh, you can go ahead please. Pritesh? Okay. We’ll take the next question from Deep. Deep, you can go ahead please.
Deep Chitalia
Yeah. Thank you. Since you work majorly through fabricators or dealers, how does brand advertising help your business?
Chintan Bodar
It helps us to — I mean the customer does not have the knowledge of this PVC product and the uses of the PVC product. Because there are lots of areas in the domestic that people doesn’t know about the utilities of the PVC products. Right. So that helps us to aware the customers.
Deep Chitalia
Okay, sir. Got it. What are your plans to increase your target geography? Can you share your revenue breakup region-wise in India like north, south, east and west?
Chintan Bodar
So if I can give the state wise the major 60%, 62%, 63% is from Gujarat and then equal from Rajasthan, Maharashtra, Telangana, Karnataka. And we want to improve the percentage of the turnover segregation in these states only as of now.
Deep Chitalia
Okay, sir. Got it. Sir, are there any market opportunities to tap in exports. And if yes, are there any plans for the same?
Chintan Bodar
So actually we are coming into the SPC flooring. It was delayed by, I mean four to five months now. But now in this month or in the next month we will be in the market for with the SPC flooring. And for SPC flooring we are targeting export.
Deep Chitalia
Okay, got it. That’s it from my side. Thank you.
Vinay Pandit
Thanks, Deep. We’ll take the next question from Varun. Varun, you can go ahead, please.
Varun Ghia
Hi. Thanks for the opportunity. Chintan, compared to last year, what is the volume growth? Revenue has grown from INR170 crores to INR198 crores. What is the volume growth?
Chintan Bodar
Volume growth is around 17%.
Varun Ghia
Okay. And EBITDA per tonne, you said INR14,500. What is the utilization per tonne approximately?
Chintan Bodar
Approximately per tonne you want, right? One minute.
Varun Ghia
Or if you don’t have that figure, going forward in the next year, you feel that the realizations have bottomed out. And can we see a uptrend in the realizations or are there any risks of further downtrend?
Chintan Bodar
Yeah, I mean there is actually these prices have bottomed out actually.
Varun Ghia
That is what I’m trying to understand. Do you feel that the prices have bottomed out or is there any further risk of downside?
Chintan Bodar
No, no, it will come down. If the raw metal prices goes down we have to lower the prices.
Varun Ghia
Okay. You feel that the realizations can go up next year?
Chintan Bodar
No, no, I think we are seeing that the raw material prices are going down. So the realization per tonne or kilo will go down. So currently it is INR110 per kilo.
Varun Ghia
Okay. And whenever we fix profit, do we fix it as a percentage or on a per tonne basis? Absolute number fix or do you decide a percentage and add that profit? What is your profit…
Chintan Bodar
Per kilo, per kilo. We generally add the margin and the overhead cost per kilo, not on the percentage basis.
Varun Ghia
Okay. And what is our plan to reduce the debt going forward maybe in the next one or two years?
Chintan Bodar
So as of now there is no plan to reduce the debt. But in case, if the opportunity comes, we will go for the, I mean equity also.
Varun Ghia
Okay. And one last question before I come back. Our distribution network is one of the main factors to grow our business. As of now what is the number of dealers or distributors we have and going forward how do we want to expand it?
Chintan Bodar
So as of now around 300 plus dealers and distributors are with us, spanned across India. And till now we were using the pool method. I mean if the dealer wants the product, they will call us and they put the order with the factory. Right. But now in this current year we want to expand the salesforce also and it will be on the push basis. So targeting the four to five states which I mentioned, we will, I mean recruit the salesforce and we’ll push the product sales.
Varun Ghia
Okay. So thank you for hosting this call and wish you all the best for the next year.
Chintan Bodar
Thank you.
Vinay Pandit
Thanks, Varun. We’ll take the follow up question from Tanvi. Tanvi, you can go ahead please.
