BORORENEWNSE24 May 2019

Borosil Glass Works Limited has informed the Exchange regarding 'Transcript of Institutional Investors and Analysts Conference Call held on May 14, 2019'.

BOROSIL RENEWABLES LIMITED

BOROSIL Borosil Glass Works Limited

CIN : L99999MH1962PLC012538 Registered & Corporate Office : 1101, Crescenzo, G-Block, Opp. MCA Club, Bandra Kuria Complex, Bandra (E), Mumbai -400 051, India.

T +91 22 6740 6300 W www.borosil.com

May 24, 2019

The DCS- CRD BSE Limited Corporate Relationship Department 1st Floor, New Trading Ring, Rotunda Building, P. J. Towers, Dalal Street, Mumbai- 400 001

Dear Sir /Madam,

National Stock Exchange of India Ltd Exchange Plaza, C-1, Block G, Bandra Kurla Complex, Bandra (East), Mumbai - 400 051

Scrip Code: 502219 (cid:9)

Symbol: BOROSIL

Series: EQ

Sub: Transcript of Institutional Investors and Analysts Conference Call

We enclose transcript of conference call with Institutional Investors and Analysts which was held on May 14, 2019.

You are requested to take the same on your records.

Thanking you.

Yours faithfully, For Borosil Glass Works Limited

Gita Yada Company Secretary & Compliance Officer ACS23280

End: as above

(cid:9) Borosil Glass Works Limited Transcript — Investor Call hosted by Prabhudas Lilladher on May 14, 2019

MODERATOR:

Ladies and gentlemen, good day and welcome to the Borosil Glass Works Q4 FY19 Earnings

Conference call hosted by Prabhudas Lilladher Private Limited. 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 you need assistance during the conference call please

signal an operator by pressing '*' then '0' on your touchtone phone. Please note that this

conference is being recorded. I now hand the conference over to Mr. Jinesh Joshi from

Prabhudas Lilladher Private Limited. Thank you and over to you sir.

MR. JINESH JOSHI - PRABHUDAS LILLADHER PRIVATE LIMITED:

Thanks. On behalf of Prabhudas Lilladher, I welcome you all to the 04 FY19 Earnings

Conference Call of Borosil Glass Works Limited. We have with us the management represented

by Mr. Shreevar Kheruka - MD and CEO and Mr. Swadhin Padia - the CFO. I would now like to

hand over the call to the management for opening remarks after which we can open the floor

for Q&A. Thank you and over to you sir.

MR. SHREEVAR KHERUKA - MD & CEO, BOROSIL GLASS WORKS LIMITED:

Thanks. Good afternoon everyone. Thank you for joining our call. I am glad to be speaking with

the investing community again along with our CFO - Swadhin Padia. Our Board met and

approved the financial results for the year ended March 2019. Our results and an updated

presentation has been sent to the stock exchanges and have also been uploaded on our

company's website. I will briefly take you through the highlights of the performance and then

open it up to questions.

FY 2019 has been a very good year for Borosil. I have to say that my team and I feel a sense of

satisfaction. Our business has crossed a significant milestone of INR 500 crores in revenue.

During this year, we achieved net sales of Rs. 546 crores, recording a growth of 26% over the

last year. These numbers are after adopting IndAS 115 without which the growth would have

been slightly higher. The consumer products business achieved a revenue of approximately INR

350 crores - a growth of 42% over the previous year. Products under the flagship brand Borosil,

recorded a net sale of Rs. 203 crores which is 39% over the previous year while serving ware

under Larah, reached sales of Rs. 147 crores - a growth of more than 46%.

You are aware that the company made a strategic shift a few years ago to create new avenues

of growth to supplement its core business in microwaveable dishes and vision glasses including

tumblers and so on. Our entry into new categories, mainly storage as well as serving ware, has

served the company well. This year the Borosil brand revenues from the new categories have

exceeded the revenues from the erstwhile core of microwave dishes and vision glasses, which

is to say the new categories are now larger than the core of the company and in a short period

of just 3 or 4 years. In particular our range of storage products, comprising glass lunch boxes,

the kitchen storage range and our Hydra range of flasks and insulated steel lunchboxes have

received a very good response from the consumers. Borosil's kitchen appliances range

positioned at the premium end of the market continue to gain customer acceptance and is

creating a niche for itself in this category. In the daily serving ware category our participation

through the Larah range of opal ware product is panning out well. Larah is beginning to achieve

reasonable scale, having as I said recorded revenues of about Rs. 147 crores in the last year.

