BirlaNu (NSE:BIRLANU) Q2 2027 Earnings Call

0:01 Ladies and gentlemen, good day, and welcome to BIRLANU Limited Earnings Conference Call. As a reminder, all participant lines will be in a listen only mode, and there'll be an opportunity for you to ask questions after the presentation concludes. Please note that this conference is being recorded. And I'll hand the conference over to Mr. Mitra from CDR India. Thank you, and over to you, sir. Thank you, Hirag. Good afternoon, ladies and gentlemen, and welcome to BIRLANU Limited's Q2 and H1 FY 'twenty seven Earnings Conference Call for Investors and Analysts. Today, have with us mister, managing director and CEO of the company, and mister, CFO.

0:52 We will first have mister making opening comments. He will be followed by mister, who will take you to the financial perspectives. Before we begin, I'd like to point out that certain statements made in today's call could be in nature, and details in this regard are available in the earnings presentation that has been shared with you earlier. I would like to invite mister to present his views on the performance and strategic imperatives that lie ahead. Thank you, and over to you, sir. Thank you, and good afternoon, everyone. Thank you for joining us today. At the outset, I want to share that BirlaNu has delivered yet another strong quarter of growth and profitability. The revenue for our India business grew by 17% to INR $5.88 crores, and this is now the third consecutive quarter of double digit revenue growth.

1:49 EBITDA rose 3.3 times to INR 40 crores for the quarter. The margins for us strengthened across most of our categories, and our product mix continued to shift towards higher value offerings. And that's a key theme that you would see resonate across our product segments. This consistent performance delivered in a far from easy external environment reflects deliberate choices we have made over the last couple of years, strengthening our portfolio, building a sharper and more efficient execution engine on both sales and operations, and investing behind our brands. These efforts are now showing up in our numbers quarter after quarter, and we intend to build on them.

2:40 I will walk you through the performance of each business before updating you on the strategic agenda and the progress on that. Our group's business continued to be the strong growth engine for the company with revenue up 28% over last year and a volume growth of 21%. We are also selling a richer mix with the share of value added products 35% higher than last year. There is a sharp focus on cost, and the benefit of operating leverage helped us improve margins further even as input costs were on an increasing trend.

3:26 To make these gains structural, we have initiated a comprehensive value enhancement program internally for... Specifically for the roof segment. It is already bringing in savings with the full benefit expected to come through at an annual level from next year. We continue to strengthen our leadership in this category with market share gains during this quarter as well. In walls, our revenue grew by 5.4% along with a significant step up in margins, which expanded by over 200 basis points over the previous quarter and 120 basis point over last year. And this was supported by better realizations, improved mix and tighter cost management across all our products.

4:19 We are also broad basing our growth alongside our traditional institutional channels. We have significantly increased our retail presence, giving the business a wider and more resilient demand base. Pipes has delivered a strong turnaround this quarter with revenue growing at nearly 20% over last year and also sequentially, while margins improved by six thirty basis points. The quality of growth has improved as well. Value added products, including fittings, now make up 47% of the portfolio, which is significantly higher than last year.

5:08 Our focused market development efforts are clearly paying off with our priority markets growing significantly faster and gaining share. We've also introduced new business segments such as manufacturing as a service within price, which lets us make better utilization of our assets, and we are building on these to further improve the overall margin profile of the business. Construction chemical grew by about 35% despite severe cost and pricing pressure arising from the ongoing geopolitical situation. Growth was held by focused market development and an expanding product portfolio. At Key and Coats, which is our most recent acquisition, revenue was up by about 50% compared to same period last year.

6:03 Even as foundational work at Clean Floor... Sorry, 50% higher than last year, even as higher prices across all key raw materials continue to weigh on the margins. The foundational work at Keane Courts is now in place, and it has built a strong order pipeline for the rest of the year and beyond. As input costs stabilize, we expect the operating leverage to support a gradual recovery in margins as well. I'm now turning to Peridot, for which it was a challenging quarter. Demand in key European markets remained weak, compounded by broader global sluggishness, and revenue declined about 4.4% over last year.

6:54 Profitability was impacted by cost pressures and lower volumes. We are acting decisively to reset the business for recovery. There is a cost out program being led by the BCG team in Germany alongside a range of other measures to restore the margins. At the same time, we are not losing sight of the long term. Paradigm continues to build its presence in the new markets, notably The US, India and The Middle East, and to win new customers in the commercial segment. And finally, to strengthen the core of DIY and retail business in Europe. These efforts will position Parador well as its markets recover.

