Thank you, Neerav. Good morning, everyone, and thank you for joining us on the earnings conference call for Cera Sanitaryware Limited for Q1 FY '27 earnings, which were announced yesterday.

We have with us today the management team comprising Mr. Vikas Kothari, CFO, and Mr.

Deepak Chaudhary, VP Finance and Investor Relations of Cera Sanitaryware. We will start with brief opening remarks from the management, following which we will open the call for Q&A.

A quick disclaimer before we begin. Some of the statements made in today's conference call may be forward-looking in nature, and a detailed note in this regard is contained in the results documents that have been shared with all of you earlier.

I would now turn the call over to the management for their opening remarks. Thank you, and over to you, Deepak.

Thank you, Devrishi. Good morning, everyone, and a warm welcome to all of you for joining us on Cera Sanitaryware Limited's Q1 FY '27 earnings conference call.

I will begin by sharing a brief overview of the operational and strategic developments during the quarter, following which our CFO, Mr. Vikas Kothari, will take you through the financial performance in greater detail.

Cera has made a strong start to FY '27, with revenues growing by 19.5% year-on-year during the quarter. Both our sanitaryware and faucetware business developed a robust performance, contributing 47% and 40% of our revenues, respectively.

The quarter witnessed strong momentum across our core businesses, with growth being predominantly volume-driven. We continue to see healthy traction in the project segment, while the retail business carried forward the gradual improvement witnessed over the last couple of quarters.

Importantly, the growth during the quarter was broad-based, with both our retail and project businesses continuing to perform well. This reinforces our confidence in improving demand environment and the underlying growth opportunities across our key product categories.

The demand environment continued to evolve positively during the quarter, supported by improving consumer sentiment in retail and sustained momentum in the project segment. Backed by a strong market positioning across the mass and mid-premium segments, diversified product portfolio, and extensive distribution network, we believe Cera remains well positioned to capitalize on the significant growth opportunities within our core businesses.

While the industry continued to witness elevated input cost pressures during the quarter, Cera remained relatively better placed than several industry participants, supported by its established sourcing arrangements and strong in-house manufacturing capabilities. Following the pricing revisions undertaken during March and May 2026, cumulative price increases now stand at approximately 12% in sanitaryware and 16% in faucetware.

We are pleased to note that these pricing actions have been well absorbed by the market. Alongside these pricing initiatives, we continue to focus on operational efficiencies to mitigate cost pressures.

This will enable us to protect margins while ensuring that we remain competitive in the marketplace. On the brand front, we recently launched our new integrated campaign, Your Moment of Cera, featuring Kriti Sanon as our new brand ambassador.

Her aspirational image and wide appeal across demographics make her a natural fit for the Cera brand. We believe that the campaign marks an exciting new chapter in our brand journey as we continue to strengthen Cera's premium positioning and deepen our connect with consumers.

The campaign has been rolled out across television, digital, and other media platforms, and we are confident it will further strengthen consumer engagement, enhance brand visibility, and reinforce Cera's leadership position. One of the key developments during the quarter has been the extension of our dealer management system to the retailer loyalty program, marking another important milestone in Cera's digital transformation journey.

The platform has strengthened our engagement with the channel partners by providing better visibility into secondary sales, inventory movement, and channel engagement. It will also enable a simpler and more transparent loyalty program while providing richer market insights for faster and better decision-making.

We believe that the extension of DMS to the retailer loyalty program will become an important enabler of improved execution, stronger channel relationships, and enhanced operational efficiency. We remain committed to adopting digital capabilities that strengthen our competitive positioning and support our long-term growth ambitions.

While the Cera brand will continue to remain the principal driver of our growth, we will continue to invest in strengthening our newer brands, recognizing that building enduring consumer brands requires sustained and consistent effort over several years before they establish a meaningful presence in their respective segments. This is particularly true in the premium category, where consumer trust and brand preference are built progressively over a considerable period of time.

Therefore, our focus at this stage remains on strengthening the underlying fundamentals of our newer brands with a long-term perspective rather than evaluating their performance over shorter-term horizons. We remain confident that the investments we are making today will create meaningful long-term value as these brands progressively scale over the coming years.

From an industry perspective, the challenges across the operating landscape are creating a differentiated environment with larger, more established players being able to leverage their scale and setup to deliver more efficient operations. Backed by established sourcing arrangements, strong manufacturing capabilities, and efficient supply chain, Cera has been better placed to manage many disruptions across the landscape while continuing to service its customers seamlessly.