The Company is strengthening its go-to market strategy and infrastructure with our retail

presence reaching 14,000 retail outlets. We expect to add another 800-1000 each year over

the next few years. Besides general trade, the company is strengthening its presence across

other channels such as large format stores, CSD, B2B and e-commerce. Sales from e-commerce

have increased from about 3 to 4% last year to over 10% of the current year.

Revenue in the scientific industrial products division was INR 196 crores which is a growth of 5% over the previous year. However, if we remove the impact of IndAS 115, the growth was

9%. The reason for this difference is that a large chunk of sales for this divisions comes during

the end of March and that is not recorded in the IndAS as per IndAS 115.

The lab ware division with sales of INR 154 crores recorded a growth of 3% and that would be

7.2% before the impact of adoption of IndAS. Klasspack - the company we acquired few years

ago with a range of ampoules and vials, has achieved a revenue of Rs. 42 crores — a growth of 15% over the previous year.

In this division, the Company has identified three new avenues for growth; the Labquest range

of instrumentation, exports and Klasspack. These three new verticals contributed to about 42%

of the scientific products division's revenue during FY 2019.

EBITDA from operations grew to Rs. 80.3 crores, that is the growth of about 27% over the

previous year. EBITDA earned by Vyline during FY 19 was INR 14 crores. Upon implementation

of the scheme of amalgamation, the EBITDA earned by Vyline will become available to Borosil.

The growth in EBITDA margin lags topline growth. This is in line with our strategy to invest

higher amounts in advertising and sales promotion. Our ASP spend in FY 19 are higher than

that in FY 18 by about Rs. 13 crores. Our EBITDA margins before ASP spend in FY 19 is 21.3% as

compared to 19.8% in FY 18. During FY 19, EBITDA margin for the business was 14.7%. As the

reported margin includes the impact of IndAS, it is higher at 15.1%. So, the point of this statement is to say that the EBITDA margin without ASP was higher than the year before. However, since ASP spends have increased more than the increase of sales, the EBITDA margin

has reduced a bit.

As I explained during the last quarter, the EBITDA margin in Klasspack is low owing to higher

wastages during production. As we work towards meeting most of the specifications, this was

expected to be a short-term impact and we expect that in the future the Klasspack's EBITDA

margins should improve although last year the EBITDA margin was impacted at 6.5%. In Larah,

the EBITDA margin was 18%. There has been a significant improvement in the Larah margin

from single digits last year. This has come through a combination of improved efficiencies at

the factory, better product and pricing mix, and scale benefits. We expect a further

improvement in margins through improved logistics cost once the new warehouse is

operational.

Borosil registered a PAT of INR 52.7 crores - a growth of 7% over the previous year. Once again,

the PAT growth lags the growth in EBITDA, primarily on account of lower treasury income as

the company has deployed funds towards expansion and modernization of its plants and

building a new central warehouse. This is in line with the company strategy of spending more

or investing more in its operating assets and reducing the amount of treasury that the

company holds as reserve.

In other developments, the process of restructuring of the Borosil group is making progress.

The NCLT has directed for getting approval of stakeholders. In fact, the meetings are on today

and tomorrow. We expect the process to be completed by the second quarter of FY 20 but the

caveat is that some of the activities are beyond our control in terms of timeline.

Coming to medium term outlook, the company as I mentioned crossed a net revenue of Rs. 500

crores in the previous year. Ours is a fairly complex business with multiple channels, multiple

customers and multiple products. Even the manufacturing is complex with multiple processes

for each product. At INR 500 crores many of these processes are set and as we grow, the

company expects to benefit from the robust base it has created and from scaling its operations

from here. We embarked on initiatives to create new pillars of growth. While some

experiments have failed as one should expect, many of our bets have played out well. We

called the shift away from plastic early and believe there will be a strong momentum towards

increase in the penetration of glass storage in the kitchen and adoption of high quality steel

products for on the go storage. Opal ware is becoming a serving ware of choice for consumers

— a mass daily use product. Larah is well poised to participate in this category and is expected

to grow well in the next few years. The company envisages a multi-year runway of growth both

in opal serving ware, and in storage products. The penetration is still low. At this stage

therefore the company will focus on increasing sales and reinforcing the equity of its brand.

During the last year our investments in advertising and sales promotion were more than 10%

of sales of the consumer products business. Products and designs can give us an advantage in

the near-term. In the long run, only a strong brand will be a true differentiator. Given our view

on the long-term opportunity, this investment is higher than the industry average. Apart from

mass media, we also are allocating a large budget to social media. We expect to continue to

invest in our brand building over the next few years although with scale the investment as a

percentage of sales will reduce.