7:42 We remain confident in Parador's long term potential as a premium flooring brand. At a consolidated level, revenue for the quarter grew 9.2% to INR $8.85 crores. Overall profitability, however, was impacted by the weaker performance at Parador. Aside of Parador, the India business continues to deliver on our stated objective of value building growth with double digit growth and steadily improving margins. Let me now update you on our strategic priorities and where we continue to make significant progress. On the capacity front, our greenfield boards plant at Nellore is on track to begin commercial production in the fourth quarter of this financial year.

8:35 We also expect to break ground on our second new project in Hyderabad by December. Together, these will significantly strengthen our position in the fast growing premium boats category. On the go to market, focused market development is delivering results in both pipes and construction chemicals, and our expanded retail presence is broad basing growth in walls. We will extend these learnings across the entire portfolio. On product innovation this quarter, we launched several new products such as the EcoRoof, QuickSeal and Polytech waterproofing two ks in roofs and construction chemicals.

9:24 And this has helped strengthen our presence in the higher value segments. Several other exciting launches are planned for the second half of the year. On sustainability during the quarter, we commissioned rooftop solar at our Golan and Chennai units and have also approved solar capacity at two more manufacturing units. We expect green power to exceed 20 to 25% of our energy mix within the next two years, reducing both our energy costs and our carbon footprint. Finally, we are seeding new engines for future growth and value creation. One such initiative is an AI enabled materials discovery platform that helps architects and designers find, evaluate, and showcase design possibilities.

10:19 It brings BirlaNu closer to the specifiers who shape material choices, and we look forward to sharing more as this new business scales up. We, however, remain vigilant as external risks have only intensified in recent weeks. Geopolitical uncertainties and global supply disruptions continue to drive inflation in key raw materials, energy, freight, and currency. High inflation and tight liquidity are likely to weigh in on near term demand, and the El Nino effect poses a risk to farm output and therefore rural demand. We are responding with discipline and agility, keeping a tight grip on costs through several cost out programs and initiatives across our businesses, managing this proactively and building on the gains of the first half of the year.

11:15 We will continue to pursue pricing and efficiency actions when needed while protecting the investments that drive our long term growth. These risks notwithstanding our strong performance in the first half gives us good solid confidence for the second half of the year. With a stronger portfolio, a richer product mix and new capacity coming on stream and an unwavering focus on execution, we are well placed to sustain that momentum and deliver a strong second half of the year and in aggregate, a strong FY 'twenty seven. With that, let me hand over to Ajay. Thank you for dialing in and your interest at BirlaNu.

12:03 Thank you, Aksat, and good afternoon, everyone. Building on Aksat's comment, I will take you through our financial performance for the quarter and the half year ended on 09/30/2026. Starting with quarterly performance, our India business and here India business is basically BirlaNu's stand alone business as well as Clean Coats business delivered another strong quarter with revenue growing 17.3 year on year to INR $5.88 crore. EBITDA increased to INR 40 crore from INR 12 crore in the corresponding quarter last year, while EBITDA margin expanded by over 400 basis points to 6.8%.

12:48 This marks our fifth consecutive quarter of EBITDA margin expansion, reflecting sustained improvement in operating profitability and reinforcing our confidence in the strategic direction we are pursuing. At the consolidated level, revenue grew 9.2% to INR $8.85 crore. However, the challenging business environment at Parador weighed on overall profitability. Turning to our first half performance. Our India business sustained its strong momentum with revenue growing 13.8% year on year to INR $14.22 crore. EBITDA doubled to INR 138 crore from INR 69 crore in the corresponding period last year, with margins expanding by over 400 basis points to approximately 10%.

13:41 At consolidated level, revenue for first half stood at INR 2,059 crore, registering growth of 11% year on year. Consolidated EBITDA increased to 82 crore from 63 crore in the corresponding period last year, representing growth of approximately 30%. Let me now take you through the performance of individual business segments. The Roof segment delivered a strong performance with revenue growing 28% year on year to INR $2.44 crore. EBITDA margin improved by three twenty basis points to 11.5 compared to 8.3% in the corresponding quarter last year. The margin improvement was driven by operating leverage and focused cost management.

14:31 We expect our ongoing value enhancement initiatives to provide further impact to profitability as the benefits progressively materialize. The Wall segment reported revenue growth of 5.4% to INR164 crore. Despite relatively moderate revenue growth, the segment continued to improve its profitability with EBITDA margin expanding by 120 basis points year on year to 12.3%, supported by better realizations and an improved product mix. With the Nellore Board plant expected to commence operations in quarter four of this financial year, we are confident of further strengthening the wall segment revenue and revenue growth and profitability.