Over the last few weeks and months, we have progressively reduced our dependence on the Morbi cluster by internalizing several key SKUs. This has further strengthened our ability to ensure consistent product availability and cater to consumer demand effectively.

These industry developments have also created opportunities for us to strengthen customer relationships and expand our presence across markets. Our ability to ensure consistent product availability and reliable execution has enabled us to respond effectively to challenging market conditions, and we remain focused on capitalizing on these opportunities while maintaining our disciplined approach to growth.

Building on the launch of our new brand campaign, we are entering into the next phase of our brand-building journey. During FY '27, we plan to invest approximately Rs.

85 crores towards brand building and marketing initiatives. These initiatives will span television, digital, social media, and on-ground activations to further strengthen consumer engagement and enhance brand visibility.

Our focus will remain on deepening consumer connect and reinforcing Cera's position across key markets. Overall, we have made a strong start to FY '27 and believe that the company is well positioned to build on this momentum.

Supported by improving demand conditions, a strong balance sheet, continued investments, and strengthening digital and channel capabilities, we remain confident of sustaining our growth momentum and maintaining our FY '27 revenue growth guidance of 18% to 20%. Our focus will continue to remain on disciplined execution, strengthening our market leadership, and creating sustainable long-term value for all our stakeholders.

With this, I would now like to hand over the call to Mr. Vikas Kothari to take you through the financial performance of the quarter.

Thank you, Deepak, and a very good morning to everyone. I will now take you through a brief overview of the company's financial performance for the quarter ended 30th June 2026.

Revenue from operations for the quarter stood at Rs. 486 crores as compared to Rs.

407 crores in Q1 FY '25. Before I proceed further, I would like to highlight a change in the presentation of our financial statements.

Turnover discounts, which were earlier reported as an expense, are now presented as a deduction from revenue from operations. Accordingly, the reported revenue for the current quarter has been reduced by 2.5%, and the revenue for the corresponding quarter of the previous year has been reduced by 3%.

The previous quarter's revenues have been restated to be comparable in line with the current quarter's disclosure. It's important to note that this change has been driven by the evolution of certain dealer incentive schemes.

For the current scheme structure, presenting the eligible incentives as a reduction from revenue better reflects the substance of these arrangements, and accordingly, as per the requirements of Ind AS, we have realigned the presentation. This reduces the turnover, but does not have any impact on absolute profitability or cash flows of the company.

EBITDA excluding other income for the quarter stood at Rs. 49.2 crores as compared to Rs.

53.1 crores in the corresponding quarter of the previous year. EBITDA margins stood at 10.1% in Q1 FY '27 as compared to 13.1% in Q1 FY '26.

The moderation in EBITDA margins during the quarter was primarily due to certain one-time and transitional factors that are not expected to recur beyond Q2. These included a one-time provision towards the long-term settlement of the company's workers pertaining to the previous period September '25 to March '26, lower absorption of fixed cost due to reduced production amid temporary gas supply uncertainty.

Additionally, while input costs increased significantly, price hikes have so far been reflected mainly in the retail business, with project contracts expected to transition to revised pricing post Q2, supporting the margin recovery in the subsequent quarters. Gas cost during the quarter remained elevated, with the weighted average cost at Rs.

48.43 per cubic meter in Q1 FY '27 as compared to Rs. 33.17 per cubic meter in Q1 FY '26.

During the quarter, gas consumption was sourced 69% from GAIL and 31% from Sabarmati. Overall, gas costs account for approximately 3.3% of the revenue during the quarter.

Input costs, particularly brass, continued to remain elevated during the quarter. In response to these sustained cost pressures, we implemented calibrated price revisions across our sanitaryware and faucetware portfolio over the last two quarters.

These pricing actions have helped offset a part of the increase in the input cost while enabling us to maintain our competitive positioning. While the retail segment reflected these pricing actions, the project business remained relatively insulated due to the nature of pre-booked orders.

Going forward, we remain focused on protecting margins while maintaining our competitive positioning. The revenue mix for the quarter was broadly as follows: sanitaryware accounted for 47%, faucetware 40%, tiles 11%, and wellness 2% of the total revenue.