In the scientific products business, while lab glassware shows steady growth, the new avenues

of exports, Labquest and Klasspack will improve the growth trajectory. Our blended revenue

CAGR is expected to move up to the high teens while achieving higher numbers in the

immediate term. EBITDA margins will expand as the company gets scale benefits and absorbs

its overheads on a larger base. We expect to improve EBITDA margins between 15 and 20%

over the next 2-3 years and thereby begin our journey of improvement in return on capital employed.

- We have begun the current year, FY 20 on a confident note. My team and I are working

towards building a sustainable business by focusing on being customer centric, servicing

customers' needs with the best solutions while maintaining our operations more efficiently to

deliver scale, profitability and optimal returns on capital deployed.

Thank you for your patient hearing. I am now happy to take questions that you may have.

MODERATOR:

Sure thank you very much. We will now begin with a question and answer session. Anyone who and '1' on their touchtone telephone. If you wish to remove wishes to ask questions press (cid:9) yourself from the question queue, you may press (cid:9) and '2'. Participants are requested to use handsets while asking questions. Ladies and gentlemen, we will wait for a moment while the question queue assembles. To ask questions you may press star and 1. There's the first question from the line of Danish Jain from Asean Capital, please go ahead.

Mr. Danish Jain — Asean Capital

Yeah hi, sir, we have three questions. In the SIP business the growth was 5%. Could

you give us some details on the outlook?

SHREEVAR KHERUKA— MD & CEO, BOROSIL GLASS WORKS LIMITED

So in the long run as far as lab division is concerned, we have forecasted an 8 to 10 %

growth trajectory and I would continue to say that this is the likely outcome for the

company at least in the medium term let's call it.

Mr. Danish Jain — Asean Capital

And my second question is on retail. Sir, many companies have state partners like Big

Bazaar, Walmart etc. Now Reliance Group is focusing more on expanding stores and

opening stores in maximum cities. So does the company see any opportunity from this

initiative.

SHREEVAR KHERUKA— MD & CEO, BOROSIL GLASS WORKS LIMITED

Certainly. I tell you all retail is undergoing a revolution in our country with

E- Commerce as well as large format stores. And the company would absolutely

benefit from this opportunity to expand our retail presence. And we work with most of

the major large format stores as well as E-Commerce platforms. We work closely with them. And so, if they expand, we would certainly expand with them.

Mr. Danish Jain — Asean Capital

And my last question is on, sir, the demerger. In last quarter the company mentioned,

the demerger process would get completed by around Q1 '20 and in this quarter the

company mentions that it will be completed by Q2 '20. So, there is a possibility it may get delayed further or will you complete this process by Q2'20?

SHREEVAR KHERUKA— MD & CEO, BOROSIL GLASS WORKS LIMITED

I think we should be able to complete by 02 '20. However I would like a caveat by

saying that we are not in control of the timelines because the matter is with the

courts, the NCLT. It depends on their decision for the matter. So, while we are reasonably confident we should conclude by Q2 '20, that's not a guarantee that we

can give to anybody. It may get further delayed by a couple of months or even further.

Mr. Danish Jain — Asean Capital

Okay, thank you, sir. Thank you very much.

Moderator

Thank you. A reminder once again to participants that you may press star and 1 to join

the question queue. The next question is from the line of Rakesh Jain, please go ahead.

Mr. Rakesh Jain

Hi, thanks for the opportunity. Sir, my question pertains to Klasspack Ltd. Could you

elaborate more on the wastage issues during production that you were talking.

Because I see that, in the last whole financial year - from the last 3-4 quarters there is

negative profitability when it comes to Klasspack. And the EBITDA margins for the full

year have deteriorated from 13% to 6 1/2 % while the revenues have grown by 15 %. So

are these client quality related issues or is there anything with respect to pricing. Could you elaborate on that?

SHREEVAR KHERUKA— MD & CEO, BOROSIL GLASS WORKS LIMITED

Yeah sure. When we acquired Klasspack, the key challenges in front of us were to improve the customer base of the company and go to what we would call a Pharnna

Plus or the top end of pharma customers. Which we have been able to do successfully.

That's the reason why the revenues of the company have been growing fairly well for

this kind of business for the last two years. Now associated with going to the new

customer or you know the higher end customers, the expectations of quality are also

much higher. In that process we have had to improve our production processes, install

things like cameras, inspections, clean room etc in our plant. And the normal trend is,

and this is a worldwide trend - when you first install cameras and you have, clean rooms in the plants, the rejections go up. And as the people get trained on how to

improve the quality, how to improve the productivity, then you see a normalization of

those returns. So, we are in that phase. Unfortunately, it can't be avoided. But I do

expect that in the coming year, we should have an improvement in the margin

Mr. Rakesh Jain

Just a follow up on that, what do you expect in the next coming year when it comes to

your profitability, and secondly how far has the rejection rate gone down until now.

