Thanks, Dhanesh. Hi everyone.

Good evening, and thanks for joining. We have with us senior management of Kajaria Ceramics, including Mr.

Ashok Kajaria, Chairman, Mr. Chetan Kajaria, Vice Chairman, Mr.

Rishi Kajaria, Managing Director, Mr. Sanjeev Agarwal, CFO, Kartik Kajaria, Head Adhesives Business, and Praveen Gupta, Vice President Finance.

I would request Ashokji to start with the initial remarks, post which we will have a Q&A session. Over to you, Ashokji.

Thank you, Dharmesh. Good evening everyone.

It gives me great pleasure to welcome you to the quarter 3 FY26 earnings conference call of Kajaria Ceramics Limited. Joined me in this conference call is the senior management team of Kajaria Ceramics.

In quarter 3 FY26, our consolidated revenue is flattish at rupees 1168 crores compared to the corresponding quarter last year, mainly due to no growth in tiles volume and absence of price sales due to closure of that division. EBITDA margin in quarter 2 FY26 is 17.2%, plus 442 basis points against 12.78% in the corresponding quarter last year.

However, EBITDA dropped by 74 basis points sequentially as compared to quarter 2 FY26, mainly because of lower sales realization as we gave some discount in order to reduce our SKUs. In Gurgaon plant, we have converted one unit with a capacity of 9.1 million square meters from ceramic floor tiles to glazed vitrified tiles to move towards value-added products as per prevailing market demand scenario.

With Kajaria 2.0, our transformation journey has begun, and we remain confident about sustainable value creation going forward. Now for this quarter segment-wise financial performance: Tiles segment remained flattish year to year at rupees 1030 crores in quarter 3 FY26 compared to rupees 1040 crores in quarter 3 FY25.

Maxx segment registered a 9% growth in revenue, reaching 103 crores in quarter 3 FY26 compared to rupees 95 crores in quarter 3 FY25. Revenue from Adhesives grew to 35 crores in quarter 3 FY26 as compared to rupees 20 crores in quarter 3 FY25.

EBITDA improved by in quarter 3 FY26 to 17.20% as compared to 12.48% in quarter 3 FY25, plus 442 basis points, but dropped by 74 basis points sequentially as compared to quarter 2, mainly because of lower sales realization. Profit before tax from KBL, exceptional items and tax for the quarter grew by 49% to rupees 165 crores in quarter 3 FY26 as compared to rupees 111 crores in quarter 3 FY25.

PAT for the quarter grew by 13% to rupees 88 crores in quarter 3 FY26 as compared to rupees 78 crores in quarter 3 FY25 due to adjustments of exceptional items of rupees 39.64 crores in quarter 3 FY26. As of December 25, the working capital days increased by 8 days to 64 days compared to 56 days on 30th September 25, mainly due to increase in receivables and decrease of other current liabilities.

With this, I take the opportunity to thank you for joining us today. Over to moderator for Q&A, please.

Thank you.

Hi, thank you for the opportunity. I think can you give some sense how is the unification working on volume and margin front?

Last call we were hopeful that some volume growth we will see because of unification. How are things moving?

Secondly, how should now we see margin going forward? The regulation cut which you have taken, is that just for this quarter or will we see this impacting next quarter also?

In terms of volume, the market scenario was weak, and also we did destocking of inventory at the dealer's end, we could not grow in this quarter three. Going forward, we see positive shoots going forward for growth.

What also happened was that we've been churning a lot of dealers. With all the unification happening, a lot of tail-end dealers are going out.

Some dealers are adding in. A lot of churning is happening, cross-selling is happening because of cross-selling between the dealers.

A lot of dealers were only probably working with one vertical where we are giving them other tiles as well. All that is happening.

Also we liquidated a lot of our stock, a lot of SKUs had increased. All that happened last quarter, and because of that we remained flattish.

January looks a little encouraging, and we should be okay from here.

Got it. Sir, on the margin side, how are things moving?

Can you give some more color what sort of margin improvement we can see? Maybe it's a few quarter we have started this strategy.

Margins will remain between 17 to 18%, somewhere in that band. That should happen.

We are already there. The juice out of unification on margin is already out.

You need to say no more dealers are left. That is a fair assessment.