On a YoY basis, sanitaryware revenue grew by 14%, faucetware by 25%, tiles by 22%, and wellness declined by 7%. Our core categories, sanitaryware and faucetware, together accounted for 87% of the total revenues.

Capacity utilization during the quarter stood at 61% for sanitaryware and 96% for faucetware. For a product mix perspective, 44% of the sales were from the premium segment, 37% from mid-segment, and 19% from entry-level products.

Geographically, Tier 3 and Tier 1 cities accounted for 38% each, followed by Tier 2 at 24% of sales. Profit after tax stood at Rs.

45 crores as compared to Rs. 47 crores in the corresponding quarter of the previous year.

Earnings per share for the quarter stood at Rs. 35.15 as compared to Rs.

36.08 in Q1 FY '26. On the working capital front, we delivered a significant improvement during the quarter through continuous focus on inventory management and overall working capital discipline.

Inventory days decreased from 80 days to 68 days, receivables reduced from 38 days to 30 days, while payables increased from 43 days to 48 days. Consequently, our net working capital cycle improved from 75 days to 50 days on a YoY basis.

This is another lever we are pushing to drive greater overall efficiency in a challenging landscape. As of 30th June 2026, our cash and cash equivalents stood at Rs.

943 crores. For FY '27, we have planned a capital expenditure outlay of approximately Rs.

43 crores. The investments will primarily be directed towards our faucetware brownfield capacity expansion, manufacturing efficiencies, digital initiatives, and strengthening our operational infrastructure.

Alongside these investments, we also have a comprehensive brand building and promotional program planned during the year to further strengthen consumer engagement and support our long-term growth ambitions. We will continue to follow a disciplined capital allocation approach while investing in initiatives that strengthen both our manufacturing capabilities and our brands.

Overall, our financial positions remain strong, supported by a healthy balance sheet, prudent financial management, and efficient working capital practices. Backed by improving demand conditions and our strong market position, we remain confident of executing our long-term growth strategy while continuing to create sustainable value for all our shareholders.

With this, I would like to go to the moderator for opening the lines for Q&A.

Thank you for opportunity. My first question is on the growth of a 19.5% and especially in the major two segments, which are 14% and 25%.

Can you give a color on the volume growth as well? Because I understand 12%, 16% price hike, there which is a mix of institution and the retail, they are, would be a different.

How has been the volume growth for these two major segments in the first quarter?

Thank you, Praveen. Regarding the growth part, especially when we talk about the last few quarters, the growth which is coming, it is a volume-driven growth, which is continuing month-on-month.

If I have to make a break-up of the total growth, in case of sanitaryware, the 14% growth was there, and this 14% was largely driven by volume, which contributed around 10%, and price contributed around 2%, since we have taken the price increase in May. Effectively, the impact of price increase will be reflecting in the coming quarters.

In Q1, it was 2% impact of price, and the mix has a favorable impact of 2%. This has constituted the overall growth of 14% in case of sanitaryware.

In case of faucetware, we have shown a substantial growth of 25%, which is further broken down into volume. Again, it's a volume-led.

18% was on account of volume, 4% was the impact of price, and a favorable mix of 3%. This way, I think the overall growth of 14% and 25% has been constituted, and the similar patterns we are seeing in the coming months also.

Good to hear that. Second question related to this is if you can give some color on the Senator and the Poliplas because those numbers are also included in these 10% and 18% of a volume growth.

Can you give some color on that as well? Is that the product mix changes because of a Senator contribution rising?

Just to give you an overall understanding with respect to Senator and Poliplas, our overall approach will remain unchanged as far as Senator and Poliplas is concerned. Since these are the new initiatives, right now talking about the numbers in terms of volume growth or mix, it's difficult to tell, but the overall projections what we have given during the year, those projections will be there.

Right now, these businesses are still in the built-up phase, and therefore, what we believe is that it is more appropriate to evaluate their progress over a longer time period horizon rather than updating on the quarter-on-quarter basis.

Right, sir. Last question, sir, related to the accounting change.

Basically, whatever the discount in the expenses, now you are booking in the sales, and ultimately, that's actually improving your margin profile. The guidance of a 13.5% to 14%, adjusting for these changes, what you had made guidance for margin guidance?

The impact on absolute terms would be not there, because once you are taking an expense and reducing it from the revenues, your EBITDA margins remains the same in absolute terms. There would be a very slight impact on the EBITDA margin percentage because your turnover is reducing, and the profits are remaining the same.