15:19 Our Pipes business witnessed a strong recovery during the quarter with revenue growing 20% year on year to INR 132 crores. EBITDA margin improved by six thirty basis points compared to the corresponding quarter last year. The business recovered from a challenging quarter one when the industry witnessed degrowth amid abnormally volatile resin prices. The improvement in business momentum provides confidence as we enter the seasonally stronger part of the year. Construction Chemicals delivered revenue growth of 35% during the quarter, supported by strong tractions across its portfolio. The business navigated elevated raw material cost and pricing pressures arising from the prevailing geopolitical environment.

16:10 Moving to Parador. The business faced demand headwinds across key European markets coupled with elevated raw material prices. Revenue declined by 11% in local currency terms and 4% in INR terms, which, along with cost basis, adversely impacted profitability. We are progressing the cost optimization programs in partnership with BCG with a clear focus on improving the underlying cost structure and enhancing Perador's profitability. In view of the operating losses at Perador, we have recognized an additional provision of INR 90 crore towards diminishing in the value of our investment in BirlaNu International GmbH, taking the cumulative provisions to INR 164 crore as of 09/30/2026.

16:58 The assessment reflects the prolonged weakness in the key European markets, geopolitical uncertainties and their impact on Parador's operating performance. The carrying value of the investment will be reassessed on a regular basis, considering Faraday's financial performance. The provision has been recognized as an exceptional items in the stand alone financial statement. Moving to our balance sheet. We continue to place strong emphasis on cash flow generation, efficient working capital management and maintaining financial flexibility to support our growth ambitions. Our total debt stood at INR $8.96 crore as on September 30 as compared to INR $8.52 crore as of March 31.

17:44 The increase was primarily driven by investment in ongoing greenfield projects and other capacity expansion initiatives to support future growth. Our working capital position has strengthened significantly compared to both previous year and the corresponding period of last year. Alongside this, we remain focused on strategic sourcing and prudent ForEx risk management to mitigate cost volatility, safeguard margins and support stronger cash generation. As mentioned by Aksat, both the Nelor and Hyderabad both projects are on track as per our plan. We are closely monitoring project execution and capital deployment to ensure timely completion within the planned investment outlay. Before I conclude, let me also send an update on Clean Courts. The integration of Clean Courts with BirlaNu is expected to be completed by end of this year subject to the requisite statutory approvals. We believe this integration will create further opportunities to realize synergies across operations, procurement and other business concerns while further strengthening our portfolio.

18:51 Overall, H1 FY 'twenty seven has been encouraging, particularly for our India business with sustained double digit revenue growth and significant improvement in operating profitability. While the external environment, particularly in Europe, remains challenging, our focus will be on sustaining growth momentum, driving further margin expenses and strengthening cash generation through operational efficiencies, effective working capital management and disciplined capital allocation. We remain committed to enhancing the quality of our earnings and delivering sustainable value for our shareholders. With that, I conclude my opening remarks and hand the call back to moderator to open the floor for questions. Thank you very much. We'll now begin the question and answer session.

19:38 Anyone who wishes to ask a question, may press star and one on the touch tone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Participants, you may press star and 1 to ask the question. First question is from the line of from. Please go ahead. Yeah. Good afternoon, and all. Congratulations on good stand alone numbers. There is definitely a improvement, and I must commend the management for that.

20:28 But my question is again on. So FY twenty seven guidance was of more than breaking even, and that is now followed... That was in August 2026. Three months later, we are again doing a 90 crore write down. And, you know, the first one was around 75... 74 crores. So 45% value, I think, we have already kind of written out. Also, you know, basically, to breakeven, you had guided that, you know, Peradore needs to do $1.40 to $144,000,000 per year.

21:13 I think we did around 60,000,000 in the first year... First half. So are we confident that we will do €80,000,000 in the second half? And, also, you know, the best quarter we've had since February 24 for was 1,700,000, which is in q four FY twenty five. For half, we had already got a hold of 4,500,000. So in the second half, can we do more than that to make it, you know, EBITDA positive? So that is one question. And I... We have gone through all the calls since 2019, and we kind of... Basically, we use the table and the 23 parallel financial commitments have been made on '11 con calls.

22:11 We find the delivery very, very low, maybe one or two, and, you know, 21 have been missed. And, also, if you remember, in FY twenty five q two call, I had asked how long a row will be due to Perador. So my... It's a angst also from us investors that, you know, something needs to be done about this. And each time we hear that, we will turn it around, but it is not happening. So can you throw some light? You know? And and there should be some light at the end of the tunnel. Right? Or or we have to abandon it. So if you can throw some light on this. Sorry for, you know, asking these hard questions, but I think it is high time that, you know, something needs to be done about that at all.