So, Even if the margin increases, we'd like to pump it back in the market in terms of advertisement. Our focus will be more on increasing our sales and maintaining the margin.

Understood. Got it.

Last question from my side, the ad spend for this quarter?

Ad spend for last quarter, October to December you are asking?

Yes.

We spent roughly 24 crores in quarter three. Spent around 24 crores.

Thank you.

Little lower than the Q3 of the previous year, but in the fourth quarter we intend to increase it much higher than Q3.

Got it.

Overall ad spend in the year would be lower as compared to the last year because we have not done one annual dealer meet we used to do in Thailand. That we have saved around 5 crore rupees.

We have negotiated well with our existing advertisement vendors. We have ignored some areas where we were not finding some value.

Optically advertisement will look lower this year, but the value we will be getting for what we have got last year.

Hi, good evening, team. Thanks a lot for the opportunity.

Just a couple of questions now. Firstly, on the last con call you mentioned that your cost-cutting measures are on, and we can see quarter-on-quarter margin improvement, and that was at the point where your margins were around 18-odd percent.

If I heard you correctly now, you are saying that margins will remain under 17 to 18, and you will be passing on the incremental benefit to gain market share. Is there a change in strategy again?

Yes. In this quarter, the margin is 17-plus, despite around 220 or 240 percent drop in the selling price.

Our cost optimization journey is continued, and further we have not stopped here. We have taken some low-hanging fruits, but we have identified some areas where we will be working in this quarter and the whole next year the journey will continue.

As Rishi has said, that this quarter there is a drop in selling price because of liquidation of some inventory. We have a lot many SKUs because of the multiple divisions.

The SKUs numbers have gone very high. We are in the process to reduce that.

That is the reason we gave some discount. That is the reason for the lower realization, and for the lower sale, the reason is, as we explained, I'm just repeating it, because there was some deal stocking happened at the dealer's level, suppose one dealer is a ceramic exclusive dealer.

We have stopped supplying ceramic to him. We are saying, now we will not give ceramic; you have to take some GVT.

Some retailer is GVT. It takes time for a dealer to change his display, because he has been displaying all GVT.

He has to display his ceramic, or ceramic dealer is displaying ceramic; he has to display GVT. It's a big change in the corporate.

It is taking time, but we are very sure after this correction we emerge as a very strong and very process-driven company. Not only that, we are in the process of improving, the fraud happened in the company.

We are revisiting, we have appointed a forensic auditor also, Ernst & Young we have appointed. They have yet to give the report, but prima facie, because I know this question will come again, I'm answering.

The fraud amount is not beyond what we have stated earlier. That is there, and we are doing our process audit also, all the processes we are getting it audited.

You will be happy to know that we have found all systems are working very strong, except that subsidiary, that was an unfortunate incident. Still we are in the process of further strengthening the system.

We have changed all the signing power. Even the chairman cannot sign, or even I cannot sign a 10,000-rupee check single.

Understood. That's excellent to know, sir.

Sir, you also mentioned that you are changing SKU reduction. Could you speak more on it in terms of how much inventory levels could reduce because of that, or properly, what's the SKU reduction looking like, and can that have any impact on sales?

See, what was happening was, because as you said, the different verticals, ceramic, GVT, PVT, there was a lot of commonality in the products. That is what we are doing.

We are reducing the SKUs. The plants are more efficient, and because of that this was the issue of this quarter only.

A lot of our work is done. We are emerging out much stronger in terms of our plants also and in terms of efficiency of the stocks also.

Understood. Lastly, on the growth front, firstly we've seen some amount of exports inch up during first six months, but like you mentioned that you were doing all of these SKU reductions because of which you did not see growth.

What's your outlook now probably for next quarter or next year in terms of demand growth? How are you seeing your volume shaping up in terms of tiles?

That's one. Secondly, even in terms of bathware, you have hired a consultant.

You mentioned that last quarter we seen around 9 percent growth this quarter, how is that shaping up and what's the outlook for that segment also next year?

Sneha, in the first part, as we said, January is looking positive and encouraging, and we're seeing a positive growth going forward from quarter four onwards. The same will be both in tiles and sanitaryware as well.

Sanitaryware, we're definitely looking at a double-digit volume growth from here. And

anything on the tiles front, could we hear some numbers for the month of January, or probably some guidance there in terms of volumes?

