ORIENTBELL

[Regulatory cover note] OBL:HO:SEC:00: New Delhi : 23.01.2024 BSE Limited National Stock Exchange of India Ltd. Corporate Relation Department Exchange Plaza, 1st Floor, New Trading Ring Plot No. C/1, G Block, Rotunga Building, Phiroze Jeejeebhoy Bandra-Kurla Complex, Towers, Dalal Street, Bandra (E) Mumbai - 400 001 Mumbai-400 051 Stock Code - 530365 Stock Code: ORIENTBELL Sub: Audio Recording of Post Earnings Call for Un-audited Financial Results for the quarter and nine months ended 31st December, 2023 held on 23.01.2024 Dear Sir/Madam, In furtherance to our letter dated 18.01.2024, please note that the Post Earnings Call has been held today i.e. on 23rd January, 2024 at 05:30 P.M. (IST). Pursuant to Regulation 30 of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015, the link of the audio recording of the said Post Earnings Call is as under: https://server.orientbell.com/media/investor_investor/q/3/q3fy24_obl_call.mp3 The audio recording of the Post Earnings Call has also been uploaded on company’s website at www.orientbell.com under below path. Investor Relations>Disclosures under Regulation 46 of SEBI (LODR) Regulations>Audio or Video Recording of Post Earnings/Quarterly Calls. Kindly take the same on record. Yours faithfully For Orient Bell Limited Yogesh Mendiratta Company Secretary & Head - Legal [Investor-call recording transcript] Ladies and gentlemen, good day and welcome to the Orient Bell Limited Q3 and 9 months FY24 earnings conference call. 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 this conference call, please signal an operator by pressing star and then zero on your touchtone phone. Please note that this conference is being recorded. We have with us today on the call from the management from Orient Bell Limited, Mr. Aditya Gupta, Chief Executive Officer and Mr. Himanshu Jindal, Chief Financial Officer along with Stellar IR Advisors. The management will be sharing key updates and financial highlights for the quarter ended December 31, 2023, which will be followed by a question and answer session. Please note that some of the statements made in today's discussion may be forward looking in nature and may involve risks and uncertainties. Orient Bell Limited will not be in any way responsible for any actions taken based on such statements and undertake no obligations to publicly update these forward looking statements. Documents relating to companies financial performance are available on the website of the stock exchanges and the company's investor section. Just you have been able to go through the same. I now hand the conference over to Mr. Aditya Gupta for his opening remarks. Thank you and over to you, sir. Thank you. Good afternoon, ladies and gentlemen, and welcome to our quarter three FI 24 earnings conference call. It has been another tough quarter for us with the marketplace being sluggish and a challenging operating environment. There's no doubt that the top line in this quarter has not been up to the mark. We still have some positives in Q3. Our community savings have increased to 30% and we now do 50% of our sales in vitrified. With this reflect the fact that our investments at DORA have now started contributing towards the unification of our product portfolio. The DORA investment has come at the right time as consumer preference is rapidly shifting from ceramics to GVT. Our contribution margins have improved, gross contribution margins have improved both on a sequential and year on year basis. In the six years we have launched an aggressive mass media outreach making our presence spread across the country covering nine languages. With a disproportionate focus on south and west where we have significant headroom to grow, our TV campaign reinforces the strategy of making tile buying and selling easier by focusing on a unique price discovery tools, visualization, and a wide product range. In our research, consumers identify these benefits as most relevant to them and our telecommercial builds on these benefits. Our dealers and employees are seeing an increase in quality and footfall and we are confident that this will help us with linearization objective and to grow our top line. We are confident that our message will be heard across the nation and we will eventually help in increasing demand in the coming time as in when the demand for tiles pick up which we hope will come over the next few quarters because the real estate cycle comprising of land acquisition, cement, steel, pipes, electrical, cables, etc. and tiles is one of the last products which is used up in this cycle. When this happens we will be ready with our increased capacity and our brand fuel in demand and of course improved distribution channels. Each campaign has come at a significant cost for now but we have decided to take the financial hit head on and continue to invest in building our brands so that when the markets turn fully positive we would be able to gain disproportionately. With this I request our CFO, Himanshu General for the Financial Updates. Over to you. Good afternoon all. Aditya mentioned this was a very tough quarter which is the case. So we obviously had challenges on the volume development largely ceramics which kind of dragged profitability but at the same time we had a few positives as well. Aditya mentioned about a contribution margin expanding and this is exactly what happened on a Y-O-Y or a sequential basis. You have both the numbers in our IR deck up to two and a half percent and this is primarily led by A, the lower energy cost on a Y-O-Y basis. Incidentally gas costs have marginally moved up sequentially but we had enough opening finished course inventory which kind of ensured that we were hedged at least from a quarter free perspective. There is also improvement in our consumption efficiencies which is something that we have been focusing on and there is also an improvement in the product mix which GBT cell is going up by seven percent which kind