SHREEVAR KHERUKA— MD & CEO, BOROSIL GLASS WORKS LIMITED

See I can't specifically give you the data, but I can share that with you in general I

would expect the profitability to rebound at least to the level that it was year before

like you mentioned 13% as against 6 and 1/2. I would at least expect it to bounce back to

the 13% level. Then once westabilize then go up further from there. As you know, the

benefits of the new customers that come in that you have larger orders, more stable

business. Then you get more scale benefits which we hope to achieve. So, over a

period of time it will definitely improve even beyond 13%. Maybe to the high teens -

that's our expectation in the future.

Mr. Rakesh Jain

And are you expecting more Capex also?

SHREEVAR KHERUKA— MD & CEO, BOROSIL GLASS WORKS LIMITED

We have added some Capex and we will continue doing that because like I mentioned, we need to install camera systems, we need to enhance the productivity and

production of some types of products. So, at the margins, yes, we will definitely have

some Capex and most of it will happen in this year. Then after that I think for the next

couple of years the Capex should reduce.

Mr. Rakesh Jain

So should we expect that at the net level also we can see some profitability returning.

SHREEVAR KHERUKA— MD & CEO, BOROSIL GLASS WORKS LIMITED

That is our desire but I hope we can achieve that.

Mr. Rakesh Jain

Okay, and second question is about our debt levels which have spiked up in the last

financial year. We were earlier a very conservative company with high cash and using

internal accruals and now we are going towards debt. So, can you explain a bit about

what is the strategy we are following towards our balance sheet.

SHREEVAR KHERUKA— MD & CEO, BOROSIL GLASS WORKS LIMITED

As far as in the past is concerned, we had much cash in the books and I had already

shared that our strategy had been, we've seen many opportunities for operational

growth and using cash on the balance sheet to leverage those opportunities. For that

reason that cash is reducing. Some increase in debt is for working capital. And so,

these are natural outcomes. A business that has to grow at 20 plus % every year will

definitely need to utilize cash flow from, our balance sheet. But we are not very

aggressive, our issues are well within control. We are in fact very minimally levelled even today compared to the size of our operations and to our balance sheet size. So, I

am not too concerned about it. We are not likely to substantially increase our debt in

terms of any fixed or term debt at the moment.

Mr. Rakesh Jain

Okay, okay. What could be your ASP spend for next year? Would it be similar to this

year or slight lower?

SHREEVAR KHERUKA— MD & CEO, BOROSIL GLASS WORKS LIMITED

No, it will be higher.

Mr. Rakesh Jain

It will be higher, should be higher than this year.

SHREEVAR KHERUKA— MD & CEO, BOROSIL GLASS WORKS LIMITED

Yes, absolutely.

Mr. Rakesh Jain

Okay, so great sir. Thank so much. And all the best.

Moderator

Thank you. Before we take the next question a reminder once again to participants.

You may press star and 1 to join the question queue. The next question is from the line of Kashyap Zaveri from M K Global, please go ahead.

Mr. Kashyap Zaveri, MK Global

Hello.

SHREEVAR KHERUKA— MD & CEO, BOROSIL GLASS WORKS LIMITED

Yes.

Mr. Kashyap Zaveri — MK Global

Thank you very much for the opportunity. I have got three questions; one, at

Klasspack, we have now done a turnover of roughly about 42 odd crores, what's the

spare capacity? Would we need to expand those capacities? Question number two, is

on the consumer ware business in the standalone entity, I see that EBITDA margins

have contracted significantly versus last year. So, in terms of A&P could you quantify

how much the margins have been impacted by that. And third question is, what is the

total amount of material that we sourced this year from Vyline.

SHREEVAR KHERUKA— MD & CEO, BOROSIL GLASS WORKS LIMITED

Okay, as far as Klasspack is concerned, we are doing some capex expansion. We are

doing Rs 42 crores revenue or thereabouts in my view at around 65% of our capacity

utilization. We are expanding capacity and we also expect a better capacity utilization

going forward. But I think once we have undergone this round of Capex, unless something drastically changes in the market, I don't think we will be doing further

capex for a year or two after that. And we will try and improve our capacity utilization

to maybe 80%.