It's early to give the numbers, but yes January has been a little encouraging.

Thanks team. All the best.

Thank you.

Thank you for the opportunity. My first question is regarding Morbi.

Could you help us understand how things are shaping up in terms of are the exports back on track? Are they still creating a lot of pressure in terms of domestic market pricing, etc.?

Hi, Sonali. Indian tile exports have experienced a 20 percent fall in value in FY25 to 16,000 crore due to increased freight rates, energy crisis, and the ongoing geopolitical disturbances.

In quarter three, we exported around 4,000 crore from the country approximately. Let's see if the trade deal with the U.S.

is positive, and it will result in increased upliftment of exports also. Sonali, it's not actually getting any pressure in the domestic market because a lot of these plants are closed in Morbi.

If the sales don't happen, they close their factories. It is very difficult for them to sell in domestic market off and on.

Sir, I would just like a little bit of this point. You're saying that the factories in Morbi are closed right now?

Since when?

What I'm saying is if the exports go down, a lot of factories in Morbi are only export-based. When the exports come down, they close down their factory, because it is very difficult for them to liquidate that material in the domestic market.

Understood, got it. Secondly, on gas pricing, any indicator?

What has been the gas pricing in Q3 for us across regions if we give? How do you expect the gas pricing to go forward?

Sonali, in quarter three, the gas pricing has been average of 37 rupees, North was 38, South was 38, and West was 37. Going forward also we expect it to remain stable, but there will be a slight increase of one rupee going forward in quarter four.

Got it. Just one last question, would you like at this point to give any kind of volume guidance for FY27?

No guidance as such. We just want to do our job and we'll work for the best.

Got it, sir. Thank you very much.

I just wanted to get your outlook on the growth front, since you have mentioned that with 2.0 you will be going ahead with all the measures which you have already taken and all the measures you will be taking, where does the growth factor comes in? What kind of growth we can achieve in the next two, three years?

Double digit, higher single digit, lower single digit? Obviously, it depends on the market, but still, yeah.

As you said, this was a year of correction, and January has been positive. Yes, next year we are definitely looking at a good value growth.

Can you just quantify it? Not exactly, but higher double digit, single digit, lower single digit?

It is difficult to quantify. We do not want to quantify it.

We are looking at it in a very positive way. We are getting a very positive feeling for the next year.

And

there will be some growth in the revenues and margins will be in the similar range, 17 to 18 percent?

Should be around that, because as I said, the first country, cost optimization will continue, and when there was an exceptional dip in this quarter,

that is not there. Maybe here in the next quarter it may continue in this quarter as well.

From the next year onward, we will be a very lean company in terms of SKUs, and our all dealers will be unified, which is still under process. We are working.

Heer will honor. He is doing it in an old fashion.

We are all doing it digitally. We are working a lot on digital things.

Not only that, we are hiring good people. We are hiring at least three to four C-level people, which we will disclose when they join, within the next one or two months.

We are strengthening the company all the way, and growth will be a result of the improvement in the system. When the long tail of dealer we have identified, white spaces we have identified.

When we do the right thing, growth has to come automatically. Despite the number one company, our market share is very less.

Even if the industry doesn't grow, which has happened in the past, the industry didn't grow, but we took the market share, and we are hopeful that next year onward we will continue to repeat our old time and take the market share significantly. So

just wanted to know what exactly are the points you are focusing on this Kajaria 2.0, and how you are utilizing the cash balance in order to increase your growth ahead, or to support the...

So

for the sales strategy, what we are doing is, as stated earlier, one, we are talking about cross-selling of the dealers. Earlier dealers were working in only one vertical.

Now they are adding second and third product lines as well. Second, we are putting a major thrust on the architect and interior designer community.

This we were not focusing much earlier on. We are making a very solid team all over India, whose job is only to service these architects and interior designers and get our products approved.

Government is another sector that we are working on as well, where we have a strong government team also to do this. All these initiatives, the work will happen.

If you can answer how we are utilizing the cash balance.

Sorry, my internet. No problem.

We have said many times, we are not going to do everything. We are just lying in the balance sheet, and we don't see major capex in next one or two years.