of justifies the investments that we have now made in Dora. Secondly there is also higher allocation to support the new TV campaign and the brand X that we are trying to build here. So we have spent 7.1 percent of our revenues double the run rate of our ongoing investments and marketing largely digital was what we were doing earlier and like I mentioned we have kind of expanded our horizon and gone to TVC now. A bit on a like for like basis after excluding the impact of these higher marketing branding investments was 7.8 percent which is 4.8 percent so a little higher than what we had in quarter two which was 3.8 percent. So quarter three cash flow from operations was kind of pulled back to fund these increased investments reported a bit of dust being rupees 1.3 crores which we had while we had reported consolidated back loss of 3.4 crores now. YCT December we still are carrying a consolidated back loss of around the same amount. More balance sheet support has been extended in quarter three specifically to support sales so we have been doing it all this while. We have done it more now in quarter three. So credit to markets have been opened up further and our inventories have also been stucked up primarily to support additional GVT from Dora for our thousand best operations. Despite the increase on DSO and DIO working capital cycle is still intact it's around 26 days for quarter three and while we do have a small debt coming into our books now for the GVT capex that we undertook. This ensures that we still have enough headroom to quickly adapt for scale up as and when more and more opportunities become available again to gain RMS. With this I think we can ask the moderator to open the lines for Q&A. Thank you. Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchstone phone. If you wish to remove yourself from the question queue you may press star and two. Participants are requested to use handshifts while asking your question. Ladies and gentlemen we will wait for a moment while the question queue assembles. First question is from the line of Shubham Upadhyay from micro gap minute. Please go ahead. Thank you for the opportunity. Am I audible? Yes please. My first question is how do you see the gas cost in near term future? My second question is the company has taken an additional 16 crore net debt and how much will be used to fund the Dora capex? How much of the fund will be used for it? Shubham your first question first. Gas cost and no one knows to be honest. We have seen gas cost going up this quarter. There is a 3-4 rupee increase which has come into play. I think across locations except in Dora where we already have APM. That is number one. You are aware of the geopolitical crisis that is there across locations. The geopolitical crisis is something that you already are aware of. How much would it impact crude or natural gas? Anybody's guess is at the moment. Crude and natural gas are unaffected so far. There was a bit of a spike coming in early Jan. Since then largely okay offshore, I don't think there is anything which is happening immediately for sure. Whatever happens to the check points as I call them in the global trade you and me don't have a control there. Let's see how things develop there. More importantly now coming to the debt. Yes debt has gone up and this has been done for this particular project, the Dora project. There are still some payments which are supposed to go out. You might have seen our investor release the presentation that we have uploaded to Stock Exchange. Largely my debt is all long term. It is like I said to fund the Dora GBT project. Okay so 100% of the debt which recently has been taken up is for the Dora projects only or is it going to like marketing and investment? No, no, no, no. You see my total net debt is around 36-37 of which 35 is my long term loan for the Dora project. I've got moratoriums, I've got etc. involved there but more importantly only one or two crores on working capital. Like I said, I've always been very efficient on working capital despite giving the support on credit and putting in more and more stocks into our factories. So that I'll continue to do. That is something that is go to us. Yeah. Okay, thank you. That answers my question. I will get back in with you. Thank you. The next question is from the line of Darshit from Robo Capital. Please go ahead. My audience. Yes, please. Yeah. So taking my questions. So firstly, my question is quite general. I just wanted an overview or you can call it an internal target or anything like that or for revenue growth going forward next one or two years and by what time will we be able to and will we be able to get to the 9-10% margin that we've been doing and if yes, then by which quarter? Repeat your first question. The first part of the question, please. Yeah. So revenue growth. Second part was about margin. I think more of the questions are linked. So I'll try to answer them as one, this thing. Of course, we expect we have been adding capacity in the last two, three years. We have invested a lot of money to convert line-to-tuities at GVT capacity and this is keeping in mind an expectation that the volumes are going to improve. In the short run, we have suffered because the drop in ceramics, which used to be 60-70% of our business a couple of years back, has been much more steeper than the ramp up on GVT. But this is something which is going to have a lesser and lesser impact on us because as I already mentioned, we are sitting at now 50-50 in terms of the which defines ceramic split. Having said this, coming to the margin piece, you might have already spoke about gas and the uncertainties and all which could be there. So I'm not getting into that. It will happen for everybody in the industry. For us, operating leverage is extremely critical. So as we grow revenues, there would be an immediate positive swing in our margins. We have already seen how we have, our gross margins have been