Assuming that the reduction would be in the range of 2.5% to 3%, earlier, if you are talking about 13.5% to 14% on Rs. 100, now you'll be talking about 13.5% to Rs.

14 on Rs. 97.

That small change will be there, but apart from that, we remain on the guidance that we had given, 13.5% to 14%. You can adjust it for this slight change.

No. The percentage terms guidance is intact.

Absolute number will vary.

Correct, that will be in practice. If I'm talking about the 14% on Rs.

100 earlier, now I'll be talking about the 14 on 97, let's say. So 14 divided by 97 comes to something like 14.4%.

Got it, sir. Thank you.

Thanks a lot. All the best.

Yeah.

Hi, sir. Thank you for the opportunity.

I just wanted to understand how much was the one-time settlement in the staff cost that you booked, and what is the nature of the settlement?

What happens is for the company's own workers, there is a wage settlement which is negotiated with the unions every four years. For the staff, you'll find that the merit increase keeps on happening on a yearly basis, so that typically averages in the range of 10% to 11%.

For the workers, you'll find that the increase is not in the same manner as the staff. Typically, every four years, a settlement is entered into with the union, and that prevails for a period of four years.

Let's say we have an increase of something like 15% to 20% every four years. That happens once at the end of the fourth year, or the beginning of the first year once the four years has ended.

Suppose you have a 20% increase, it'll be remaining constant for the next four years. Effectively, for the next four years, the wage for the staff would remain at if it was Rs.

100, it would remain at 120. There will be no further increases apart from another 2% to 3% kind of increase which happens on a regular basis, inflationary kind of a thing.

As of now, you can expect something like 15%, 20% kind of an impact on the basic wages. On an overall basis, you'll find a 15%, 20% increases.

The impact for a year-on-year basis would be 5%, but as of now, it'll be an increase of 20% over the wage which was being paid to the workers earlier. The negotiations are still going on.

It had more or less been settled in May, and the kind of increase that we are envisaging would be in the range of Rs. 1 crore per month.

So 6.3 crores was the effect which has come in for the previous period because the last wage agreement had ended in the month of September '25, and that we are giving effect on a retrospective basis. It will be 6.3 from the period of September '25 to March '26, which has been given effect in the current quarter.

So, 6.3 was for the previous period, and 3 crores was for the current period. For the current year, we anticipate that the wage cost would be going up by something like 12 crores for the full year for this particular period.

Because 6.3 has been affected for the previous period, the total impact in the profit and loss of the year would be 18.3 crores.

Just to understand this, quarterly run rate would now be the similar one which is in 1Q, excluding the 6 crore which was a one-time settlement, right?

You're talking about the margins?

No, I'm saying for the staff cost, this would be around 72 crore kind of a quarterly run rate.

Correct. If you're talking about the staff cost, if you exclude 6.3, then you can expect the same to be replicated for the remaining three quarters.

Apart from the fact that in certain quarters there would be incentive coming in for the staff, but on an overall basis, if you take the previous year, increase it by mostly 10, 8% to 10% kind of a thing, 10%, because staff is increased by a certain percentage, wage is not increased by the same percentage, effectively, it will be in the range of 8% to 9% for the whole year, and add 18.3 onto that. That will give you the whole year projection kind of a thing.

We believe it will be coming in the range of 300 crores for the current year.

Understood, sir. Sir, on the --

Good morning. My first question is that we are internalizing some SKUs that we were outsourcing, as you mentioned.

If you could just talk a bit more about that. My second question is that I think our target for flagship stores this year is about 50, if I'm not wrong.

If you could just update me on the progress on that as well. Thank you.

You're right. We have been talking about internalizing certain SKUs.

Typically, both in the case of sanitaryware as well as in the case of faucets, we manufacture most of the complex SKUs in-house, and the simpler ones are outsourced. In case of sanitaryware, recently, there has been some issues in the context of Morbi being not operating up to its full efficiency.

We were initially in Q1 facing some challenges, and it was anticipated that the challenges may happen in the Q2 onwards also. On an overall basis, we have been quite comfortable in respect of the volumes that we have been able to get from Morbi from our outsourcing partners.

As of now, we are quite comfortable in respect of availabilities, both in context of Q2 as well as for the entire year. We don't see too much of a challenge.