As far as the A&P expenses are concerned as I have already mentioned, our A&P

expenses are more than Rs 36 crores for the consumer division. So that's primarily the reason for a lower EBITDA margin in general in the consumer division.

And as far as s purchases from Vyline is concerned, I don't have the data with me right

now, but I would be happy to check it out and come back to you on that.

Mr. Kashyap Zaveri — MK Global

Sure, but this A&P expenses would also include expenses on Larah also, right, the Rs

36 crores.

SHREEVAR KHERUKA— MD & CEO, BOROSIL GLASS WORKS LIMITED

Yes, yes.

Mr. Kashyap Zaveri — MK Global

So on standalone basis where, you know, margins have contracted to 10 and 1/2 to 7.7 for this year versus for FY '18...

SHREEVAR KHERUKA— MD & CEO, BOROSIL GLASS WORKS LIMITED

Much of the spend has been on the Borosil side this year.

Mr. Kashyap Zaveri — MK Global

So for this contraction, is the A&P largely the reason or is there anything else in terms

of pricing, competition, something else.

SHREEVAR KHERUKA— MD & CEO, BOROSIL GLASS WORKS LIMITED

No, in my view it is the main reason, while of course there is a lot of competition and it

continues to be so. At the gross margin levels, we are quite okay. We are stable.

Mr. Kashyap Zaveri — MK Global

Right, so this year we spent roughly slightly more than about 10% on A&P in total in consumer ware. In FY20 would this 10% remain more or less the same number?

SHREEVAR KHERUKA— MD & CEO, BOROSIL GLASS WORKS LIMITED

It may go to 11 or 12%. It will definitely be more than 10%. It may go on to 11% or

12% depending on the opportunities. The last 1 or 2 percent is hard to predict. If we

spot an opportunity, we may quickly go for it.

Mr. Kashyap Zaveri — MK Global

Sure, sure, that's it from my side thank you very much, sir.

Moderator

Thank you.

The next question is from the line of R. Narayan from Midas Advisors. Please go ahead.

Mr. R. Narayan — Midas Advisors

Hi, sir, thanks for giving me this opportunity. On these standalone financials when I

come to the segment breakup I see the scientific ware segment has come down for

this quarter sequentially both year on year. Any reasons for that?

SHREEVAR KHERUKA— MD & CEO, BOROSIL GLASS WORKS LIMITED

Yes, as I explained IndAS has got applicable for this quarter, but was not applicable in

Q4FY18. Now the month of March is a big month for us in the scientific division. It has very high sales. So if you look at 04 last year INDAS was not applicable whereas this

year it is applicable and as a result of that the growth in both the top-line and the

bottom-line look depressed.

Mr. R. Narayan — Midas Advisors

How much would that be, sir?

SHREEVAR KHERUKA— MD & CEO, BOROSIL GLASS WORKS LIMITED

If you remove INDAS the sale was Rs 59 crores against 56 crores for the year before.

And the margin would have been the same in terms of the percentage. The growth in

margin would also have been about 7%.

Mr. R. Narayan — Midas Advisors

Okay, sir, and for the consumer ware how much would have been the volume growth

and how much would be a pricing growth.

SHREEVAR KHERUKA— MD & CEO, BOROSIL GLASS WORKS LIMITED

That's very challenging to say because we have so many different segments in which

we operate. Most of it is actually volume growth and very little in terms of pricing

growth.

Mr. R. Narayan — Midas Advisors

And has there been any competitor activity in terms of selling our products or cutting

margins or selling prices etc.

SHREEVAR KHERUKA— MD & CEO, BOROSIL GLASS WORKS LIMITED

See, like I said before we are a multi channel, multi product, multi region player, so in specific channels, specific products and specific regions you may find some of that happening. But on overall basis our gross margins have more or less been protected

for the year. So, while in some areas you do find competition and pricing pressure, in

other areas it is not so much. It is a mix and it is hard to make a general statement on

the same. Overall, we are quite comfortable with the current status of competition in

the market and also with our current pricing in the market. I am not seeing any

substantial pressure there.

Mr. R. Narayan — Midas Advisors

Do you see any demand related channels in terms of the general consumption

SHREEVAR KHERUKA— MD & CEO, BOROSIL GLASS WORKS LIMITED

Honestly, I do realize elections are going on and people are talking about demand

being impacted. That people waiting before making purchases, although frankly I do

1 0

not see that on the ground. Now things may change from tomorrow. I don't know but

so far, I have not seen any impact really.