23:04 Thanks, Justin, and thanks for your question and your comments. And I think I understand the sentiment. In terms of something that needs to be done, one one major activity we've undertaken is there's there's a engagement of PCB to come in and do a comprehensive cost restructuring. We are now in month three of that engagement. I'm also encouraged by the results that have come so far. The team overall, the initiative has identified a value envelope of additional about 9,000,000 to $14,000,000 at an EBITDA line level, and that is what we are pressing on. Now this is a comprehensive restructuring on the cost line across all possible line items.

24:01 So that's a major, major initiative that has already been undertaken, and the first set of ideas are beginning to be implemented as well. So we will see the results of that within this financial year itself. The second positive in which we need to see the full results, the investments in the new markets, namely North America, Middle East, India, there is a lot of good positive traction. If you recall and as you recount many of the earlier calls, the whole thesis has been for us to diversify geographically, and the activity in these markets is critical for that.

24:49 I'm happy and confident to report that in these markets, the momentum is very good. For instance, in The US, already in these six months, we have done more, almost twice as more as what we did in the... In full financial year last year. We are on track to finish in North America for this financial year at nearly four to five x of previous year's performance. So there are those green shoots. We need to wait out and see the results before before any other decision or conversation is done on that. Okay. So so how long it will take for the BCG exercise to conclude?

25:36 And what is the new timeline? Yeah. In terms of the identification of value opportunities and designing of initiatives, we are at the end of that phase. So the diagnostic and the idea identification has already been done. We are at... We are just about concluding the design phase, and implementation has also simultaneously started. Overall engagement will run up to the end of the financial year because that's largely the implementation support. But a lot of the result and how much of that 9 to 14,000,000 envelope actually translates on ground will be visible within the next three to four months.

26:23 Okay. So my question, I know I talked a lot, but there was one question on, you know, about the August guidance that, you know, Perador will be a bit positive this year. Do you see that happening or that looks bleak? So at the moment, the first milestone for us to to ensure is as we are out of the summer months to ensure that in this remaining part of the year, which is h two, we should be positive. How much are we able to cut into the losses of the first half of the year? That I think is something that we should see how that situation works out. Also contingent on how the demand is picking up in the core European market.

27:12 But overall, coming into this conversation as we are already in November and October has passed, there is some positive rebound as far as the revenue is concerned. So the first milestone is to ensure that the second half of the year, are positive and create surplus to cut into the losses of the first half of the year. Okay. Perfect. Thank you for answering my questions very patiently, and I wish you all the best for this turnaround. It is very, very important for the company to do that. And if I have any more questions, I'll come back in queue. Thank you. Yes. Thank you,.

27:58 Thank you very much. Participants, you may press star and one to ask a question. Next question is from the line of Parikshad Gupta from Fair Value Capital. Please go ahead. Thank you very much for the opportunity and for the detailed opening remarks. And also congratulations on consistent growth in the India business. I have a few questions. First, a clarification on the Pipes and Construction Chemicals update. Press release mentions and even your opening remarks that the growth in Pipes has been around 20% and the Construction chemicals around 35%.

28:51 However, the segment results mentioned 16%. So can you please understand help us understand the disconnect here? Is it the putty business or something else? That's it, Prashiv. Third leg of this segment is PooTi, where there's been a decline of about 17%. As we have shared in the past, the strategic focus is on construction chemicals and pipes within this segment, and that's where we are pushing on. And we've already shared 2035% respectively as the growth in pipes and construction chemical. So the aggregate number is explained by the decline in Puti.

29:38 And Puti also is in real terms, if I may just clarify, there's no decline in a like to like basis. Typically, putti has a spike during the Diwali season. This time, it's deferred by a month, and that is why there is a timing effect to it. But on a like to like basis, we are about the same level as last year in Pupil. This is very helpful. In terms of the pipes growth, can you please help us understand what was the volume growth and the inventory gains? I asked this question because some of our competitors, they have been able to grow volumes by over 20% and in terms of value, you know, close to 40%.

30:28 So just wanted to understand how much of it was volumes for us. Yeah. So I think the comparison, the numbers you are quoting is not all competitors. It is a particular competitor. And in a in a quarter like this, different players seem to have adopted different game plans. Some have focused on volume at the expense of profitability. Also, the mix of agri in this quarter has had a significant bearing on some of the volume growth that are reported. So I'm just contextualizing the macro picture for us. Mhmm. Number one, you asked about inventory gain. I... In our numbers, the inventory gains are marginal, so it is almost almost negligible.

