Kajaria Ceramics Ltd

Good evening to everyone. Sir, I must say a good set of volume growth, that's a positive surprise for all of us. Sir, I noticed one thing that despite weaker realization, our gross margin has been improved and now you are looking forward for a better growth volume in 2Q. So, assumingly the realization stays here, improved from here. So, is there a scope for margin to improve from here as well, gross margin? Can we think about that?

So, we are looking at a 15% to 16% EBITDA margin as we have said previously also, and we are maintaining that right now because our priority is to sell volumes in the market going ahead while keeping our projected margins.

Shaleen, as far as gross margins are concerned, I think it's at 38.5% this time which is 100 bps higher than a Y-o-Y quarter. So, I think you are alluding to this, right? So, with respect to raw material cost, I think the raw material cost is significantly lower compared to Y-o-Y and that keeps changing because of outsourcing mix keeps changing. So, one should not dwell much into this quarter, but as far as gross margin is concerned, I think it should be in this range plus minus 1%.

Even if, let's say, some realization improvement happens, we should get some benefit out of it, right? Is it fair assumption?

Yes. That will further add to the gross margin.

Right. The second thing, your manufacturing number was higher than the sales number. So, when you allocate the cost, is there some part of the cost which is already coming in in this quarter from those manufactured trial or you proportionate it? I mean, for example, I could see that your power and fuel cost was up like 10%, right. So, how should I think about that?

So, the growth what we see here is largely because of increase in production which has gone up by 13% during the quarter.

So, then which effectively means then we have taken part of the cost in this 1Q, right?

Right, because that's there in the stock today.

Page 6 of 19 Right, so I mean, correspondingly, then it will not be same for the next quarter because we already have a stock with us.

Yes, but if in the next quarter the stock again remains, the incremental stock comes into play, then again, we will have the same situation. So, again it varies depending on where the stock is.

Right, so basically, I was looking at the avenues where we could have, there's a case for a margin improvement. I think coming back to the same points on the cost, on the employee headcount, can we understand how much is the increment phase and how much is the additional headcount phase because there is again a big jump over there and sustainability of that?

Actually Shaleen, what had happened that last year same quarter, there was a mistake that we did not take that increment in the quarter. So, there is some difference because of that and the Secunderabad plant we started, we capitalized the salary in the last quarter so this time additional Rs. 3.5 crores salary has come from Secunderabad and around Rs. 2 crores from the other Kerovit Global and all. So, this will be the run rate for all the quarter roughly.

Basically our costs are hitting us because we are kind of starting new plants and the benefit of them in terms of revenue will come with the lag. That's correct. Yes.

And hence the depreciation is also a little higher.

Revenue will also go. So, in this quarter, the quarter has been penalized because of the costs and corresponding revenue has not come in this quarter.

So, basically, yes, understood. It is a great show. I think momentum has come back. We look forward to see the area delivering double digit volume growth.

Thank you. The next question is from the line of Praveen Sahay from PL Capital. Please go So, the first question is related to the product mix, PVT, GVT, ceramics. Is there any material change versus the last Q1 FY24 to this quarter?

It's more or less the same. No major change. The only change that has happened is GVT mix has gone up a bit while the other two segments the mix has been a bit down.

Secondly, on the Nepal JV, why there is a delay in the commissioning from June to now September?

There were very heavy rains in Nepal. So, because of that we delayed the expansion, but now everything is in order. August, we plan to light up the kiln and by September the production will start.

Page 7 of 19 And last question related to the non-tile segment. So, there is a good decline in the EBIT margin in this quarter. So, why is it so and when we will see improvement in this segment?

When the bathware segment the 1st Quarter margins were low because we just started the new plant of Kerovit Global on March 30th. But sanitary ware plant takes 5 to 6 months to commence production properly. So, 1st Quarter was pretty poor on the production. From this quarter, the production will pick up and from the next 6 months, October to March, it will give you good results. So, this was the reason why even 2nd Quarter will be a little muted in terms of bathware because of the loss of the new plant, but from October that will be compensated.