R NARAYAN — NS ADVISORS

Sure sir. And sir with regards to the scheme, I was just looking at your presentation. The

consolidated EBITDA is 80 crores. And you have mentioned that Vyline EBITDA would

contribute about 14.4 crores. Is that correct? So, if I had to look at the proforma figures, we

would look at somewhere around Rs. 85 crores EBITDA right?

SHREEVAR KHERUKA — MD & CEO, BOROSIL GLASS WORKS LIMITED

Rs 80 crores does not include Vyline EBITDA. So Vyline EBITDA is on top of the Rs. 80 crores.

R NARAYAN — NS ADVISORS

There is a 14.4 crores EBITDA separately for Vyline. So 80 plus 14.4 will be the proforma

EBITDA for the consumer company?

SHREEVAR KHERUKA — MD & CEO, BOROSIL GLASS WORKS LIMITED

No consumer and scientific put together.

R NARAYAN — NS ADVISORS

Okay. And what would be the proforma PAT that we would be looking at?

SHREEVAR KHERUKA — MD & CEO, BOROSIL GLASS WORKS LIMITED

Proforma PAT?

R NARAYAN — NS ADVISORS

Yes.

SHREEVAR KHERUKA — MD & CEO, BOROSIL GLASS WORKS LIMITED

So Vyline's PAT would be somewhere around 6.4 crores. So 52.7 plus 6.4.

R NARAYAN — NS ADVISORS

Perfect sir. As on date I could see about Rs 680 odd crores in your treasury side. What is the

kind of capex we would be looking at to deploy these investments?

SHREEVAR KHERUKA — MD & CEO, BOROSIL GLASS WORKS LIMITED

So honestly speaking a lot of those are shown as investments but are actually loans which we

have given from Borosil to group companies. For example, investment in Borosil Limited. Much

of the acquisitions and expansion has been funded by these loans. So a lot of the investments

are already operating assets. I think net cash surplus in the company would be about Rs 125

crores.

R NARAYAN — NS ADVISORS

And what is the kind of capex you are looking at for the next 2 years?

SHREEVAR KHERUKA — MD & CEO, BOROSIL GLASS WORKS LIMITED

I think about Rs 75 crores in this year.

MODERATOR

Thank you. The next question is from the line of Akhil Parekh from Elara Capital. Please go

ahead.

AKHIL PAREKH — ELARA CAPITAL

Thanks for the opportunity. My question is on the Larah side. You mentioned that we did some kind of improvement at the client level and improved the efficiency. Would you be able to

elaborate more on it, like what kind of changes we have done and how it has led to better margins.

SHREEVAR KHERUKA — MD & CEO, BOROSIL GLASS WORKS LIMITED

Certainly. We actually did this last year. So, we had invested about Rs 70 odd crores, on

upgrading our plant and buying best in class technology to improve our throughput. That

investment seems to be paying off. Our plant efficiencies have improved with the scrap ratio

having reduced. Our select ratio has increased. Quality has improved.

AKHIL PAREKH — ELARA CAPITAL

Okay.

SHREEVAR KHERUKA — MD & CEO, BOROSIL GLASS WORKS LIMITED

At the furnace the capacity has gone up. So, all of that put together has resulted in this

improvement and what's more, I expect this to improve further going forward because a

lot of

that improvement came after Q2 of last year. This year we will see a full year's impact of that benefit.

AKHIL PAREKH — ELARA CAPITAL

Okay. And remember like couple of quarters back you had mentioned that our power and fuel

costs for the plant is around 8-10% on a higher side as compared to our competitor. Has that been normalised now?

SHREEVAR KHERUKA— MD & CEO, BOROSIL GLASS WORKS LIMITED

No. That is challenging for us to normalise because the cost per unit is driven by government

and not by us.

AKHIL PAREKH — ELARA CAPITAL

Oh okay, okay.

SHREEVAR KHERUKA— MD & CEO, BOROSIL GLASS WORKS LIMITED

So that is very challenging for us. Let's call it a competitive disadvantage that we have.

AKHIL PAREKH — ELARA CAPITAL

Okay, okay. And we buy it on spot price basically, this power?

SHREEVAR KHERUKA— MD & CEO, BOROSIL GLASS WORKS LIMITED

We have some open access. But mainly you can consider spot price only. Mainly spot price.

AKHIL PAREKH — ELARA CAPITAL

Okay, okay. And in terms of channel wise sales would you be able to give some number on it?

SHREEVAR KHERUKA— MD & CEO, BOROSIL GLASS WORKS LIMITED

I have given that in the past. I have given that in the past. And there is not a material change. In

fact, if you go through the presentation it is provided there.

