Orient Bell Limited

Ashvath

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Ashvath

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Ashvath

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Anuj Arora

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Aditya Gupta

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Ashvath

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Aditya Gupta

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Aditya Gupta

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Ashvath

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Aditya Gupta

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Our sustained focus on operational efficiencies has resulted in a 3.7% reduction in manufacturing cost on a like-for-like basis after adjusting for the impact of product mix and energy prices.

— Anuj Arora

See, you're right, the listed tile companies in FY '24-FY '25 have not done well on top line growth and which obviously put pressure on profitability, but we see some green shoots of improvement.

— Aditya Gupta

Historically, you will find that H1 is weak.

— Aditya Gupta

You are asking some 10 different questions, so it's very difficult to kind of pick and choose what to answer.

— Aditya Gupta

So far as gross margin is not really a concern, we are good at that.

— Aditya Gupta

There has been a decline in the EBITDA margins compared to what they were in that, say, 4 years back period.

— Aditya Gupta

That is one thing which is a good sign because if you remember FY '25 was a steep decline to FY '24.

— Aditya Gupta

Q

Thank you. Good evening, ladies and gentlemen, and welcome to our quarter 2 FY '26 earnings call. In the building materials sector, cement and steel, which are the first stage of construction activity have shown good signs of revival. This is a positive development, which will have trickled down effect on the tiles sector. Tiles exports are up 6% year-on-year versus 12-month FY '25 average. With no new capacity expected to be added, this should lead to a reduction in domestic market oversupply. We maintain as per our previous commentary that government projects execution gas costs, geopolitica

Anuj Arora

Thank you, Aditya. Good evening, ladies and gentlemen. We continue to monitor the market closely. Encouragingly, we are beginning to see positive signs of recovery in both the cement and steel sector, which gives us optimism for a stronger performance in the second half of the year. Our sustained focus on operational efficiencies has resulted in a 3.7% reduction in manufacturing cost on a like-for-like basis after adjusting for the impact of product mix and energy prices. Gross margins have improved both sequentially and year-on-year and remains among the best in the industry. On a consolidate

Q

My name is Gunit Singh. I'm from Counter Cyclical PMS. Sir, if we look at our margins, operating margins, they have been around 3% to 4% for the last 2 financial years, whereas historically, they have ranged between around 8% to 10%. The last 2 financial years also coincidentally, were years where real estate performed considerably well in its cycle. In your best judgment and from your experience, I mean, where do we see ourselves in this cycle? Because ours is a cyclical business, so at what point do we see ourselves in the cycle? By when or do we see any signs of improvement in terms of, say

Aditya Gupta

See, you're right, the listed tile companies in FY '24-FY '25 have not done well on top line growth and which obviously put pressure on profitability, but we see some green shoots of improvement. I see informal checks tell us that significantly large number of units in Morbi have decided to close down permanently. Exports this year, as I said earlier, is averaging about INR1,500 crores to INR1,600 crores every month, which is about 5%, 6% more than what it was last financial year, 12-month average. This, along with the closure of some units in Morbi and no new capacity -- no new significant ca

Q

I have a few questions. One of them is what is our gas cost blended for this quarter, if you could help me with that, sir?

Anuj Arora

Ashvath, our blended gas cost is similar to last quarter is in the range of INR44 slightly less, I think Rs. 1 per cubic meter less than what it was in September of last year. Something in that range.

Q

Yes. My question was on the gas cost. I couldn't really hear the management said. Could you reiterate that?

Anuj Arora

Ashvath, in this quarter, our average gas cost was around INR43.3 per SCM and it is in line with the previous quarter, which was INR44.5. So slightly, it has reduced. Could you help me with the project retail split? Also, if you could help me with what is our trajectory going forward? Do we expect some improvement on the project front? You're talking about project retail split? Yes. this quarter. Ashvath, on the project retail split, we take, as always, projects which have a volume of more than 3,000 square meters as a project, everything else we count as retail consistently. We have about an

Q

I have a couple of questions. As recently, Ashvath talked about the adhesive business segment. I'd like to have a little bit more information about that. How are the margins in that segment in our adhesive business?

Aditya Gupta

Khush, I think it's too early for us to give you a sense on margins. As I said, we have just started this at July end. We just started with one plant and business is still in a few millions a month. Overall, the margins -- the gross margins, I think will be attractive, but maybe a bit too soon. I think we'll be able to give you a clear picture by the end of quarter 3 on this. As I said earlier also, we are not encouraging -- we are not incurring any capex. We are leveraging a lot of our existing manpower and other assets. We hope to make a decent gross margin on this, but more about this in qu

Q

Sir, the industry has taken some price hikes lately. Just wanted to understand on that front, we have a similar view in taking price hikes?

Aditya Gupta

Price hikes. Ashvath, yes, I also kind of read that about some competitors you were talking about a 1%, 1.5% price increase in the cost. We have taken a price increase in 1 or 2 products, not across the board. We have just -- what we have chosen to do is be a bit more conservative on the discounts that we are giving out in projects and all. We are levering all the data that we have for us. Everything is digitized, has been digitized for a few years now. We are working very hard on using all that wealth of data to try to squeeze out, to try to reduce deposits from people who are not giving us v

Q

Sir, just like most of the questions have been answered from my answers. I wanted to get in the last peak cycle, which was in 2022, our margins were almost comparable with our peers like 9%, 10% of EBIT. From that, there is a gradual decrease to about 4%, whereas the other competitors are able to maintain the margin near about 8%, 9%. Was it because like operating cost has gone up? Or what could be the possible reason? How do you see the improvement from here?

Aditya Gupta

You're absolutely right. There has been a decline in the EBITDA margins compared to what they were in that, say, 4 years back period. I think there are multiple reasons for that. For example, gas cost in our mother unit and even in our South plant of Hoskote, where we have long-term tie-ups with gas authority, the gas cost there did not go down while a lot of our competitors -- most of our competitors actually do bulk of manufacturing in Morbi, there with the mix of propane and LNG and much more... Sir, I could not hear anything, you got cut completely. I’ll just start again. See, there are mu

Q

Yes. Sorry, if this is a repetitive question, but I joined a bit late. I was just wondering what was the reason for the increase in gross margins by 250 bps.

Anuj Arora

Shubham, basically, what we have done is if you're watching us, we have been continuously working on costs. On a like-for-like basis, approximately 3.7% is that we have saved on our manufacturing cost. This is the main contributor for the gross margin increase. Because this quarter, we haven't seen any ASP increase, right? We just had volume growth. That's what I was wondering, I mean, 250 bps increase in gross margin is a bit higher. Basically, everything is coming from the operational efficiencies. In terms of ASP, it is similar to the quarter 1, but whatever gain that has come is on account

Q

Just a few questions on the industry front. If you could help us with the export scenario right now in Morbi. There are also some talks on some players focusing now on the domestic market. Is there any care of additional volumes coming in for India? If you could just help us with domestic operation?

Aditya Gupta

Ashvath, as I said, the five-month revenue for the export, I think it is a BOB capital report, is about, it says that this five-months till August to which data is available is about 6% value growth over the last year's monthly average. That is one thing which is a good sign because if you remember FY '25 was a steep decline to FY '24. We still have to reach FY '24 level, but a 6% growth is a good sign. That’s one. A lot of units, Ashvath, in Morbi, seem to have closed down permanently, which are units, which were smaller units, which I realize that their cost of production is not really going

Q

Thanks. Thank you, everybody, for being there and for your interest in Orient Bell. I look forward to meeting you guys again 3 months from now. Thank you.

Management