And in terms of plywood, the 1st Quarter the loss was higher due to increase in timber price in the market for which we have taken a price increase on 22nd July of 3% but in terms of adhesive, the profit was much higher versus Quarter 1 last year.

Thank you. The next question is from the line of Dhananjai Bagrodia from ASK Investment Managers. Please go ahead.

I just wanted to ask broadly for your breakup of revenue between metros and tier one and rural, do you have any broad-based breakups?

Basically we can give you a rough idea, North is 35% of our sales, South is roughly 30%, East and West are 17% each. If you go to metros like we can say Delhi is 3%, I can give you a state wise break up if you want but that's a rough number of our zones.

So, what was that? Roughly, because we don't understand North and South both are 30:30 each. 35 and 30.

Just to understand, would you have a broad base in terms of metro and tier 1 because that is how we are speaking about how you will...

See, metro is close to about 15% overall. Tier-1 would be about 31%-32%. Tier-2 will be about 31%-32%. Tier-3 will be about 14%-15%. And Tier-4 and below will be the rest. 15, 30, 60, 75, 90. So, basically the remaining will be 10%?

Yes, about Tier-4 and below should be about 7%-8%.

So, last three years, we have not had strong volume growth per se because Metro was the one which was leading in housing. Now with government again focusing back on Tier-2 and Tier-3 in terms of improving their market scenario, then we will be the biggest beneficiary of that, right?

That is where the action is. For the last 2-3 years that is where the action is. Tier-1, Tier-2, Tier- 3 that's where the action is.

Page 8 of 19 So, then sir, why didn't we have strong volume growth if the action was out there predominantly?

That's why it started, no? With this quarter the volume growth has started with 8% and overall annually we will be looking at about 11%-12%, so there's a lot of growth will come from these areas.

So, that's why sir, Tier-2, Tier-3 have just started picking up, is that right?

No, they are there for the last one year, 1.5 years. See, overall the demand in India was not there, right? Overall the industry, as we discussed even last year, the industry was flattish where we grew by 6%-7%. This year we are forcing the industry to be at 5%-6%. We will outpace the industry by 6%, so we will be plus the industry.

And just to have an idea how would exports be then like could there be any impact in our...

The industry grew from Rs. 16,000 to Rs. 20,000 crores. At Kajaria, we don't export much. Our main focus is the domestic market so our export has also been flattish.

Industry, how industry growth be in exports because see if exports become weak then they will start dumping in India but as long as exports grows in a way where they don't need to dump in India, then we are through.

See firstly let me just clear that concept they don't dump it in India if the exports degrow, they close their factories. Dumping in India is not easy. It's not a switch on and off button that you can just supply to people and then suddenly shut the supply, right? So, they don't dump in India.

If the exports don't work, they shut down their plants.

Thank you. The next question is from the line of Utkarsh Nopany from BOB Capitals. Please go Sir, my first question is on the tile capacity utilization. So, in the presentation, we have mentioned that we are going to dispose of two ceramic tile lines at Gailpur plant from July onwards. And if we adjust for this capacity, then we operated it around 96% rate in the June quarter. So, my question to you is, like, if we are quite optimistic about the demand scenario, then what is holding us back to come up with a large expansion program in the domestic market, as we are already operating at a pretty high rate, and we also have a strong balance sheet position?

That's what we're going to do because that's the need of the hour, and that's what we do every year. If you have to grow at 11% to 12%, 15%, every year we have to put up capacity or do some outsourcing. So, it's a question of a right balance which we are looking at. And once we dispose these two lines, which were very old, 26-year-old, we will put up a new capacity there. But that capacity putting up takes 6 to 7 months before we can put up that capacity.

Page 9 of 19 And some connecting question to this is like our outsourced tile for the share has gone up from say 18% in FY19 to around 25% at present. So, where do you see the share to settle down over the next 2 to 3 years? And if you can also provide some clarification whether there is any difference in the product quality and margin profile of our own JV and outsourced types volume or all are same?