Maybe if we continue, keep the cash and may increase the dividend and all, I can't say at this moment, but we don't have any major capex in the future. We don't see any capex in the...

So

cash balance may increase going forward.

Thank you.

Hi, good evening, sir. My first question is regarding the pricing scenario in the bathware portfolio.

I just wanted to know, have we taken any price hike recently or plan to take any price hike in faucets and sanitaryware both? If you can specify how much price hike we are planning to take in both.

So

yeah, we have. The brass price has really increased, and the entire industry has taken a price hike, and so have we.

From 19th of January, we have taken a price hike in the faucet products to about 8 to 12 percent, and sanitaryware we'll plan to take a price hike probably from 1st of March.

Sir, how much price hike we are planning to take for sanitaryware portfolio?

Not that much. There the cost has not increased that much, but we'll take a call.

We're still working on a pricing strategy.

Okay. Second, sir, on the tiles realization front, if we see for our own manufacturing product, the tiles realization for us, it has fallen from 401 square meter in Q3 of FY23 to right now at 365 square meter.

We have seen a decline of close to around 9 percent. If you can help me out, when we can start seeing improvement in our tiles realization, sir?

For that we're doing, a couple of things. As we said, even the architect interior designer team, they will also help us sell in more value realization tiles.

See, prices of tiles are not increasing in the market, with so many players there. The only way forward is that we have to sell more of value addition.

It's difficult to again calculate and tell you what is the price realization going to be, but it should not go down from here. The way we are working, I think we'll maintain it, and slowly it should go up.

And

we have converted one line of ceramic of 9 million in Jaipur plant in GVT. That should also

help in improving the realization. That reduces the bottom line further.

Okay. Sir, lastly on the capital allocation part, we have already mentioned that we are not planning to do any major capex.

If I see our tiles own capacity and plus JV capacity has gone down from 92.5 million square meter to 82.5 million square meter over the past 18-month period. We are operating at almost full capacity.

Whereas if we see two unlisted peers in Poland, Boroboda, are almost doubling their capacity. Just wanted to know whether our conservative capital allocation is not likely to result into any loss of market share for us in the coming quarter's time frame?

No, market share loss is not a situation at all. There is enough capacity available at Morbi, at very good competitive prices for us to outsource from them and sell in the country.

We also have a very substantial production capacity built in. Whenever we feel the need, we can always expand.

Right now we don't feel the need to do it. Our capacity, that way, if you see, with all our stock, we have a good capacity, 82.5 million.

The rest of the players are still in a much lower capacity than us.

Fine. Sir, if you can just specify what is the share of our institutional sales in December quarter versus last December quarter?

So

roughly our share is 70 percent in retail and 30 percent in projects. This projects includes government projects also and private projects also with builders, basically.

That's it from my side, sir. Thanks a lot.

Thank you.

Thank you for the opportunity. My question is, as you had mentioning that a lot of cross selling, you are emphasizing to your dealer.

Now where we are in the journey within the dealers, 100% of that has been achieved or 70%? Where we are right now?

I would say about 70 to 75% is already done. Rest will all happen in this quarter.

That does not mean that we will not grow in this quarter. We will definitely grow as well in this quarter, and the remaining journey will also happen, so that next year when we start the next financial year, we will be in a very, very solid position.

Good to hear that. Second question is, as realization on sequential basis has been down, but your gross margin has improved.

Is there some cost related to the RM as well, some rationalization happened? What exactly happened there?

As I said, the cost optimization journey continues. If the sales realization wouldn't have dropped, the margin would have been much higher.

The

margin, 17-plus margin, is despite the drop of 250 or 240 bps decline in the sales realization.

No, sir, right you are. I am saying that your realization has down, gross margin has improved actually sequentially.

Gross margin is a function of realization and the RM. Is there some...

Yeah. Have you taken the gross margin?

Have you taken the power and fueling?

No, sorry, what? Yeah.

Hello, sir. What you said?

Sorry?

Most of the analysts are not taking the power and fueling in the consideration.

No, not power and fueling.

Yeah. You have to include power and fuel in the stores and spares, then as compared to Q2.

Q2, Q2 FY26 was around 36%, and even this quarter it is 36%. To be very precise it was 37% in Q2 FY26 and in this quarter it is 36%.