increasing once you already spoke about that in this opening statement. Substantially from, say, from quarter two of this financial year to quarter three. Okay, great. And like so, margins will improve and the key drivers would be, first of all, revenues if they grow and second would be the gas price, right? That should let me try and simplify this for you. So you asked two questions. Let me try and put it in my own words, right? You know that you've added some seven and a half million capacity over the last two, three years, yeah? Yes. Alcove, which has actually come in, actually in quarter three, yeah? So 3.3 of the seven and a half is coming only now in quarter three. So these are largely, you know, let me say headphones for future growth, yeah? So we have invested our own money and yes, we borrowed a little bit too to build up capacities. And the, let me say, the rankup of these capacities was undersized at a particular rate. Unfortunately, it hasn't happened for multiple reasons, external, internal, and we are working out solutions. So this will happen over a period of time and with that scale comes into play. That should help. More importantly, on rust profit margins, obviously, you know, one is the price side of things. The other is the cost side of things, right? You are largely in control of your own cost more in terms of consumption parameters. Get it? So this is something that we have been controlling and this is why you see our results improving. Even if you wish to compare us with competition, which I love to do internally for our own cells to know where we are, the service all put together, you would generally see over the last 10 odd quarters that our rust profit margins have not been bad. You know, they are amongst the top one or two results. Yeah? So I think this is what we intend to do always unless there are exceptional reasons, things that we can't control. EBITDA is obviously a number that most of us track, but you know, I think I focus more on free cash flow generations, right? And for me that is critical. This is something that we have been monitoring very well since the time at least I came on the table and you know, we were doing some calculations at our end just to see how good or bad are we and we realized that over the last four and a half years, you know, we have paid down our debt, we have built up more capacity, we have invested into branding and we have done whatever else is needed, whether it's payment of dividends, interest, taxes, etc. All of that cash flow is still pretty robust, even counting in the bad times that we have seen over the last two or three quarters now. So it's all double digits, more than 12%. I think that is what we need to focus on and this is what we are focusing on. Does it help you get a better perspective of what we are trying to do here? Yes, yes. Very nice. And thank you for the detailed explanation and all the rest for the future. Thank you. Thank you. The next question is from the line of Miraj from Arihant Capital. Please go ahead. Thank you for the opportunity. Aditya sir and Iman Chasar. Nice speaking to you again Iman Chasar. I have a few questions so the operator can ask me to get back in the queue but I have a lot of questions. Firstly sir, in terms of demand I wanted to understand that as per our guidance the ceramic side of business is drawing down the margins while on the vitrified side we've now reached 50% of the business of the volumes and if I were to look at our capacity utilization it comes around to 43%. So what I am pursuing from this is that there is a fall in demand of ceramic and rise in demand of vitrified but can't we fasten the process of vitrified sales over here because the capacity utilization seems low compared to what the commentary actually is. So capacity utilization I don't know where you are getting the number from Miraj our capacity utilization for quarter three were very close to 65%. Just to give you an understanding of where this industry is today even in quarter three last Morbi was operating around the same levels for most of the year actually. So industry capacity utilization have also been very low. When I say capacity utilization I mean without adding stocks selling in the market. It is obviously not optimal and we should aim for 1995%. This is very clear and this is what we are working on. Maybe others I can share on the demand side as to how he is seeing things happen. So Miraj, the trend that you are talking about of ceramics slowing down and the market preferences moving towards vitrified sales is absolutely right. That trend is happening and accelerating. Also with a lot of price competition from Morbi today a vitrified tile would be available to a dealer at a rate at which he was buying say a ceramic tile two years, three years back. That is also speeding up the adoption of vitrified or the replacement of ceramics with vitrified. Our organic capacity leaving aside the two JVs associated by JVs we have is almost two-thirds ceramic and one-third GVT. Our GVT utilization capacity utilization are much higher than what overall capacity utilization are. We have on the GVT piece also which is the growing part of the market we have considerable headroom in terms of capacities to grow especially after the start of Dora GVT last quarter the new line there. So I think from that perspective we are well positioned for growth once the market turns back and some of our challenges we have been able to resolve. Okay so of the 36.9 million square meter capacity that we have one-third is GVT. So since there is more demand on GVT is it possible for us? No Meeraj just let me correct you please that 36.9 million square meter includes our associated entities out of that 37 million by own manufacturing capacity is 30 or 30 or so million per 27 million out of that 27 it is basically very broadly one-third capacity. So maybe just to add a little touch the 10 million capacity that we have with our associated entities