It all depends on which market you are catering to. If we are catering to North and East, we would like to have our own capacity. If we are catering to West and South, we will partly use for West. West is outsourcing and South will expand our capacity. We have two plants there, Southeast Asia and this Kalahasti.

See margins are always better in our own manufacturing plants as compared to Morbi. Margins will always be better. It will be a mix of both manufacturing and outsourcing going forward. We cannot give you the numbers right now, what will be a 2 to 3-year projection, but it will be a mix of both manufacturing and outsourcing.

And sir, my last question is on the Nepal operation. So, whether we are going to consolidate Nepal operation going forward or it would be shown separately as share of profit from JV going ahead? And can you please provide some sense regarding how the ramp up of the plant is expected to happen in second half of FY25, FY26 and 27?

So, it will be shown as share of profit of associate which is below the line.

And how the plant ramp up is expected to happen?

Let it start first and then we will review and say what will happen tomorrow.

Thank you. The next question is from the line of Keshav Lahoti from HDFC Securities. Please go ahead.

Just want to understand on volume front, how has been it like, whether June has been quite healthy versus possibly April and May, how should we see the monthly trend and how is July going?

April was not good, May was better, June is slightly better and that's what we see that the trend moving better from here on.

Understood. Got it. So, there has been some price hike by Gujarat Gas in July month. So, will it have any impact on margin? How should we see that?

The price hike was just Rs. 2 per SCM and the impact is not there that much.

Understood. Got it. And one thing you said the average fuel price was 37 for this quarter. So, last quarter you mentioned it as 39 or was it flat or marginally down this quarter?

Page 10 of 19 Last quarter the fuel was 39, average 39 and this quarter is 37.

Understood. Got it. It is quite clear now. Just one last question. How much is your Nepal sales right now in volume terms in FY24 or maybe for this quarter?

It's not a very major number. See, right now, since we are exporting from India, Nepal sales is not a very major number. We are selling about 70-80,000 square meters a month. When the plant comes, we have to sell about 4 lakh square meters per month. The real game will start when the plant comes into production because the custom duty is also very high in the range of 50% to 55%. It will be much more competitive, and we can get more volumes. That's the whole purpose of the plant.

So, it can add a new layer of growth to the company, the Nepal market, understood.

Thank you. The next question is from the line of Vinamra Hirawat from JM Financial Services. Please go ahead.

So, I heard you say Morbi can't easily dump in India. So, regarding the US tariffs, we shouldn't estimate any change in volumes or realization guidance in tiles if the US expected tariffs of 400% to 800% go through?

See, first of all, where this number has come from about the additional duty. As far as the additional duty is concerned, even it comes, it will not be more than 10% to 25%. That's number one. Number two, India is very competitive per se. Number three, just to give you some statistics, in the month of June, Russia has overtaken America as number one market, USA is #2. So, lot of markets are opening up because India is a very competitive player in the international market.

So, don't think that alone America will do anything great. It's a whole world which has opened up to India, and there are 178 countries which India is exporting tiles to.

Nice to hear that. My next question is on GVT, PVT and ceramic. As I understand, GVT is growing the fastest and commands a price premium. What is the expected volume growth for the next couple years in GVT? And do you expect GVT and a better more premium product mix to drive higher realizations going forward than what they were this quarter?

See, all the three verticals have to grow to get the consolidated number of 11% to 12%. GVT might grow a little faster than ceramic and PVT but they all will be growing and yes as a value as you know as the product mix changes as we sell more of the value-added high big tiles; your margins will be little better but that will be offsetted by the volumes. Our first priority would be to deliver our volumes.

Got it. I just have one more question on your bathware. If I heard you correctly, I think we grew at 8% in bathware. Are we seeing higher volume growth here in line with tiles in the second half and in FY26?

Page 11 of 19 Yes, we definitely will. It will be a good double digit growth for sure, end of the year. And we will see the numbers increasing from here.

Thank you. The next question is from the line of Ritesh Shah from Investec. Please go ahead.