In anticipation that there could be challenges, we had already taken the process of internalizing some of the higher selling SKUs from these outsourcing partners to make them internally within our manufacturing plant. We have already undertaken that exercise, and in case we are having problems from the outsourcing arrangement, we are now well geared up to produce these SKUs in-house.

Sure, sir. The second question about the flagship stores?

Stores, as we already have given a guidance if you're talking in respect of Senator, we have given a guidance that it'll be going up from 35 to something like 50 stores by the end of the current year. We are aligned with that.

We'll continue to kind of scale up these stores, and we should end up with something like 50 by the end of the current financial year.

Sir, this internalization, do we need some additional investment for this? Or, no?

Small amount of investments are required because the kind of casting lines which are required are different for different kind of SKUs. Kind of Rs.

2 to Rs. 3 crores of investment, or small investments, which are a part of the routine also, we do that on a regular basis also, that kind of investment is required.

We don't require kind of massive investment in terms of setting up manufacturing capabilities or getting additional machineries. The current facility by itself with some change in the lines which are required for specific SKUs, that needs to be done.

Thank you.

Thank you.

Hi. Thanks for the opportunity.

Two questions. First is with respect to the change in management, the KMP recently.

Who's going to take over the responsibilities with respect to Senator and Poliplas? If you could just refresh us with both these initiatives, with a short-term and longer-term view?

Thank you, Ritesh. Regarding the recent resignation of Mr.

Baliga, just to update that he is leaving due to his personal reasons. His responsibilities were limited to the Senator and the Poliplas new initiatives, what we have started 1, 1.5 years back.

Now, we have identified our existing National Head under the succession plan to lead these businesses going forward. However, Mr.

Baliga will continue to support the company till 30th September to ensure the smooth transition. Overall, we do not see any sort of major challenges as far as his exit is concerned, since both the businesses have dedicated operating teams, the established business processes, and a strong second line of management.

As such, we do not expect this transition to have any impact on our execution. We are moving, or progressing in the same way that we were doing earlier, and now it will be led by the existing National Head.

Sir, on the targets?

On the targets also, like I told, the targets remain intact, what we have given initially for Senator and Poliplas. However, on quarter-on-quarter basis, it is difficult to give the numbers because still these are young initiatives, and we are moving in a right direction, and we see that the targets what we have given are approachable.

Sure. Sir, my second question is, you did indicate about taking certain SKUs in-house, given the issues that were in Morbi because of external reasons.

Sir, how should we look at this with a longer-term timeframe? Is this something which is a change in strategy wherein we are looking to increase the insourcing part and reduce outsourcing?

How should we look at it? Thank you.

That is a continuous process. On a continuous basis, we keep on trying to see because the SKU profile also keeps on changing on a regular basis.

Now, if you see the recent past, you'll find that that happens on a very frequent basis. Earlier, if you had a certain set of SKUs, it used to have extremely long life cycle.

Now, you'll find that the life cycle of the SKUs have also started coming down. It's a continuous process.

If you talk about the kind of mix which is there, typically, on a long-term basis, the idea is always that the plant should be manufacturing more complex pieces, and simpler pieces should be outsourced. Whenever the need arises that you have a situation like the current situation which had developed in the recent past in respect of the Morbi situation, it is always possible for us to internalize the outsourcing SKUs in-house, like we did in the current situation.

To answer your question, on a long-term basis, more complex SKUs would be in-house, but whenever the need arises, we can make slight shift in the overall mix, as required.

Would it be possible to put a volume and a value number for outsourcing aspiration number, for both faucetware as well as sanitaryware, please? Thank you.

See, that keeps on evolving. On a long-term basis, we have been kind of maintaining a 50-50 in-house and outsourcing kind of a ratio.

In case of sanitaryware, it has slightly skewed more towards outsourcing in the recent past. That is also because of the fact that apart from the items that we are manufacturing, sanitaryware would always involve certain items which will always be outsourced, because it also involves a lot of bought-out parts like cistern, seat covers, and flushing mechanism, which will always continue to be outsourced.

We don't want to enter into those manufacturing. Same thing in the case of faucetware also, that certain SKUs which are from polymer or ABS and which are chrome plated later on.

These items also will continue to outsource. We don't intend to enter into manufacturing of those SKUs.

Apart from these SKUs, you'll find that the mix will keep on changing on a dynamic basis. There are certain SKUs which will always keep on outsourcing, but apart from that, mix will keep on changing.