please do appreciate that these are minority GVTs that have a minority state there ranging from 21 to 26 percent. So we are not really the active partner in that GV but yes we have a right of refusal in terms of taking all the product that they produce. Right? There are supplies but we are not really on the driver's seat there. So I think there are two GVTs that we have and one of them is for vitrify test for ceramic so what is the break between them the breakup between them out of 10 million. Okay so proton both of them are almost equal size one produces like you rightly said vitrify double charge largely the other produces volatile which is what we use to what we use for our south and west operations the almost equal size. Understood okay and sir still so yeah I there was one mistake on from my end and yeah the volume is 65 percent the capacity utilization how quickly can we ramp this up to our optimum utilization because I believe that the demand is just looking at the commentaries from real estate companies and addressing companies in building material segment I believe that the demand should start coming in now or you know any time now so do we need to there are two parts to this question first is that do we see the need to add any more other associate company and the other part is that how quickly could we ramp this up to our optimum utilization so so Mirage first yes I agree with you that real estate sector has started you know moving up and we see we see a lot new projects being launched every day real estate prices have been going up very nicely for the last one year or so but keep in mind that tiles coming right at the fragment of our real estate project when it is being delivered it is one of the last two months of the three or four year project life that tiles have been used so a lot of these projects are going to add to the demand maybe next year maybe maybe two years from now depending on when they were actually launched so that's point one secondly in terms of capacity I don't know whether you have been checking out with say Moby if you were you would find that about about 50% of the units in Moby have been closed in December and in January and the trend continues in January so there is a challenge on the demand side a short term challenge on the demand side because for one exports December is not the best of month for exports and since then the freight rates the cargo freight rates have dramatically gone up so exports are being postponed people are waiting for the freight to kind of cool down a bit and so it's a bit of a wait and watch and that's why a lot of capacity and Moby today is also standing idle so difficult to kind of give you an exact time frame of when this capacity will bounce up but I think all of the parameters in terms of real estate consumption in terms of the number of months which are happening across the country and all are in the positive direction so my question was more towards that if I were to look at my peak capacity utilization I believe 85 to 90% is something that we can do please correct me if I'm wrong here so that is the first part 85 to 90% if it is heated to deliver 85 to 90 I know the demand part you are saying that it is a bit slow right now but let's say if it were to spring up back again let's say in the next quarter itself are we ready to deliver 85 to 90% utilization and secondly sorry yes we are so this capacity is not this capacity is available to us these are all manufacturing units and also capacity is available at a very very short in a matter of weeks it can be turned up we have in all our units long term gas connections from India limited so we do not have any issues in terms of supply of natural gas and capacity utilization can be ramped up in a matter of weeks understood and if you were to add any other further associate to keep us more balanced in supply on the supply front whenever the demand comes in are we evaluating any players on that front and the associate side see Miraj we keep evaluating options why only an associate may be a full buy out also but there are challenges in the sector you know most of the players that you need to indulge with you have to check the product offering that they have what are the synergies that could be coming into play with you and the partner on the other side so there are things that we always keep discussing internally if there is something which is happening I'm sure we'll come back on all organic opportunities that we exploited in our own plans we did inform markets at the right time the moment we were going live so there is anything like this happening I'm sure we'll come back to you and tell you transparently something has been now agreed on understood what is the average gas cost for the quarter for the plants if you could just mention that so gas cost for the quarter would be just around 50 on a blended basis just around 50 if I were to count my blessings on the alternate views that we use across locations again for rupees or 5 rupees cheaper understood and in the month of Jan till now how have it been is it up or down no it's pretty flat pretty flat you know there is now no surprise for now understood so the marketing campaign that we started we've this quarter we've seen almost two weeks from what we were doing earlier in my ad so for how long are we planning to run this and with the target that we have what kind of revenue are we aiming over here so are we aiming to increase our geographical revenue particular from a particular geography or a particular category okay so we started the campaign was launched the first week of December to answer your first question we continue we will continue this campaign through quarter 4 and we have a study decided we want to build up the brand immediately for orient bell and this is something which we shall continue to do in the next financial year also so it is not a one-off initiative it is something which the company will continue to