31:26 Overall, the revenue growth was about 20%, of which about 4% was the volume growth and the rest was from a pricing and mix perspective. So 15% was pricing and mix related. Significantly for us, and that's where the comparison becomes complete, we've also grown on the profitability side by about six thirty basis points. So overall, at EBITDA margin level, we are now north of nearly 5% at a price level. And the choice for us was to ensure that we are growing in a profitable manner and we are not sacrificing on the margin as far as this segment in this particular quarter is concerned.

32:18 Understood. This is very clear. Next on the walls business, can you also again break down the 5% growth into volume levels as well? And if you could also help us with the capacity utilization levels across our boards and blocks capacities? So it's essentially three products, blocks, boards and panels. Overall, the growth in revenue is about five and a half percent. The volume growth is in the vicinity of about one to 2% at an aggregate level. The realization growth is depending on which product is anywhere between 5% to 9%.

33:09 And at the EBITDA level, the growth in profitability compared to last year is close to 120 basis points. So we are now in this segment about 12.5% at our EBITDA margin. And the capacity utilization Capacity utilization are depending on which product segment are in the vicinity of about 85%. Understood. So my next question on the design, the AI based design platform. Can you please help us understand more of the objective around this platform? Is it more for the awareness of BirlaNu products?

33:58 Or are you also going to showcase other brands' products as well? And I'm sure you know this. There are existing players such as Lyft Space, and they showcase multi brand building products. They have architects on board, and they worked on a very specific business model where they it's more like a freemium sort of a thing. However, our I guess, the target user is an architect or a designer. So can you please help us understand the exact objective behind this? Yeah. So the overall objective is is twofold. Number one, this is being viewed as a organic build of a new business segment, which will be enabled and driven by a tech platform.

34:48 The idea is that we engage with a large mass of the specified community in the building product space, and there are several propositions that we are building around it. The second objective is with the connect with the specified community, there is also a benefit that flows into our existing products and our b to b business. So that's the second objective that we are driving. As you would have noted in the board meeting yesterday, there's been an approval to create a subsidiary. We want to drive this as a as a independent business line, of course, within the BirlaNu umbrella.

35:36 In terms of its exact product features, etcetera, I would let the details emerge at the right time. I think it's slightly early. We are still in early development stage, and we'll share more details in subsequent conversations around this. Okay. Thank you for this. Just my final question. On the solar installations and savings of energy costs, in the recent past, the power and fuel expense has been close to 4% of our sales with it being around 14% of the other expenses. Considering the current projects coming alive as well as the project under immediate pipeline, What is the contribution of margin savings or margin expansion that we are anticipating here?

36:35 So for this solar project, it is in a phase manner. It take... It will take around six to nine months' time at different locations. Overall, the annual of cost, annual of savings will be in the range of 4 to 5 per hour in annual business. And that 4 to 5 crore, of course, pertains to our existing footprint. The new plans that are being set up, I think we'll share those saving estimates as these plans actually get commissioned. But roughly speaking at each location, on the regime and the state government's rules, we are trying to convert anywhere between 40 to 50% of our energy consumption to green or renewable based.

37:25 And on a typical basis, if I do a rough back of the envelope, the savings are to the tune of about 30 to 35%. Understood. These are all very helpful. Thank you very much. Yeah. Please. Yeah. No. No. No. That's it. Okay. Yeah. Again, thank you for answering all the questions, and I'll rejoin the queue for any more. Thank you, Birlakshit. Next question is from the line of Vinit Thala from Xylem Investments. So at the outset, I'd like to congratulate on the India segment.

38:11 But at the same time, I'd like to echo the concerns around Parador, which were made by the earlier participants. So my question is, were '25... Were 26, and this quarter, we've impaired around $1.64 odd crores of our investments in in. In the same period, we've raised the corporate governance... Sorry. The corporate guarantee limit from 45 to 50 odd... $55,000,000 and also doubled our SBLC. So I have, like, two questions. First, what is the total exposure today, how much has... Of of these limits have actually been utilized? And is the SBLC within the 55,000,000 limit of the corporate guarantee or it fits on top of it?

38:59 Yes. So as of today, our exposure is EUR 40,000,000, 20,000,000 as you mentioned is SBLC and against corporate guarantee, it is EUR 20,000,000. Okay. So $4,040,000,000 dollars. Okay. So so I was just intrigued. I wanted to understand why are we increasing support while simultaneously, you know, we are writing down the investments. And what what really happens to these these financial supports in case, you know, we prefer to wind down corridor? See, the question on why are we supporting is an important part of our portfolio. It's an investment phase. The market... Cold markets that it has been operating in is have have seen difficult times.