Tanvi
Just a couple of questions I had starting with. So what would be your maximum capacity utilization? You said for the coming year it would be around 60%. So what would be the maximum capacity utilization that we have considering the new capacity also?
Chintan Bodar
So it is depending on the product sizes we experience that the maximum capacity we can achieve is 80% of the install capacity in the different categories of the product and the different sizes of the product. So we cannot assume that this is the maximum capacity. But if the product is right and the machine is right, we can achieve the 80% of the install capacity.
Tanvi
Okay. Okay. And one thing. Can you just give us a breakup of the installed capacity in terms of PVC profile? In terms of, I mean metric. PVC profile, WPVC, UPVC, roofing and cladding.
Chintan Bodar
Yeah. PVC profile is around 32,000 metric tonne per annum. WBC sheet and frame is around 12,500. UPVC door and window is around 3,200.
Tanvi
And PVC roofing, cladding, ceiling.
Chintan Bodar
PVC roofing is around 1,200 and cladding and decking is also 1,200 around.
Tanvi
Okay, so approximately your total installed capacity is 50,100, if I look…
Chintan Bodar
Correct. Correct. Correct. And the maximum we can achieve is around 37,000.
Tanvi
Just one question more. So when we talk about the revenue concentration you previously highlighted that PVC is from where most of the revenue comes. So if you could just give us a breakup of revenue concentration across these sectors. PVC, UPVC.
Chintan Bodar
Yeah. This PVC sheet and section is around this year, it is 55%. WPC is around 26% and UPVC window profile is around 6%.
Tanvi
I think PVC is the highest margin product that you have.
Chintan Bodar
No, no. All the three have the same margin. Comparatively UPVC window is the higher margin.
Tanvi
Okay. But its share is the least. It’s approximately 6% for this year.
Chintan Bodar
6%. Yeah. It is on the lesser side. Yes.
Tanvi
Okay. And just one more question. And can you give your volume in absolute terms how much you’ve done in FY ’25 and how much you target for FY ’26?
Chintan Bodar
Okay. So in the last year it was around 18,500.
Tanvi
Okay. What is your target for FY ’26 when you said…
Chintan Bodar
It is around 40% in volume.
Tanvi
40% in volume and 30% in revenue.
Chintan Bodar
Revenue, I cannot comment because there may be price reduction or price revision up move also.
Tanvi
Okay. But mostly are you able to pass on the prices?
Chintan Bodar
Yeah. Yes.
Vinay Pandit
Thanks, Tanvi. We’ll take the next question from Atul. Atul, you can go ahead please.
Atul Karwa
Thank you for the opportunity. Just wanted to understand about your — just wanted to reconfirm. You mentioned that 30% revenue growth in calendar — financial year ’26 and ’27. Is my understanding correct?
Chintan Bodar
Financial year ’25-’26, 40% on the volume growth. And for the next two to three years it will be around 30% year-on-year.
Atul Karwa
Okay. 40% in year one and 30% in year two of Ind AS.
Chintan Bodar
Yeah.
Atul Karwa
Okay. Thank you so much. All the best, sir.
Vinay Pandit
Thanks, Atul. We’ll take the next question from Deepak. Deepak, you can go ahead please.
Deep Chitalia
Sir, am I audible?
Chintan Bodar
Yes.
Deep Chitalia
Sir, my question is regarding.
Vinay Pandit
Deepak, your voice is not clear. Deepak, your voice is not clear.
Deep Chitalia
Well, you see, I understand that we are paying — can you hear me, sir now?
Vinay Pandit
Yes, yes, now it’s clear.
Deep Chitalia
Hello. Sir, can you hear me now sir? Actually my question was like regarding profitability. How are we going to improve our PAT considering that we are going to pay a lot of interest for the term loan? Apart from the electricity cost like what is our other strategy and are we looking — sales also increasing because of the new factory expansion? Thank you.