The idea would always be more complex in-house, simpler ones outsourced.

Sure. Thank you so much.

All the very best. Thank you.

Hi. Thanks for taking my question.

We've delivered a great revenue growth, but it's not translated into operating leverage from our side. Is this margin dilution a result of the deliberate and aggressive pricing strategy to capture market share from the unorganized players?

Or is it just because of the raw material and fuel cost inflation? What's the extent of our pricing power to pass these inflated costs to the dealer network in the coming quarters?

Thank you, Rahul. You'll find that, in the recent past, we have started showing top-line growth.

In the current quarter, we grew by something like 19.5%. In spite of that, our revenues, dropped by, you can say, 3%.

We were something like 13.5% earlier. We were 10.13% in the current, quarter.

Now, this, has been primarily because of a certain number of one-time impact which has come in this current quarter. We can say it is one-time and transitional kind of a thing which has happened in the current quarter.

I'll just run you through. The main idea of what I'll be communicating right now would be that over the year, full year for financial year '27, we expect that the margin that we were, predicting earlier, 13.5%, 14%, we'll be meeting those margins on a full-year basis.

The impact of, the margin that we've seen in Q1, 10% is something only because of certain one-time factors which have happened during this quarter. I'll just try to run you through those one-time factors which have impacted profit in the current quarter.

First was the long-term settlement, which, impacted revenues, of by 6.3 crores, because it was in respect of the period September '25 to March '26. This was one-time and is not expected to recur in the future, periods.

If I see the impact of this, 630 lakhs, 6.3 crores, it has a 1.3% impact on my, margins. Apart from that, we operated with one single kiln during the month of, May and June, and also for part of March, but we're talking about Q1, it was so mostly, sorry, April and May.

We operated with a single kiln. It was only in the month of June that we started off with the, second kiln.

Now, the fixed costs were being incurred for as it is, but only one kiln was under, operation. You can say our, production was impacted to the extent of 30%, 35%.

We produced only, 65% to 70% of what we would have normally produced. This had an impact of something like Rs.

3.7 crore, crores on account of, under absorption of fixed cost. This impacted our margins by something like 0.75%.

This is again one-time and is not expected to recur in the future period. What we have also done during this period is that because, the validity of projects typically, is for one year, we tried to foreclose and deliver as much of materials possible to the outstanding orders, because the brass prices of brass and even gas was on a uncertain side, and we were anticipating that it may be going up further in the subsequent periods.

We tried to foreclose as much of the orders as possible, and that is why you'll find that during this period the, proportion of project, to overall, revenues has gone up from 39% in the previous quarter to 43% in the, current quarter on a quarter-on-quarter basis. Now, on account of this, increased closure, we have had an impact of something like 4 crores in terms of, profits.

This is translating into something like 0.8%, on our, overall revenues, margins, on our overall margins. Apart from this, the price increase that we have taken, it has not reflected on the project side.

Also, what has happened, we took the price increase in the month of May, even on the retail side, it takes some time for the price impact to take effect. What happens is, whenever a price hike is imminent to be announced, you'll find that the dealers kind of rush in to put in orders, and these orders are dispatched, when they're put in before a particular cutoff date, they are dispatched at the same old pricing.

Because the price increase was taken in the month of May, we had a kind of backlog in orders wherein even for the retail, we dispatched at the old prices and not in the new prices. So, that, you'll find that, from the month of, July onwards, the all these dispatches have now started happening for the retail portion at the revised prices only.

This kind of delayed price increase effect, you can say, will lead to a kind of, improved margins in the future, by 1.5%. If I see on an overall basis, I'll just summarize the various one-time factors which had impacted in the current quarter: LTS had an impact of 6.3% or, sorry, Rs.

6.3 crores or 1.3%;, one kiln under absorption of the fixed cost had an impact of Rs. 3.7 crores or 0.75% in terms of margins;, impact due to closure of old projects, increased closure of old projects, which took our, project share also higher, about 4 crores or 0.8%; and the delayed price increase effect as 1.5%.

If I add all of them, you'll find that it is leading to a kind of one-time impact of 4.35%, and the current EBITDA was 10.1%. Effectively, if this one-time impact was not there, my EBITDA would have been in the range of 14.5%.