39:49 But that said, with the game plan that we are executing, and we are trying to diversify both in terms of geographical breadth and also the consumers or customers that we are serving, there is an investment phase in the business. All of this is being done with a line of sight of a rebound and resurgence as far as the business and the core fundamentals of the business are concerned. So as an operator, the way we look at it is, like, in my previous answer, I was talking about this new business that we are setting up on the tech side, which will have an investment cycle and then a return cycle.

40:36 Parador has been going through that investment cycle. I do acknowledge it's been longer than what many of you would expect. But we are making these investments with a view of returns coming through and these strategic players actually paying off. So the green shoots that are coming from the markets that we have invested in the last twelve to twenty four months also gives us that confidence. Puneet, I would like to add one more point. These are the provisions we have created considering current market situation. In case the IRRRLANU starts generating cash flow, this provision will get reversed. Yeah. No. These are... So you are talking about the impairment, right, in the investment?

41:24 No. This is this is a provision created in the investment value, equity investment in. Correct. Correct. So we are not an impairment of goodwill in the stand alone. It is impairment is lying in the consolidated books. We have not touched that impairment. No. That is fair. But my question is because, you know, 40,000,000 is fairly significant. It is almost 50% of our market cap. So what really happens to... Like, in case, like, if it would be a small probability event, but if that really materializes and we have to, you know, wind down paradox. So what really happens to this $40,000,000? See, remember this 40,000,000 also is an aggregate of acquisition financing that was done at the time that the asset was taken in. So it's not that this has been pumped into support the operations entirely. That's not the case. So one has to distinguish between the two.

42:21 Do not want to indulge in any speculation on what may happen. There are... Apart from this, there are 100 other scenarios we can discuss and debate, but not a useful conversation to have at this time. Okay. Fair fair fair enough. Fair enough. Okay. Thank you. Okay. Thank you, Vineet. Thank you. Participants, you may press star and one to ask the question. Next question is from the line of Akilesh from North Star. Sir, I wanted to ask you whether you had some clear line of sight today on which would be the first quarter where you think Parador is reflecting its potential as performance.

43:16 Is that going to happen in Q3, Q4 as you sit here today? Or do you think it's a year out, it's not visible right now? And secondly, this new investment into the platform, what kind of budget are we keeping in mind for this new venture? Because it will be an investment phase. And again, will it be a drag on our earnings? Let me answer the second one first. I think on Pareto, I have already answered this question in the previous query, so I don't think I have much more to add on that. On the second one, this is a asset light model.

44:03 The first approval we've taken is to the tune of about five CR, which will be consumed over the next twelve to eighteen months. The line to breaking even is not a long gestation time. So this is not asset intensive, CapEx intensive business model that we are going after. So this is not in any way is going to materially impact the financials of the business. But if it goes through then and is successful as per the plans that we have made, it will have a significant positive rub off on the business. Okay.

44:49 Sir, just one more question. Although I know it's not entirely your domain, but are the promoters interested in increasing the stake in the company at this market cap given it is a fraction of the sales the company makes? They own about 40% in the company. Is this something that they're looking at in any shape or form? You've already given the answer, not my question to answer it. So I honestly don't have much to comment on. Okay. Thank you. Thank you. Thank you very much. Next question is from the line of Vinay Gupta from Previse Wealth Management. Please go ahead.

45:56 Yeah. I have. Thanks for the opportunity. You know, it's it's been discussed. I think this is a question we keep on discussing on every con call, and it's already been discussed. But, you know, the the parador, you know, things just does not solve. I mean, it's been, like, four, five years now. Right? You talk about this thing in in, you know, investment phase. We acquired this, if I can remember correctly, at $610,100 crores. Now the total valuation of our company is, you know, near about that. We are throwing, you know, every quarter or every year. You know, we already... In the first half, we have thrown about 200 crores on that business. Every quarter, there's something or the other that keeps on affecting that at all. Either it's weak sentiment or either there is pricing or something or the other. Do you think we are really throwing, you know, good money after bad? And eventually, I mean, we cannot write down the other part of the business to zero because, you know, just to safeguard one of the assets. I mean, even if it turns around, let's imagine, like, you know, three, four years down the line, it turns around. But the cost that we are paying today is immense.