invest in in the future also that is point number one point number two you talked about any specific geographies so yes I mentioned in my opening comments also that we have advertised in nine languages and of course five of them are the South Indian languages the four South Indian languages and we have spent disproportionate amounts in South India on TV disproportionate to our current sales with a strategy to build up volumes going forward as you know the Dola new line is something which we have made for South and West markets only the new line which we had made in Hoskote about a year and a half back is totally South focused could you break down what is the Dora the new Dora lines utilization for the last quarter sorry to interrupt may we request you to rejoin the question as there are several other participants waiting this question is from the line of Keshav Vijay Ratan Lahodi HDFC Securities please go ahead hello hi thank you for the opportunity on the principle the demand side how will the domestic demand be impacted because of the actually the ocean rates are rising so we will make to higher dumping by Modi in domestic market and secondly how has been the situation from Modi dumping last quarter Keshav line was not very clear so what I have understood is you are asking about the export outlook currently is that what the question is yeah export also and how will it impact the domestic demand okay fine so I look at the rates have gone up I mean Dubai container was kind of used to be available at almost zero cost today it is 400-500 US dollars there is across markets freight rates have really gone up so there is a lot of postponement of exports which is happening because the buyers are looking for the freight to kind of come off before committing cannot say when this will be sorted out but as we speak situation on the export front on the freight channel is not very good how it impacts the domestic market is clearly there is a certain portion of that capacity production capacity which was export oriented which starts dumping stocks in the domestic market so that does happen it happens every time so it is a clear negative for the for the domestic market in terms of dumping by some of these guys we have seen some sequential improvement in gross margin so what are the key reasons for that is it product mix or how should we see that so Himanshu has spoken about it and if you want to repeat that hi Keshav Keshav largely two or three reasons playing out one like I said gas costs have come down both sequentially and on a yy basis this is clear more importantly I think we spoke about consumption efficiencies last year same time there were challenges now those have been ironed out over the last two three quarters we are also saving money out of whatever projects we built up to support power and fuel efficiency so all of those are now paying off and therefore with the product mix also improving all of that is helping today and therefore the gross profit margins are better than where it was but otherwise also try and look at my gross profit margins on a quarter to quarter basis and on a yy basis for the last 10 quarters you will get an answer that we are generally among the top two in the industry overall last question from my side quite an interesting ad campaign launched zero percent sale if you want to understand that what are the key areas to understand you know the process of this aggressive marketing strategy what is in your mind is it rising into what kind of gaining market share you see going forward okay Keshav so so the objective of our ad campaign first and foremost is to build up brand awareness so we have been manufacturing and selling tiles for almost 5 decades now and this is an area where we have been laid and that's why we took up this we took up this as a strategy that even for us even the markets are down and the top line is not too good we wanted to go out there and start investing to build it up so the long term objectives of doing this campaign are to clearly create a differentiated brand image for orient belts as a company which makes tile buying and selling easier which makes a choice of choosing a particular tile or design of tile or type of tile very easy and comfortable for the customer but how should we see let's say from the point of view like what would be the KRA to see whether the campaign is going as planned by the company means what sort of maybe possibly higher reactions you'll be able to charge what sort of better growth we should see from one or two years perspective Keshav I understood you correctly are you trying to ask us what is the KRA that we have said for our marketing guys for the campaign what is the idea to judge whether the things are going as planned so Keshav the campaign is about 6 weeks old now there is we keep evaluating it once every couple of months and all so to start with there are very clear goals in terms of the reach and the frequency and the opportunity to see and the frequency in all the key markets which is basically amongst our target audience of 30 plus age, male and female this thing how many people have actually seen our advertisement so that is clearly objective number one we keep evaluating that keep measuring that as the time data TV audience measurement data keeps coming out and kind of keep adjusting whether you want to spend more or less in a particular market change channels and stuff like that so that is the delivery part of the campaign the second from the business perspective we expect the campaign to have an impact on the website traffic that we have you know idwell.com is one of the pioneering websites and we have multiple awards for this website over the last four years not just the time industry but within the business industry so we expect organic traffic on the website to go up dramatically we expect the number of leads which come to us through the website to go up dramatically and finally all of this has to result in a