Couple of questions. One is if you could provide us an update on implementation of sales for automation and DMS. How far are we? That's one. Second is are we already opting for channel financing? If yes, to what extent of sales does it get covered? And if you have any plans over here?

So, in terms of Salesforce automation, it has already become live. It has been sent to all our sales team force in the last month. And we've already started tracking the movement of the people. In terms of DMS, we did an initial launch for the top 50 dealers across the country last week. And we're going to go live in the first week of August, where they can see the stocks online, place orders online. So, first week of August, it's going to go live to 900 dealers across the country.

On channel financing, 50% dealers are already under 4%, 3%, and 170 dealers have already come under channel financing. And we hope to have at least another 300 dealers in channel financing by next 2 to 3 months.

Sir, how do you see the velocity of sales actually change for us as we implement sales for automation and DMS is going forward. How is it likely to benefit us if we could just educate?

See, it is not directly to velocity of sales. It's about improving the quality of the time with the dealer spend and our people spend in the market. Today we can track how many architects are wasting, how many dealers are wasting, are they wasting time on the same dealer, how many times in a month. It improves the quality and efficiency of the team as well as the dealer community basically. Let's say a dealer phones a guy 4x for placing an order, he can now just punch it online to get the plan directly. It's all about improving the efficiency and the speed and the quality of time management basically.

And on channel financing as we are open to more dealers, is it likely to impact sales or can it be incremental leader?

It is helping those dealers to grow faster.

See right now their orders get stopped if their payments are stuck right. Once you get into channel financing, then their orders are not going to be stuck. They are clearing their orders and the orders are being cleared and they are paying the financers.

Right, that's useful. And sir, is Salesforce Automation and Dealer Management System something unique to Kajaria or is that something the industry practice like are we the first movers for Ceramic?

Page 12 of 19 Industry is already doing it. There are a lot of industries in the building industry who is doing it.

Sir, specific to Ceramic. So, are other Morbi players or other companies...

Ceramic we are not aware, but we learned it from meeting new people that a lot of building material people in the industry are doing it, Havells, Asian paints. So, we adopted for it being Kajaria being number one, we had to go for it, and we did it.

Sure, that's helpful. Sir, second question is on government orders. I think this was one particular focus area to increase volumes. I think you had indicated setting up a dedicated team during the analyst day. Are there any numbers over here? What's the scale of improvement? What can we expect over here?

You will see a positive trend in government orders from this year more. Right now the team was only in North, now we have an all India focus team.

We are treating it as a separate division to help us in increasing our government orders.

Okay, sir, will it be possible for you to quantify what percentage of our total volume of government orders right now? To what extent will it be comfortable with, say, year down rate?

The whole idea is to get more of the government share. It will all result in overall volumes.

We will quantify it at the end of this financial year.

Sir, just last question, can you detail the fuel mix basically for North to what I understand we had biofuel, we had R-LNG and biofuel was nearly like 30% biofuel by energy. Same thing basically for Gujarat and South if you could please provide some color?

In North, biofuel is about 30% plus. In Morbi, there is no such thing as biofuel, they are using coal for filing of spray there. And for South plant, they are using partly a mix of biofuel and coal.

Sir, what will be the pricing for biofuel? Basically, when we say Rs. 36 – Rs. 37, biofuel is at what cost? Is it like variable?

Biofuel is costing about Rs. 22 to Rs. 23 rupees per SCM.

Thank you. The next question is from the line of Shubham Agarwal from Axis Capital. Please go ahead.

First question, can you share the revenue or volume mix of PVT, GVT and ceramic tiles in Q1 25 and 24?

Page 13 of 19 So, the volume mix in ceramics is 43%, PVT is 23 and GVT is 34 and the revenue mix is ceramics is 38%, GVT is 37 and PVT is 25. This is for Q1 25, right? Correct. And can you say for 24 as well?

In 24, it is 44% ceramics, 31 GVT, 25 PVT for volume mix. And revenue is 38 ceramics, 36 GVT and 26 PVT, more or less the same basically.