46:54 I mean, we were, you know, at $45,000 crore company. Now we are barely even thousand crore. So, you know, this... I think the management really needs to draw a line that, you know, some batches, maybe, you know, just not just so that it could be give up. Okay. Let's just not fight this battle. Maybe it will create value up to $4.05 years, but it's been way too long. And then, you know, your bandwidth is being used too much in a particular business while the other businesses are showing up and, you know, all your efforts are being reflected there. So why not just hide it off if if if you think what the management or the promoter think that this is a viable business, might as well let you know hide it off and, know, get its own set of investors who are interested in, you know, in turning around. I mean, the core business is doing well, but because of this one part, nothing has been captured. No value has been generated for anybody, and it's been four, five years. So, you know, that's my... You know, just wanted to have your take on this and that you can, you know, consequently say that these are my comments also. Thank you.

47:50 Sure. No. Thanks, Vinay. Sir, we hear what you are saying and what callers before you also mentioned. As far as bandwidth is concerned, I don't think bandwidth is a challenge. If that was a challenge, then there would not be a turnaround on the existing part of the business or the core India business. The fact that it is on a good good trajectory, there is both revenue and profitability growth should also give you confidence that I don't think there is any cannibalization of bandwidth. We are putting the bandwidth in all the right pockets, and we have the teams and the leadership to drive these businesses in the right fashion.

48:43 See, and as I've shared on previous calls, as operators and in our seat as management, we continue to explore all options for all our portfolio companies or portfolio segments. As far as the question of hiring off, etcetera, is concerned, we don't think now is the time to do it. And there are reasons, as I spelled out earlier in the call, why we feel that is the case. But as a company overall at a portfolio level, all options are actively evaluated at all times. So so, actually, thank you thank you for answering this, but I do understand. But, you know, I... I'm sure you also understand the anxiety of the shareholders. I mean, one part killing all other businesses, right? I mean, the turnaround has taken, I think, massive amount of capital. I mean, literally, I think INR 100 crores is a total PBT of our other division, right? If we feed, you know, at the stand alone, this business and the other business, the valuation would be significantly higher. So this business is not only dragging profits, it's also driving, you know, driving down the valuation of the company as a whole. And it's it's like this does not... You know, I'm sure you are considering everything, but I would still say that please take it on the on the right path. I mean, it's it's getting more and more. I think everybody's getting very desperate because the value destruction has been massive

50:13 because of one part of the business and everything else that you are doing right is just not getting reflected. So, yeah, I think I... I'll just rest it here. Thank you. Okay. Thank you. Thank you, BirlaNu. Thank you. Next question is from the line of from Securities Investment Management. Please go ahead. Yeah. Hi, sir.. Sir, had a question on your polymer division. So now we are on a run rate of $710.50 crores, but on a EBIT level, the... This segment is still making losses. And if I compare this quarter's result, you know, with other three listed companies which are reported results, the profitability and...

50:59 Has improved quite a bit for most of the other companies. But for us, on a few of few business, there are still... We are still making losses in this position. So can you help us understand what would lead to turnaround this... Turnaround in this division? So I... On on the polymer division, which is aggregation of pipes, construction chemicals and, I don't think there's a story of a turnaround as much as it's a growth and a scale up story that we are pursuing. And I think it's important to also look at these three segments slightly differently. Bites, as I said, there has been a significant profitability improvement for us quarter on quarter. If you see the results for, I think, three to four quarters, including this one. This quarter, we have grown our profitability by about six fifty basis points.

51:59 And that shape of the P and L was an important thing to rectify, which we have done. The volume growth is what we are pursuing with and the revenue growth that is also now visible, and we'll continue. So somewhere, the the aspiration with which we are growing is that we have to almost be growing at double the... Whatever the industry average growth rate over the next three to four years. So pipes, we are on steady ground. And with with the acquisition that was done, even the results of that segment are are fairly strong. So I see no cause of concern or a need for a turnaround. Yes. There is a need to keep pressing the accelerator as far as revenue scale up is concerned.

52:50 Construction chemical, the youngest part of our portfolio, been around for maybe last two to three years, also got a leg up with the acquisition of TeamCourse that we did. Again, here, partly, we are bending the channel and the sales team. So there is a little bit of investment ahead of the curve. But that said, it's not much overall. As a subsegment, it is still profitable. There are seasonality then, which is why quarter two may look slightly different, but we are confident that we'll finish this full year on a profitable note. So there is absolutely no room for concern here. In fact, the acquisition of Clean Courts is shaping up very well. It has given us a portfolio of specialized products, higher margin products, and we are pushing hard on building that sales engine.

53:54 One early result there from quarter two is that we have done close to 50% more revenue than the same period last year. And today, as we exit October, enter November, we are at a stage where there is more demand than we can service out of our production facility. So overall, it holds a lot of promise, but like with any new business build, it has to go through its spaces of the right building blocks being put in place. So we are doing both simultaneously. Put the... Of course, we have also outlined is not a strategic growth agenda for us. So it's more in our hold and maintain formation.