AKHIL PAREKH — ELARA CAPITAL

Okay I will check that. And for LFS sales is there any return policy or is it once we sell it, the

distribution...

SHREEVAR KHERUKA— MD & CEO, BOROSIL GLASS WORKS LIMITED

We don't do it on consignment if that is your question. Once sold it is sold.

AKHIL PAREKH — ELARA CAPITAL

Okay, okay. And maybe if you can please elaborate on how is the competitive scenario in the

opal ware segment given that only 3 players are there and there is a huge opportunity for this segment to grow maybe in terms of pricing cut or anything has taken place in the last quarter

or maybe last year or so.

SHREEVAR KHERUKA— MD & CEO, BOROSIL GLASS WORKS LIMITED

In general, the competitive intensity has increased over the last 2 years because earlier there

was one player, now there are three.

AKHIL PAREKH — ELARA CAPITAL

Correct.

SHREEVAR KHERUKA— MD & CEO, BOROSIL GLASS WORKS LIMITED

So, in that sense there has been an increase in competition and therefore pricing has not

increased. But it has not reduced that much either. It's in line with expectations. And the key

point is like you said the market is large and there is a lot of scope for growth over here. And

each of the three players have their own room to play and will continue playing in that space.

Although I don't think we will see too many more players coming in. That's my guess because

there is enough capacity now in the country to cater to country's needs.

AKHIL PAREKH — ELARA CAPITAL

Okay. And we are not planning to expand our capacity at this point.

SHREEVAR KHERUKA— MD &CEO, BOROSIL GLASS WORKS LIMITED

We are looking to first be 100% utilised in terms of our capacity and then we will consider the

expansion.

AKHIL PAREKH — ELARA CAPITAL

Okay. How much is the utilisation rate right now?

SHREEVAR KHERUKA — MD & CEO, BOROSIL GLASS WORKS LIMITED

It's about 75%.

AKHIL PAREKH — ELARA CAPITAL

75%, okay. And one last question if you can share the return on capital employed for this

particular segment.

SHREEVAR KHERUKA— MD & CEO, BOROSIL GLASS WORKS LIMITED

Well I don't have it with me at the moment. But it will be a part of our next call for sure.

AKHIL PAREKH — ELARA CAPITAL

Okay, okay, alright. Thank you so much.

MODERATOR

Thank you. The next question is from the line of Naitik Modi from OHM Portfolio. Please go

ahead.

NAITIK MODI — OHM PORTFOLIO

Yeah hi, thank you for the opportunity. Firstly, on the consumer side, on the standalone entity

on Borosil Glassware, there is a 39% growth. Can you share the breakup for if you can for

product wise category sales for the standalone?

SHREEVAR KHERUKA — MD & CEO, BOROSIL GLASS WORKS LIMITED

Sorry I can't do that.

NAITIK MODI — OHM PORTFOLIO

Oh okay. And in terms of the gross margins for Borosil Glass as well as Hopewell, Borosil Glass I

mean the consumer ware segment — can you share the gross margin numbers?

SHREEVAR KHERUKA — MD & CEO, BOROSIL GLASS WORKS LIMITED

Sorry I can't do that.

NAITIK MODI — OHM PORTFOLIO

Okay. And then in Hopewell you said that the utilisation is about 80%.

SHREEVAR KHERUKA — MD & CEO, BOROSIL GLASS WORKS LIMITED

Yeah 75 -80% in that range.

NAITIK MODI — OHM PORTFOLIO

75 - 80%. So what is the peak that you can do with your current capacity?

SHREEVAR KHERUKA—MD & CEO, BOROSIL GLASS WORKS LIMITED

We can go to 100%. No problem.

NAITIK MODI — OHM PORTFOLIO

Sure. Will that suffice for the next couple of years or you intend to have a...

SHREEVAR KHERUKA— MD & CEO, BOROSIL GLASS WORKS LIMITED

I think it should suffice for this year. And then towards the end of the year we will take a call on additional capex.

NAITIK MODI — OHM PORTFOLIO

Alright, thank you.

SHREEVAR KHERUKA — MD & CEO, BOROSIL GLASS WORKS LIMITED

Thank you.

MODERATOR

Thank you. The next question is from the line of Arun Maroti who is an individual investor.

Please go ahead.

ARUN MAROTI — INDIVIDUAL INVESTOR

Thanks for the opportunity sir. Would like to know about the inventory level sir which has gone

double in this year.