Chintan Bodar
So as you know that we have expanded the capacity, we will definitely increase the sales. Sales in the volume and the revenue terms also. So definitely it will help us to increase the PAT in the profit after tax apart from the electricity saving. So EBITDA, I mean EBITDA level percentage will also increase and in the absolute term also it will also increase because interest cost is constant. Right? And the depreciation is, this is the maximum. It will go down in the coming time.
Deep Chitalia
Thank you. Wishing you the best.
Chintan Bodar
Thanks.
Operator
Thanks, Deepak. We’ll take the next question from Pritesh Vora. Pritesh, you can go ahead please.
Pritesh Vora
Hello, sir.
Chintan Bodar
Yes.
Pritesh Vora
Sir, you mentioned about this volume and revenue growth 40% this year and 30% going onward. So what are the ways you can achieve this? Is this just production capacity you have increased? That’s why you’re confident? Or are you opened up new sales channel, new distribution? Or how do you so comfortable selling 40% this year?
Chintan Bodar
So earlier in the last two years we faced the supply constraint. That was the major confidence we have that we can sell the product. And because at every time 30% to 40% of the total order we were not serving on time. So they, they were procuring from another, I mean manufacturer or somewhere else. So that is one. Second, we are expanding our sales force in the selected areas. And we are also collaborating with the influencer across the categories. Yes, so that is why we are confident that we can achieve this in this current year 40% and 30% year-on-year.
Pritesh Vora
Okay. And among the segment-wise which you mentioned, you sell PVC, 55%, UPVC, 36% and window, you are saying 6%. How does the segment profile will change over next couple of years?
Chintan Bodar
So we expect that UPVC window and profile will definitely increase in the current year. And WPC is 26%. So it will also go up. I mean the major contributor will be WPC and UPVC window in this year.
Pritesh Vora
Okay, you are saying UPVC window is 6%. WPC is 26%. Is it?
Chintan Bodar
Yes, yes. Yes.
Pritesh Vora
And PVC is 55%?
Chintan Bodar
55%, yes.
Pritesh Vora
Okay. So sir, how do you see the this moving like say three year down the line, what do you see this because your UPVC window is a higher contributor, right? How do you see the mix change?
Chintan Bodar
I mean 55% in the PVC profile. I think it will be constant. WPC and UPVC will increase from this year. Because we have expanded WPC in capacity is doubled. I mean 200%. And for the UPVC it is 100% increment in the production capacity. Because as per our expectation and the experience, we have added the capacity.
Pritesh Vora
Understood. Understood. Right. And how does the polymer price increase or decrease impact our margin?
Chintan Bodar
Generally sir, we pass on the increase or decrease on the customers. So as of now it is on the decreasing mode. So the prices of the product will definitely go down. And if it is increasing then we pass on the increased price to the customer.
Pritesh Vora
Okay. So do you keep the fixed EBITDA conversion margin with you? Like say If PVC is INR100 for example, I don’t know what is the price right now. But if INR100 goes to say INR50, your margin of say your margin of 20% for example does it retain like that? And then you charge instead of INR120 you charge INR70 when INR100 goes to INR50.
Chintan Bodar
Up to up to 5% we retain either side and then we pass on.
Pritesh Vora
Okay. Understood. Okay, sir. Wish you all the best.
Chintan Bodar
Thank you, sir.
Vinay Pandit
Thanks, Pritesh. We’ll take the follow up question from Keshav. Keshav, you can go ahead please.
Keshav Garg
Yeah. Thank you. Sir, what is our go-to-market strategy for SPC and what will be the target market?
Chintan Bodar
So we are targeting export for the SPC US and Europe. So we are collaborating with the different exporters in India only as of now. So I mean in two to three months we have the clear idea on the strategy side.
Keshav Garg
Okay. So we’ll be supplying to players that are directly marketing to players like Walmart in the US?
Chintan Bodar
Correct, correct.
Keshav Garg
Okay. So that means I was, I mean I was coming to that the working capital cycle, if we were targeting directly the foreign clients, it would have gone up. So we should not see any drag on our working capital cycle when SPC comes in?