certain grand change which is what we measure 176 months question would like to remind participants that you may press star and one to ask a question the next question is from the line of Rohit Suresh from Samatwain investments please go ahead hi good evening and thank you for the opportunity so my first question is based on your commentary in the last quarter the blended gas price for us and for the industry so it has come on the same level which previous few quarters ours was a bit higher compared to the industry and second was that you said that the price drops that you had taken they were actually some you know growth in terms of volumes through the price that you had taken I just wanted to know why has in spite of being on a similar path in the industry in terms of gas pricing as well as the price drops why has the volume uptake been a bit low I understand the external factors but is there internally something where you feel like you are missing out and there is some scope for improvement so Rohit definitely there is scope of improvement and this is the question that we keep asking ourselves all the time there are two main reasons which I would like to kind of point out one I have already spoken about which is higher than industry dependence on ceramics products historically we have reached as I said we are now 50-50 in quarter three between ceramics and vitrify but if you look at some of our competitors or most of our competitors you will find that this ratio would be more of 1730 or something like that so this is one thing ceramics are kind of being replaced with vitrify so we have had a bigger impact on our top line so that is one reason a second reason which I think is there which is something which we are putting solution in place for is this year has been a year of high attrition for us much higher than what we usually had and this has kind of slowed down this is impacted top line generation this is impacted market working and all so these are two reasons which I would say are unique to oriented current have you lost market share in our like key geographies because of the high attrition or market share loss so right yes the H1 results are available for our competitors for quarter three we are the first one to come up with in H1 yes some of our competitors have grown faster so obviously there is a market share loss unfortunately the industry is not mature enough to have you know region wise or state wise market share this thing but yes overall H1 was a time when we did lose market share and now with the new GBT capacity coming up on speed in quarter three actually the capacity came came up in September that there was a lot of new testing, new products being developed and finally in the month of November we were able to start selling from the new line so with all of this happening we see attraction not slowly coming back got it so just one question one more was that historically in FY21-22 when gas prices were on an increasing trend we used to get some benefit over the competitors right so now with gas prices increasing at least from 40 to 50 in the last quarter and if it's on an upward trend will we expect a similar benefit on our margins hard to comment on with right now this is obviously way beyond our control in terms of how the gas prices will evolve past trend yes you were right you know see they are linked more to spots so if spot spot is actually very very volatile so if it goes up like anything you know you can expect anything to happen there correct in our case we are more insulated in terms of having a long term linkage where there are pricing formulas agreed already as a comment so in quarter through 3 also when we saw our gas prices going up a little gas prices also went up by the same proportion that's the reality what happened in quarter 3 with us and Morbi got it sir and what would be the price gas price in Morbi right now should be you know so gas price or the propane price there on equivalent gas terms is more or less similar I think 46-47 in that range 45-47 comment sir and this one last was on are gas or are we using biofuel or is it so we are using biofuel so we are using biofuel in one of our plans not all right now because of the economics okay okay got it sir and lastly on the capacity utilization at Dora the previous participant that also asked that is that numbers of course so I think it would not be a right so we give a blended capacity utilization out Rohit wait for some more time as in when capacity is ramped up we will be in a more comfortable position sharing these numbers see we do not want to give that split out for obvious reasons yeah we are building up the plan today we are building up our salience in south and west I do not think this is the right time to share numbers at least on a regional basis yeah wait for some more next I am sure we will come back to you guys at some point thank you so much and wishing you all the very best thank you okay thank you question is from the line of Madhur Ratil from counter-cyclic investment please go ahead thank you for the opportunity sir we wanted to understand the 7.1% of the our marketing revenue as a percentage of sales so this will continue as a percentage of sales for FY24 and 25 or the amount will continue for FY24 and 25 no no so see I think it is constant in this world right a single day is dynamic so what we are marketing spend we have been doing in the past 3.5% roughly yeah give or take here or there it has been ramped up for reasons because obviously we were starting it for the first time and we wanted to pan India reach out to support our salience over a period of time for brand-building yeah brand recall and we will see how these investments play out Aditya did mention a lot about these already so there is nothing more that I can add but yeah if these have to be ramped up or we can you know this is something that we can agree on depending on how the situation is okay sir so I understood what