So, we anticipate that for the whole year that there will be still some impact in the Q2 also, because, projects, as I've mentioned earlier also, they have a kind of validity of six months to one year, and, once the old prices start, the projects with the old prices start getting closed and we start having new, projects coming up, dispatches for the new projects starts happening, you'll find that this change will start reflecting in the, project segment also. Going forward, we anticipate that there would be a impact of all the one-time impact of all these factors would not be there.

Projects will start delivering the kind of margins, that they are supposed to, from let's say post Q2. For the whole year, we are confident that the kind of margins that we have talked about earlier, 13.5% to 14%, as mentioned earlier also, adjusted for the kind of, the kind of reductions that we're doing in terms of turnover, we should be able to deliver for the full financial year.

Right. Thanks.

My second question is more regarding the greenfield sanitaryware expansion plans. We've previously deferred our Rs.

130 to Rs. 150 crore greenfield expansion plan due to subdued demand expectations.

Yet, we've just posted nearly 20% top-line growth. Does this Q1 volume performance trigger a revival of the greenfield CapEx execution?

If not, then how close are we to maxing out our current sanitaryware capacity utilization? Do we need to rely more on outsourced manufacturing to meet the higher demand?

That'll be all.

Regarding the greenfield part, so as we are seeing the continuous improvements which are happening as far as the demand is concerned, and especially in case of sanitaryware also. The growth is coming, like I projected the numbers also, we have this 14% growth prior to this quarter.

It was roughly 10% growth was there. This is a positive sign in terms of reviewing the greenfield project, which was kept on hold for certain period.

However, to say that means Q1 was a type of one-off where the capacity utilization in case of sanitaryware was 61% because of all these geopolitical concerns and we stopped one kiln operating from July onwards. Our both kilns are operating from June onwards.

Means the operational utilization is roughly around 80% of the total capacity. Still, we have certain capacities left.

We will review in terms of the greenfield expansion also. By end of this year, if we see and we expect that the demand will continue in the similar fashion, and accordingly, we will take the needful decision.

Once the decision with respect to the construction of this greenfield will be there, the project will take around 18 months from the date of start. We think that this positivity is continuing, and this is somewhat enable us when we take the decision in terms of the start of the greenfield projects.

Hi, sir. As you said that the impact of the project business will be coming from Q3 onwards, can you guide on the EBITDA margin for H2 FY '27 and FY '28?

I didn't get it. You are talking about current financial year, next financial year?

Yes, for FY '27 and --

FY '27, as I just mentioned, it will be in the range of 13.5% to 14%. We are standing by that guidance for the current financial year.

For the next financial year, we would want to hold that for the end of the year, because as we keep on going further into the period, it becomes kind of speculative. As of now, we are confident that we will be able to deliver the kind of numbers we're talking about, both in terms of the top line being in the range of 18% to 20% and EBITDA margins in the range of 13.5% to 14%.

Beyond that, we would not want to go right now. We'll talk about it maybe once we start ending the year, and then we'll be able to have a better idea about how the demand is progressing and holding up, then we'll be able to guide better in respect of the next year.

Sir, and for H2 FY '27, I was asking.

For the full year, we are still projecting the 19.5% to 20% -- 18% to 20% kind of growth for the revenue, and for the full year, 13.5%. Quarter-on-quarter basis becomes extremely difficult, because it is totally a factor of what one-time events keep on happening, like for this particular quarter, if you had asked me in Q4, I would not have been able to predict that we'll be having margins which will be lowering by this extent.

We had a few items which we knew that will be coming up, long-term wage settlement, etc., was there, which we had been telling you also that some impact would be there on the margins in the Q1. Same thing we're saying for Q2 also.

There would be some impact coming in the Q2 also because projects have not yet converted with the revised pricing. For the whole year, we'll be better able to guide.

We should be ending with that 13.5% to 14%, which we're saying right now. Okay.

Understood, sir. By what timeline can we expect to return to the historical average of 16% EBITDA margins?

See,

that is difficult to say because we can go on a year-on-year basis only. Once we are at the end of the year, then again looking at the way that the demand situation is continuing, the kind of growth that we have been able to take, the kind of operational efficiencies that we have been able to bring, and the kind of competitive intensity which is prevailing in the market, based on all these factors, we'll be able to guide you better at the end of the year.

As of now, the visibility is there only for the current year, and based on the various factors which are prevailing right now, we'll stick with what we have given you for the current year.