For that you have to take raw material, trading purchase, and power and fuel and stores and spares.

Sir. Okay.

Yeah. Thank you for answering my questions.

Thank you so much for the opportunity, sir. I just want to know from a long-term industry structure perspective, when do you believe that Indian tile industry reaches an inflection point where organized players start gaining visible market share from Morbi or unorganized players?

When do you think the long-term industry...

Hello?

Just repeat your question for everybody. Yeah,

yeah. My question is from a long-term industry perspective, when do you believe Indian tile industry reaches at the point when organized player gaining visible, sustainable market share from Morbi or other unorganized players?

That Kajaria, Somany, like players will gain the momentum.

See, two things are happening. One is GST has changed a lot of perspective.

Earlier, as we all know, there was a lot of problem on various fronts. With GST two things have happened, everybody has become part of GST, almost you can say 80% of the industry are in GST.

Some here and there is still being done at Morbi by underpricing, as you all know. GST is a big game changer.

With the process of time what will happen is the branded players today, you see housing is going up. People prefer good products, as you all know.

With the change of time, the branded players will be more preferred compared to Morbi. Even in Morbi some people are emerging as branded players, like Varmora and Simpolo.

I think over a process of time, it's a time which will tell, but things will happen whereby the current share of the organized is about 40%, the share of Morbi is about 60%. I would say about two years' time or three years' time it will be 50-50.

Great, sir. Great.

Thank you. Thank you, sir.

Thank you so much.

Hi. Very good evening, sir.

Sir, before the unification, I think the pricing, dealer schemes and incentives for ceramic, PVT, GVT would have been different, right, for all three segments. Now given the unification has happened, has that been aligned, and are the dealers now comfortable understanding the pricing and scheme structure?

Yes. Just to answer that question, with effect from 1st Jan, we have aligned the pricing in ceramic, GVT and PVT, make the discount structure very similar.

When a sales team goes to a dealer, it's very easy for them to explain what are the various schemes and pricing structure of all the three verticals, and also aligned and set the policies to a great extent. It's all performance-based.

It has become simpler post-unification rather than it was pre-unification.

When I talk to dealers, what I hear is that the earlier person who was handling three segments, three products separately, because of different schemes and structures, it's still getting difficult for them to understand the new pricing and schemes, and hence they are still contacting the older sales managers to place orders. Any thoughts on this?

This happened from 1st of Jan. It takes, let's say, a month, two months' time for them to absorb and get in the market also, and once it's explained to all the dealers, it will all become very simple and transparent for them to understand the new systems and the policies.

Okay. Is it possible to do certain central meeting with all the dealers and explain them this, or how does it work?

How are you communicating this with your channel?

We can't do a central meeting because every geography and zone is different. You cannot get 800 dealers on a call together because the pricing and systems are different, schemes are different for various zones, North East, South West.

It's all being told to the dealers by the people on the ground, and we've had some meetings with dealers in various pockets to explain them what the new scheme and policy is.

I understand that, of course. It has to be more regional-driven kind of effort to communicate.

Got it. Very clear on that.

Secondly, when I look at the production breakdown, it's 6 million square meters per quarter is what you report as the joint venture production. Just wanted a clarification.

These joint venture production are entities referred to which region? Is this largely Morbi and South Asian Ceramics?

Yes, the joint ventures are three in Morbi and one in South Asia. Four plants are joint ventures.

Right. Over here...

Sorry. One of the subsidiaries, in the board meeting, we have taken approval to acquire 10%

of the joint venture, make it our wholly-owned subsidiary.

It will not be a joint venture, and even the joint venture, we have increased our equity significantly. The ultimate aim is to acquire the balance and merge it with Kajaria Ceramics going forward and

run it more efficiently.

Right, that was the precise question, that incrementally this 6 million square meter per quarter or 24-25 for the full year will actually move to own manufacturing, and there will be no JV production breakdown available. Is that correct?

That's right. Never as we go along, we'll take a call.

As we said that out of four JVs, this quarter we have taken the permission to convert it into a wholly-owned subsidiary. Like that as we go along, but we still own majority of the shares of these JVs, 80-plus percent in Morbi.

All the JVs, we have almost 85 percent-plus equity, and we are running the plants. South Asia is about 60 percent.