So, actually the reason for asking this was that I noticed that the gross margin has expanded Y- o-Y, and this has happened despite there being a realization decline and you having a largely similar revenue mix from in-house manufacturing. So, what has actually driven that will help you increase the gross margin significantly. Generally these are the things that help you increase gross margin.

Yes sir, so as we just commented on it, raw material costs were lower but again you can't actually compare that with year-on-year because the outsourcing mix and everything keeps changing.

The gas prices were favorable but because of the increase in production that is not seen there in the gross margin, but that also helped improve our gross margin and on the EBITDA margin side, the employee cost is one cost which has led to shaving off the gross margin advantage which has not come into EBITDA margin.

Right. So, the outsourcing mix is also very similar. That's what I was thinking because everything is very similar Y-o-Y till this margin expansion. I will circle back on this. No worries.

I will take the second question that I had in mind. This is regarding the gas cost. Now I actually calculate gas cost as per SM of production. Now gas cost per MSM of production has actually increased QoQ for you by about 9% despite there because you mentioned that the average gas cost per SM has declined from 39 to 37 marginally, but power and fuel cost per MSM of own production has actually increased 9% Q-o-Q just trying to understand, am I seeing it right or how should I see it?

Q-o-Q, the gas prices are same. So, overall gas price was 37 and now it is 37, fuel price which is combination of all the fuels. And Y-o-Y the fuel prices have come down from 39 to 37 on an average.

And if you could highlight what's giving us the confidence that if you can highlight, give us some more color on what's giving you the confidence of the 12% or volume growth over the rest of the year as well. Maybe I believe some of it would be coming from diversification into a new revenue segment, let's say one Nepal and the second being the government orders that you're now picking up which you weren't picking up earlier. Is that the right way to think? Like the

Page 14 of 19 new distribution channels that are opening up or the new geography that are opening up is helping you?

What is going on in all the areas, whether it is projects, whether it is government projects, whether it is a retail. So, everywhere we are putting all our efforts, so we are looking at a combination from all these, the combination of everything we are looking at a 11%-12% volume growth as long as the industry also grows at about 5%-6%.

Which you are reasonably sure that you are seeing that growth having come back sustainably?

We are optimistic and positive about it. And the 1st Quarter, with the 8% volume growth, at least we know that things are in the right direction.

I will just verify two numbers now. One, I missed your channel financing share. Like what percentage of your revenue is channel financed at the moment?

We have given you some data. Rest you can get later.

No, I actually missed it if you can repeat it, sir. That'll be helpful. You mentioned it in the same call, right?

You listen to this conference recording later; you will get the answer.

I will listen to it, okay got it. And your share from government orders you mentioned it will increase to 45% by the end of year. Did I hear that right?

No, I think we didn't say all that. You please listen, you will have all the answers. You missed out few portions.

Thank you. The next question is from the line of Sneha from Nuvama. Please go ahead.

Just a couple of questions from my end. If you had done around 8% growth, what would be a rough estimate for the industry? How would have industry fit in the same current quarter?

Industry should have also grown by 3% to 4%, I would say. But things are looking positive on the ground, that much I can tell you. The numbers, more numbers will clear later because 1st Quarter as we all know, was election quarter, June was very hot. Looking at everything, I think what we have done is okay. And industry should have done slightly better, but I think things will be more clear at the end of the 2nd Quarter.

Page 15 of 19 Understood. And what about exports? Would exports also have grown because what we understand is exports have taken slight hit because of anti-dumping duty talks on US.

No. Anti-dumping is a very small thing. People are not understanding that part. The serious problem is the freight rates because of the Hamas Israel problem, which has gone up sky high.

They have slightly come down from what they were at the peak, but still it is very high. So, that's the thing which is causing exports to slightly come down. The moment this problem gets resolved or some solution is found, exports will pick up again. The freight charges have gone up very high. So, it's not America. America is a small issue.

The real issue is the freight rates. Once it comes down, we will again start seeing growth coming back. Exactly.