Hi, sir. Sir, I just wanted to understand the gross margin trend, given that brass cost is still rising, both copper and zinc is all-time high, how are we looking at the gross margin, and do we intend to take any further price hike in the coming quarter?

Gross margins have been impacted in the current quarter because of the fact that input prices have gone up, and we have taken a price increase, but that takes a little time to get reflected on the top line. On immediate basis, it had an impact on the kind of gross margins we have had.

Especially in the faucetware segment, the gross margin had been severely impacted. The brass prices are continuing to go on an uphill side only.

Currently, we have reached, you can say, a range of Rs. 900.

If it continues to rise, we may have to take a further price increase. The price increase that we have taken earlier will start coming in on the retail segment from July and from the project segment from the next quarter, let's say Q3 onwards.

If we take a further price increase, there would be some delay again in it actually reflecting on the top line. There would always be a couple of quarters or one quarter where the retail would take 2 to 3 months where the retail takes a certain time to get impacted and longer period for project to get impacted.

We continue to watch the raw material prices, and based on that, we'll evaluate whether we need to take a further price increase in case of faucetware or in the case of sanitaryware.

Sir, can our gross margin expand from here? It's come down to 45%, 46%, which used to be 50% plus.

Is there any scope that this coming quarter or maybe 3Q onwards, we can see expansion there?

Again, the current quarter, 46%, as I mentioned, was an aberration. From the next quarter onwards or maybe from Q3, we again start seeing a kind of uptrend.

From Q3, if the brass prices continue to hold at the current levels and the gas prices also continue to hold at the current levels, we should be back at the levels of 51%, which we typically used to have. Again Q1 46% is kind of an one-off margin, and mostly impacted because of faucetware, where the brass prices have gone up exponentially, but the prices are taking a little time to get affected.

Sir. On the faucetware expansion, given that we've reached 96% utilization, is there any plan to prepone the expansion that we planned in the 4Q, given that we're seeing good demand?

Before 4Q, it is not possible because they've already undertaken the expansion, and we should be expecting that increased capacity to come into effect from the fourth quarter. Before that, in Q2 and Q3, it is not possible.

We don't anticipate any challenges in respect of material availability, because both the in-house and the outsourcing have been functioning on a normal basis in the case of faucetware. We have a lot of scope for taking procurement from outside also, as well as in-house, we have been functioning at 96%, we can go beyond 100% also.

It is possible to go beyond 100%. You don't anticipate any availability challenges in respect of materials for faucetware till the time that the expanded capacity comes into effect.

Sir. Fine.

This brass cost, last quarter, what was the average, and this like Rs. 900 versus last quarter?

The prices have been going up on a continuous basis. I'll just give you the kind of trend which has been there on a month-on-month basis.

December, it used to be in the range of 665. January, it went up to 747.

February, 758. March was the same range.

April, it was 800. May, it was 8 60, you can say.

June, it has gone up to 880.

Okay. Sir.

Got it.

Currently, in July, you can say it is in the range of Rs. 900.

Okay. It's continually going up.

We may need another price hike, that's what I understand.

We are evaluating that situation, but if it continues to go beyond 900, as of now, we have taken a price increase which is protecting us up to this current range, but if it keeps on rising beyond the current range, let's say it goes up to 950, 1,000 kind of a number, then we may have to again think of a further price hike.

Okay. Thank you so much, sir.

Thank you.

Thank you.

Hi. No, I just have a last question regarding our discretionary advertising and promotion spend.

Especially related to this Kriti Sanon national brand campaign, are there any more ideas on the table, or do we have any plans to expand our discretionary A&P spend, and if yes, then in what direction? That'll be all.

As of now, the budget is, as I mentioned earlier in our opening remarks, Rs. 85 crores.

This includes the kind of spend that we'll be doing for TV, digital, social, everything. As we go forward, if we feel that the need is there, even for the current quarter, that option is always available.

It is not that this has cast in stone that will be at 85 crores only. As of now, the budget is 85.

If we feel that we need to increase the budget, that can always be done as we go forward.

Thanks. Thanks.

That'll be all. Thanks.

Thank you, everyone, for attending this call and for showing interest in Cera Sanitaryware Limited. Should you need any further clarification or would like to know more about the company, please feel free to reach out to me or to CDR India.

Thank you once again for taking the time to join the call. Thank you.

Bye.