Chintan Bodar
So as of now we are not thinking on that because we want to, I mean first start the production and the — we want to market our product and the reach of the customer. So we have not thinking on the working capital as of now. Okay. Okay. And is there an indicative ask from the customers themselves for this product that they are looking forward to sourcing this from you and we might be able to sell whatever we, whatever capacity we come up with. We have discussed with the various exporters and the local persons also what the — to get the idea about the export market of SPC flooring. So as such we do not see the domestic market. So as of now we are just discussing and the — we want to place the our product in the market. That’s it.
Keshav Garg
Okay. Got it sir. And what is the quantum of supply from India to export countries for SPC?
Chintan Bodar
Sir, I do not have the exact idea. You are mentioning that the market of the SPC flooring.
Keshav Garg
Yes.
Chintan Bodar
No, no, I don’t have any idea.
Keshav Garg
Okay. Okay, fine, sir. Thank you and all the best.
Chintan Bodar
Thank you.
Operator
We’ll call Mahesh Attal to ask his question. Mahesh, you can go ahead please.
Mahesh Attal
Yeah. Hi. So I’m sorry I’ve joined little late. So my first question would be on the recent capex that you have done both ’24 and ’25. Okay. ’24 you have done some capex and ’25 you have done some capex. So if I may ask what could be our potential revenue. Let’s say if we want to do a revenue today, I mean if I run my plant at the optimum capacity, what numbers are we looking at? First that would be my question.
And then follow-up would be like our margin profile has been you know, doing like, you know, fairly good. I mean it has improved and it’s being maintained pretty well. So do you think what should be our broad criteria of margin going ahead even at the higher increased revenue scale? Because you are also talking about exports now. So what do we take as an average thing when we are talking of the numbers of FY ’26?
Chintan Bodar
Okay. So for the first question we can achieve the INR400 crore from this production facility with the same set of machineries and the infrastructure we have. We can definitely improve the existing machinery and we have some space also in the current facility where we can put some more machineries. Right? And for the second question we want to improve the margin efficiency. That’s why we are coming into SPC flooring because it is export-oriented market and there are good margins with the SPC flooring. And for the current existing portfolio we have, we do not see the major upshift in the margin. We can definitely achieve it through margin efficiency through our production capacity.
Mahesh Attal
What I fail to understand is that why have we not grown our revenues this year? Maybe we have grown around 13%, 14%. What stopped us this year from growth? Because when you say that you are having enough capacity to do up to INR400 crores obviously some of it must have gotten added in the later part of this year. But then what has been drawback for us for this year, for this particular year?
Chintan Bodar
So till the December we we were struggling to get the dedicated electricity line. So last three months we had the opportunity to gain or the have the maximum production capacity. So for the ninth-month we have not used our install capacity at optimum.
Mahesh Attal
So let me put it this way that if suppose if you would have used this for the entire six months what could have been the way you have used in the last three months, what could have been the revenue potential of this facility?
Chintan Bodar
Optimum is INR400 crores.
Mahesh Attal
No, no, I’m talking about…
Chintan Bodar
Yeah. if I get the HD line at the starting of the year we have achieved, we must have achieved around INR250 crores, INR260 crores.
Mahesh Attal
Okay. So basically just because we were not able to get that on time, we are, basically what you’re saying is there are orders in hand but you are not able to fulfill it because of this thing. Right?
Chintan Bodar
You cannot say order on hand because we are not working with the, I mean we are working with the dealers and distributors. So they put orders month-on-month basis. But we identified that we would have got that INR50 crores, INR60 crores more if we had we had the opportunity to use the optimum capacity.
Mahesh Attal
Okay, so fair enough to say that next year these numbers are going to come and over about that there will be some achievement. Any guidance that you want to give for the next year?
Chintan Bodar
40% in the volume. 40% increment in the volume. Yes.