SHREEVAR KHERUKA — MD & CEO, BOROSIL GLASS WORKS LIMITED

Yeah. So look as part of our strategy we expected the first quarter to be a good one. And we

have built up inventory for April to June because we are anticipating a good demand and that is

the main reason to do the same. And that is something we are watching. But it is not

something that we are concerned about at this stage. We have also added new product

categories such as domestic appliances and steel bottles in hydra range. So when we add new

products typically inventory goes up. Also, there were some regulatory changes in the

appliances category for which we needed to get inventory before the end of the year. So those

are the main reasons which are contributing to the inventory increase. But it's not something

that I am at the moment concerned about. It is actually good that we have that buffer so we

can have better sales in the first quarter in this year.

ARUN MAROTI — INDIVIDUAL INVESTOR

Okay sir. And my second question is about the other expenses which has gone up drastically in

this year. Would you like to highlight the major heads?

SHREEVAR KHERUKA — MD & CEO, BOROSIL GLASS WORKS LIMITED

So like I said mainly this advertising and sales promotion which has gone up by Rs 12 or 13

crores. And then there are some investments which we sold on which we realised some losses.

And the corresponding income of those investments were shown in other income. There is

always a difference in the EBITDA from operations which we look at while discussing business

performance and the EBITDA reported in the published accounts. We have tried to highlight

this in our investor power point presentation. Besides there are expenses related to our

merger demerger amalgamation scheme. We have some costs associated with that. Some of it

which has come in this year and some of it will come in the next year. So those are the major

reasons.

ARUN MAROTI — INDIVIDUAL INVESTOR

Okay sir. Whether that impairment of investment was related to IL&FS or something....

SHREEVAR KHERUKA — MD & CEO, BOROSIL GLASS WORKS LIMITED

No, no that was not related to IL&FS.

ARUN MAROTI — INDIVIDUAL INVESTOR

Okay thanks a lot.

MODERATOR

Thank you. Before we take the next question we would like to remind participants that you

may press * and 1 to join the question queue. The next question is from the line of

KashyapJhaveri from Emkay Global. Please go ahead.

KASHYAP JHAVERI — EMKAY GLOBAL

Yeah hi. Just wanted to check on Hopewell. This quarter despite not being the peak revenue

quarter for that business, our EBITDA margins were still pretty strong at about 19.5-20% for the

quarter as such. I understand 02 for this business is the peak quarter and Q3 being still higher

than Q4 also. So would this margin be sort of base line margins for that business for next year?

SHREEVAR KHERUKA — MD & CEO, BOROSIL GLASS WORKS LIMITED

Yeah that's what I was hinting towards the beginning. Somebody asked a question about

margins in Hopewell. What's happened is we started the new furnace in February last year.

And it took maybe 4-5 months for the operations to improve and stabilise. And so, the first

quarter last year, I am talking about 01 2018-19, was impacted. Whereas the fourth quarter

was the best in terms of margins, in terms of operating performance. So even in spite of the

lower sales owing to the traditionally weak season in Jan to March, we achieved better

margins. And I would hope that that becomes a base line for us going forward.

KASHYAP JHAVERI — EM KAY GLOBAL

Okay. And second question is on your A&P spends. Out of Rs 36 crore would you be able to

break it up between A&P?

SHREEVAR KHERUKA— MD & CEO, BOROSIL GLASS WORKS LIMITED

It's mostly A.

KASHYAP JHAVERI — EMKAY GLOBAL

Okay.

SHREEVAR KHERUKA— MD &CEO, BOROSIL GLASS WORKS LIMITED

More than 70% would be A. P would be 20 - 30%.

KASHYAP JHAVERI — EMKAY GLOBAL

Okay. Okay. Sure sir, thank you very much sir.

MODERATOR

Thank you. Participants who wish to ask questions may press * and 1 on their touch tone

telephone.

As there are no further questions, I would like to hand the conference back to the management

team for closing comments.

SHREEVAR KHERUKA— MD &CEO, BOROSIL GLASS WORKS LIMITED

So thanks once again to everybody for participating and asking your valued questions. Just to

close, I would say we are very confident on the year that's to come. On all aspects of our

operations we expect growth in terms of top line and operational improvements in terms of

profitability. So, I look forward to chatting with you all again after the quarter one results are

through. And hopefully that will be with even better numbers. Thank you. Bye-bye.

MODERATOR

Thank you very much. On behalf of Prabhudas Lilladher that concludes this conference. Thank

you for joining us ladies and gentlemen. You may now disconnect your lines.

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Borosil Glass Works Limited has informed the Exchange regarding 'Transcript of Institutional Investors and Analysts Conference Call held on May 14, 2019'.

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