60 percent. They are only operating as plant.

Earlier it used to be JV, in real JV, because these people, our partners, used to run the plant. Over a period of last couple of years, we have taken the management control,

and

they are just shareholder, but we are running the plant.

Absolutely, I completely agree. That's what I was wondering, that since we own majority and now the endeavor is to own majority and 100 percent ownership, it should all move to own manufacturing versus joint venture.

I agree.

Now it is tax efficient also, suppose some JVs are having losses, so that is not getting any benefit, and in Kajaria, I am paying tax. Once we merge everything, there will be no related party transaction, no tax issue.

It will be very clean system of working going forward.

Absolutely, got it. Last question was on discounts.

The discounts, was it region-specific, or it was pan-India offering from your side, like the SKU reduction, which happened?

SKU reduction was plant-wise, across the country.

Across all plants across the country, and across the country plant-wise and dealer-wise as well.

Got it. There is nothing to do with abnormal inventory, right?

Because when I look at September balance sheet, the inventory was fine. What is this related to?

This is more of cleaning up of our own plants. We are making our plants more efficient.

What has happened is the tiles which sell more, how we are making sure that their stock is more as compared to a lot of dead inventory and the tiles which don't sell more. That is the churning of the inventory, and that is also all the liquidation of the old stock which happened this quarter.

Rahul, one more thing, though we have not reduced the inventory at the company level, there is a marginal increase in the inventory at company level, but as Rishi ji has explained, because of the dealers talking, the inventory at the dealer level has diminished, which will help us in future.

Got it. Very clear, sir.

Thank you so much for answering the questions in all the detail.

Thank you.

Thank you for the follow-up. Just one question on the gas consumption.

Overall, all inclusive in a year, how much of gas do our plants consume? About 200 million cubic meters?

Is that correct?

No, not 200 million. Overall gas consumption, we can come back on this question with a definite answer.

When you talk about fuel, it's a combination of gas and biomass also, and coal as well. In North, we are using a combination of biomass and fuel.

In Morbi, it's all about coal. We have to do plant-wise working and come back on the gas part, how much gas we are using.

Because currently what is happening in Morbi, they have an option to use gas or propane. Exact details we will come back.

Rahul, your question, why this question? You want to know, you have any apprehension about the gas price increase?

This is why you are asking this question, or why you are interested in knowing the quantity. I can tell you there is no impact of gas in this quarter, because some people have some apprehension because of increase in Henry hub, there is a cost escalation.

That scare I can clarify, that is 4 to 5 percent overall gas or fuel consumption. That was temporary spike in two days back because of extreme cold in Europe, which has gone down, and there will be no impact of any gas either in this quarter.

There will be maybe marginal gap, let's say 50 to 80 lakh rupees in the next quarter. Beyond that, there will be no increase in the gas price if I take the prices today.

Got it, Sanjeev. Thank you so much.

Hi, am I audible?

Can you talk about the export scenario? Last year it was around, say 18,000 crores.

Can you give me more updates, what is the situation now and unorganized players, where are they supply going?

FY24, the exports was 20,000 crore, and this year we're estimating it to be around 16,000 crore. Going forward, exports should be stable and growing only.

Once the U.S. trade deal comes to light, then we'll know much more what the U.S.

tariff should be.

How much exports will be around for the nine months period? Any estimation?

12,000.

12,000, and we are expecting it to be 16,000 crores for this year?

Approximately for the financial year.

Understood. Thank you.

Thank you.

Hello, thanks for the opportunity. I just wanted to know about bathroom segment.

How are we going forward with our distribution channel? Are we adding dealers, retailers?

Basically that.

In bathroom, we have a mix of both distributors and retailers. Some areas distributors are working, some areas retailers are working.

There also a lot of this work is happening. Bathroom still it's taking a little time, but we are still going in, attracting all the dealers, getting there, making sure our products are displayed.

We are seeing some results, and hopefully that should also change as we go along.

Can you quantify how much are our dealers, retailers?

How many? I cannot quantify.

Thank you.

Thank you, Ramesh. I think it was a good interaction with the people who were there.

I thank on behalf of Kajaria, on my own behalf, for people who are asking questions, and thank you very much for today's deliberations. Thank you.

Thank you.