Mahesh Attal
Okay. And see I have a one more question which is like when we say Kaka as a brand, so what are your strongholds? Like which region is your stronghold and where are the areas? Because I see a lot of your competition doing lot of advertisement, marketing into new geographies. So where are we on that and when could we see new geographies added to our thing?
Chintan Bodar
So we are strong in Gujarat as of now, 60% to 65% revenue is from Gujarat. And we are exploring our strong region in the, I mean we can say in the state of Maharashtra, Rajasthan, Telangana, Karnataka.
Mahesh Attal
Have you been doing any marketing spend in these areas?
Chintan Bodar
Yeah, at the digital front and the traditional methods like shutter painting and wall painting, we are already doing it.
Mahesh Attal
What was our advertisement expenditure last year, absolute?
Chintan Bodar
In rupee terms, it is around INR4 crore around.
Mahesh Attal
Okay, so what percentage of — it’s around 2% of our sale, right?
Chintan Bodar
Yes.
Mahesh Attal
Okay. All right. So do you see any thing you want to enlarge it for the next year? Maybe advertisement or marketing cost?
Chintan Bodar
Yeah, definitely it will increase. Because if you want to, I mean if you want to give, go aggressively in these areas, we have to push the advertisement cost.
Mahesh Attal
Any guidance on that for the next year?
Chintan Bodar
No, as of now we have not decided yet.
Mahesh Attal
All right. Okay. All right, thank you so much.
Chintan Bodar
Thank you.
Vinay Pandit
Sir, there are some questions in chat. I’ll only ask you the one which we’ve not touched upon till now. There’s a question from Manu, which says how many distributors have you added this year and how is the distribution channel shaping up?
Chintan Bodar
So at the distribution, I mean numbers front as such we have not added any new distributor because some of the distributor may have gone and some may have added in the last year. So basically, for the first nine months, 10 months we did not have the confidence to serve them. So we didn’t go there to add the new distributors. But now definitely we will add more distributor in the region I have said.
Vinay Pandit
There’s a question from Shubham Jain, other peers we’ve seen getting large orders from players like DLF, etc. Can you also receive these kind of orders and can you share some big clients whom you cater to?
Chintan Bodar
So we want to focus on the renovation part on the retailers and the government entities. So as of now we are not directly in the touch with the large real estate players. Definitely our distributors and the dealers or the local players who are associated with are definitely in touch with them. But we are not directly going there as of now.
Vinay Pandit
The other question is from Manu. Have you introduced any new products in the last year? How is the acceptance in the market?
Chintan Bodar
We have added fluted panels in the last three, three months and it is, it is very, very much accepted and we have added. We have started with the first one machine and now we have three, three machines for that.
Vinay Pandit
Another question is from Riddhi Agarwal. Working capital days have increased slightly. Are there any specific challenges in receivable or inventory management and what steps are you taking to optimize the cash conversion cycle?
Chintan Bodar
So there is a challenge with the inventory management and because there are lots of SKUs we are as of now holding with our catalog and the promises. So now we want to reduce the SKUs and we want to serve the customer on time. So around 10 to 15 days we are taking as of now and we want to reduce it to two to three days. So for that we have to reduce the SKUs also. So that is what this year we are working on that.
Vinay Pandit
There’s another question from Tanvi. Another peer is delivering EBITDA margins of 15% to 16%. Do you think you’ll be able to achieve this in the future?
Chintan Bodar
So currently year-on-year if you see that we are increasing the EBITDA margin, so definitely we are looking forward to improve the EBITDA margin through production efficiency. And the new will help us to improve the EBITDA margin.
Vinay Pandit
Okay. So that is the last question for the day. Would you like to give any closing comment before we end this call?
Chintan Bodar
Yes. Thank you for the participation. And we are looking forward to have this fantastic year from the Kaka industry side. Thank you. Thank you everyone.
Vinay Pandit
[Operator Closing Remarks]