Thank you. The next question is from the line of Rishab Bothra from Anand Rathi. Please go Two, three questions. To take from the last question, what is our lead distance in terms of transportation? We have three factories, two in Gujarat and one in Rajasthan and another two in the… We have 8 factories right now.

No, but 8 is in different states. So, I was mentioning of Rajasthan.

No, 8 is tile factories, not in different states. Eight are tile factories.

So, what is the lead distance I wanted to understand? Lead distance from where?

I mean from the Eastern factories, one located in South and one in the East.

What is the question exactly? What are you asking?

What is the maximum distance of travel and transportation?

Where do you need the transportation distance from? You are putting a very confused question.

South factories are catering to South India.

The maximum distance of transportation from any of the locations. Let's say there is a plant which is 700 km away.

Page 16 of 19 What do you want to do with that? What is the distance?

My question is how can we reduce that whether a new plant is to be set up in that particular state or other one?

You leave it to us. You can't take all those calls. We have 8 factories. Please get your data right.

We have 8 factories, 2 in South, 3 in West and 3 in North. Those 8 factories are properly distributed to all over India.

Second question is we have 90% of the revenue coming from tile and 10% from the remaining segments. So, what is our growth plans for those segments?

It's basically a tile company. Next 5 years also you will see revenue should be between 85% to 86% of tiles and rest will be from other verticals like what we have today.

But we want to grow those segment as well, you don't want to hive it off. Yes, of course.

Thank you. The next question is from the line of Amit Purohit from Elara Capital. Please go

Sir, just on the growth, we've been growing ahead of the industry, and you would attribute it to what? I mean, would you attribute it to distribution expansion or existing markets also doing well? How do we think about that? And you highlighted that the smaller towns are doing better but just wanted to get your insight?

So, as mentioned we are basically working on all fronts. We are strengthening all our fronts whether it is a retail channel, whether it is projects, whether it is government projects everywhere the action is on to make sure that we do our desired volumes. I will give an example like in the retail front, a dealer of us opened a 20,000 square feet showroom in Hyderabad, right, so everywhere the things have to be there, then only the volumes will come, right, on all the fronts whether it is distribution, whether it is projects in terms of branding to get the market share to increase our volumes.

Sure. And sir, how does one think about over the next 2 to 3 years as the volumes comes back?

I mean, we have seen very high kind of margins earlier, as well in the range of FY16-17, we were flocking somewhere around 19% kind of EBITDA margin. How does one think about, given the context that there are many players which have entered and this category does see competition coming and realization do get impacted, so can we think about over the next 2-3 years somewhere when the volumes recovered to mid-teens or so, would a margin outlook of 17% to 18% is a possibility or you would probably look at high teens kind of a volume growth and keeping the margin same or do you think you would..

Page 17 of 19 We have already given a 3-year vision at our annual meet in the month of May, where Kajaria would be after 3 years, number one. Number two, we have already given an EBITDA guidance of 15% to 17% for this particular year. And as we go forward, we will see how things shape up.

Sure. But you think there is a possibility, as the demand improves, the margin of liquid.

Thank you so much. The next question is from the line of Saurabh Jain from HSBC. Please go My question is relating to your Nepal plant. Now that the plant is expected to get in commission in September, can you make some comments around how would your distribution strategy would be like? What kind of number of dealers are you looking to add? And some more color also on your marketing initiatives for that local market. That will be very helpful.

So, just to give you a background, our capacity will be 5 million square meters of ceramics and GVT. The total market in Nepal is roughly 2,500 crore. We are looking at a 10% to 12% market share once we get fully operational. In terms of dealer distribution, we were already exporting to Nepal as Rishi said, between 70,000-80,000 square meters per month. So, we have a decent distribution network, but we've now strengthened a team in Nepal, and we are trying to increase our dealer network much more, do the branding, increase more dealers, and do some local advertising also to get the Kajaria brand more registered out there. So, as we keep on moving along, we will keep on strengthening our local network out there. That is our strategy.