what was the motive behind this investment I'm just trying to understand for the next 18 months so like from the 3.5% will we see it going to 5% or is there some kind of figure in our mind so you can say 5% could be normal for OBL at least for these the ultra short term short term types okay sir my second question would be sir our revenue from trading has been on a constant like on a similar lines when it was so where do we see this going so with our new capacities coming in do we see trading revenues going getting lower going forward no I don't see trading there are products that we don't manufacture please keep that in mind our own manufacturing capacity that is what Aditya mentioned you know 60-65% of that is actually pure ceramics so I and there is only GBT 35% so I may need more GBT I may need more I may need more commodity products coming in from trading it's a tap that has unlimited potential so you know so we will try and use it wherever we can to be able to give customers what they want okay that was from my side sir thank you very much and all thank you participants may press star and one to ask a question from the line of KShark from CounterCycle please go ahead then I am trying to understand that even though we have reached the percentage of advertisement and sale promotion expense from 3.5 to let's say 5% of their abouts now the question is about the effectiveness of that spend so how do we evaluate that at whatever money we are spending so because our top line is only not growing so at the top line been growing then the shareholders would not have mind minded that sacrificing the margins but here we are sacrificing the margins also without anything to show for the top line so what are your thoughts on that KShark these investments have just started now whether they are doing good or not we get to know over a period of time right so please appreciate we were working with you know so when I joined this company we started doing the 3.5% on digital marketing people used to ask me whether this will work or not how do you know right and very well to be honest but I think immediately post COVID when the opportunities came in terms of people wanting to buy I think the solutions that our team had built came into play and we were able to realize what we intended to realize growing better than the industry we realized over the last 1.5 years that our competition is spinning a lot on these other things that we were not doing on branding and therefore we have taken a plunge and committed to ourselves that yes let's build the brand recall let's go ahead and invest and therefore we are doing it and there are like Aditya mentioned there are KPI for the marketing team as well to be able to deliver what they intend to deliver or what they have been brought into deliver which is to generate demand yeah so let's be patient I know there is no possibility for me to give you guidance on how this will pan out but hopefully with markets coming back with all these interjections we are doing internally with our teams you know we know our weaknesses it's not that we don't but nothing can be sorted out overnight right so allow us some time some breathing space and ensure over the next 1 or 2 quarters you start seeing results yeah this is what we hope for so basically shareholders can expect something over the next 1 to 2 quarters either mostly on the top line side this is what we hope for yeah obviously underlying market dynamics also have to be looked at we are the first ones to report results this time let's see what is the results you know we have not done very well in the first half this is also very very clear so let's see where competition is and how do we want to now play in the market sir and if we are trailing 12 month numbers our profits operating profit is even less than the covid period covid year of FI 20 sir and I mean it's lower than what we did in FY 11 so I mean if we look at the rest of the industry things are not sluggish but they are not so bad in the rest of the industry so is there anything from what you have already alluded to about the brand building etc sir is there anything else where we are doing something sir kisha I think you know you and me both are finance guys we understand free cash flow much better instead of what we report on EBITAS for whatever reasons correct you know there are a whole lot of provisions there is a whole lot of other things that happen in those numbers and you know my free cash flow numbers you know whatever I've run to build cafes to do debt repayments to support branding all of those numbers are there and I think I elucidated on the call in this call rather today that you know in the starting first of April 2019 my free cash flow generation to support all these activities that I've done has been close to 12-13% in this kind of an industry yeah bare minimum I don't think that is bad you know given what EBITAS my peers make I listed I'm listed all put together right so we have not done that badly you know yes there have been quarters where we have done so good and yes the expectations are much more which is very very clear again so like I said you know instead of focusing on EBITTA EBITTA number I think you know right now for the moment what makes more sense is how much volumes are we doing what is my gross profit margins and what is where is my free cash flow am I heavily borrowing in the market or am I still strong right on the balance sheet front I think that should be more of a guiding spirit between now till you know for the next one or two quarters for sure and then we'll see how to position ourselves there on make sense sorry I missed you said something Kishor thank you very much and best of luck thank you thank you no further questions from the participants I would now like to hand the conference over to Mr. Aditya Gupta for closing comments thank you everybody and no questions now so we are closing this earnings call thanks for joining thank you