So, even now, do you have your exclusive dealer partners in Nepal or is it sold more to multi- brand?

No, we already have a Galaxy dealer in Nepal who are exclusive Kajaria dealers. And we are looking to increase that number to much more.

Can you share those numbers what is today and what are your expectations in terms of number of dealers, please? Rishi Kajaria So, we already had a dealer base when we talked about our plant in Nepal. Currently, we have about 50-60 dealers, which will increase to about 100 dealers in the next 3 months. 50 to 60 are almost like doubling to in the next 3 months.

Page 18 of 19 The moment the plant comes, everything changes right? Because your price will be much lower as to what you're giving right now. So, we will increase our dealer base and we will strengthen our branding. We are very sure that we will get our numbers.

And 5.1 MSM, correct me if I'm wrong, almost 1 MSM would be like cannibalization. Is that right understanding? Because what we will be exporting from India that will be done away with and so incrementally net net about 4 MSM of net addition will be there. Is this the right understanding?

Yes, we have to quadruple or make our sales 5x of what we are doing right now. But that will all happen because of the price advantage. What we are selling right now is with all the duties and everything and when we produce the price to the dealer will be much lesser.

And also can you also elaborate a bit what kind of marketing initiatives you are going to take in that market? What kind of interest you are evoking? And if there are any plans to open up local Nepalese based celebrities, any insight will be useful?

Nothing on the card for a local Nepali celebrity. As we mentioned, once a plant comes in, price will become more competitive. We can get the dealer smaller lots, the rotation cycle will increase, the distribution base will expand, that's how we will sell our capacity.

So, it's very similar to India. Nepal is very similar to India. Our strategy is whatever is working here, we will use a similar strategy there.

And if one question, if I may ask, you are aspiring to do about 150 MSM of tile sales by end of FY27, which is like a 12% kind of an annual growth. Can you also tell us what kind of dealership expansion ambitions do you have to achieve this kind of volume growth as you take? What could be the number of dealers you would want to have in the next 3 years for the total company level, yes of course?

So, it will be a combination of both. We are right now at about 1800 dealers as of March 31st, 2024. So, every year, I think with this, we will add about 10%, which is about 200 dealers every year.

So, almost like 700 kind of a number in the next 3 years.

Also, a lot of our existing dealers also open more showrooms and increase volumes. So, it'll be a combination of both.

And we also have 415 exclusive dealers only sell Kajaria. The main thrust will be to open more exclusive stores also of Kajaria.

Thank you. The next question is from the line of Rajesh Kumar Ravi from HDFC Securities. Please go ahead.

Page 19 of 19 My question pertains to this shot up in the container freight index. What are your thoughts on exports from Morbi becoming less attractive and that impacting again the supply in the domestic markets?

So, nothing like that will happen in this 1st Quarter, even despite the freight increase and the freight transit time, the Morbi exports have been flattish. So, whatever they did it last quarter FY23-24, they did the same in ‘24-25 and they are going to soften as we go along, this free trades and all. So, things will get better, they'll come back.

Because we are seeing reports which forecast that the freight index may further shoot up and that is why this concern that most of the freight rate which has gone up may not have reflected in the freight cost in Q1?

If it shoots up, it is not happening only for India, it shoots up all over the world. As I said earlier, India is the most competitive player along with China in the international market. If exports have to take place which it has to, India will be a very large player along with China in the export market.

And any idea what sort of volume growth we did in month of June? Any ballpark, was it double digit volume growth?

June was double digit volume growth. As earlier Rishi said, April was tough, lower, May was better, and June was even better.

And that is why you are looking that this quarter the volume numbers should remain in double digits? Yes, that's what I have already said.

Thank you. Due to time constraint, we will take that as last question. I would now like to hand the conference over to the management for closing comments.

Thank you very much for having this conference done on behalf of Kajaria and on my personal behalf. And thank you all for doing it. And thank you all the participants who have spared their time to be part of this conference. Thank you very much.

On behalf of Equirus Securities, that concludes this conference. Thank you for joining us and you may now disconnect your lines.