54:42 And it's allowing us channel access for the construction chemical products. So there is a useful objective that we serve. And, Aditi, this EBIT also includes large portion of depreciation cost because of the new investment in the last six, seven, eight years, including two acquisitions. The 40 crore is annual depreciation we charge in the segment. Oh, okay. Understood. Got it. And is is it possible to quantify losses we are making in? Because if the five and We are not making percent. No. No. We are not making we are not making losses. We we are just about breakeven as far as Puti is concerned. So there is no question on making losses.

55:35 Got it. Understood. Sure. And lastly, sir, on PALIDOR, I think in your opening remarks, you mentioned that this BCD initiative could give us cost savings of 9 to 14,000,000. So did I hear it correctly? Because that is quite a big amount. Yes. That's the value, Anurag, that has been identified by that initiator so far. Typically, in exercises like this, you should assume a little bit of discounting by the time these savings hit the bank. Now whether that discount gets applied to the higher end of the range at 14 or at the lower end, I think that is what will emerge in the next few weeks.

56:24 But that's the kind of scale of saving that is being done. And I think I shared that number more to also convey that this is a deep cost restructuring that is being done. It is not a superficial exercise that we are doing. One... So this cost benefit, which is... We are expected to the NIS, this is more to do with some internal improvements and not just from, you know, increasing sales increasing sales from. This is more of internal takeouts. Right? This is all internal takeouts. This is almost assuming we are working off the base of last year's revenue, and that's what we would like to take off internally has no linkage to sales volumes.

57:14 Got it. So the breakeven or would reduce materially now? Correct. I mean, if these numbers land where they are supposed to, we would be shaving off a monthly breakeven by at least a million euros annually, like, 9 to 10,000,000 is what we are looking at. Got it. Understood. And last question, sir. What would be the cost if we are paying DCD, which is currently reflected in the PBT losses of Paradigm. Because I think this... These costs would not be there next year onwards. Yeah. At the moment, there is no cost booking because the program is entirely So at the moment, it's not it's not reflected.

58:03 And, yes, you are right. This will be one time in nature. I I don't think it'd be right for me to share the commercial details of the engagement just yet. Got it. Sure, sir. Thanks for answering the questions. Thank you very much. Next question is from the line of individual investor. Please go ahead. Thank you so much for the opportunity. Good morning to everybody, management team as well as other participants. So sir, I'm calling in from Germany. My question is regarding Parador, Right? I mean, it's not about, improving the numbers or anything. It's about the overall sales. How are you looking to increase the overall sales? Because I see here around, it's been a bit difficult with macro, with jobs and costs rising. Right?

58:59 And I've been to an OB, and then I've asked how, people are actually buying the floorings. So there is not actually a very huge, difference between us and the competition, except that that Parador is slightly premium. And what is the exact which you're looking at here? Like, is it, let's say, antidumping duty for the Chinese floorings? Or what is it that you're looking for for increasing the sales? Because the demand, I don't see it is increasing a lot. Right? Because number of people who are replacing their floors or their housings is not a lot. That is my first question. Second, I mean, the continuation of the question is also, like, I see your products in DM, right, the cleaning... Four cleaning products, which are sold in DM. I also don't see a lot of people actually picking it.

59:51 So what is it that we are looking at in terms of increasing the sales? So your question is increasing sales in Germany and the Central European market or your question is about... Exactly. Yes. Yes. It will be sales in Germany and, yes, Central Europe and overall sales for Parador as well. Okay. So let me then respond to this at two levels. One, what are we doing at our overall company to increase sales and sales volume? And I'm glad you are dialing in from the from the hub of the action, so there is you will resonate with some of the messages that I'm sharing.

1:00:39 So first, as a company, one lever for sales growth is around geographical expansion. You would recognize that Carador as a company historically was very Central European focused, and we are now opening or establishing a deliberate and strategic presence in some of the fastest growing large flooring markets in the world where we were present very tactically and marginally. So markets like North America, where despite all the global turmoil, the chlorine market is on a good positive trajectory, and it's a large chlorine market. We are establishing a foothold there. India is a market where we did not pay, so we are working towards building that one up. Similarly, a couple of other developing markets like Middle East and Southeast Asia are what we have invested over the last two years.

1:01:38 So that's one we were... Second, Paragon as a company was largely in the residential space and selling its product to retail... Through retail channels, whether DIY or specialized high speed retail. We have also added a layer of commercial sales on top of it. Now commercial growing in the commercial segment mean... Made building relationships with the specified community and also product differentiation, which we have done over the last two years, and there is a good action coming in on the commercial side of the business. So those are two themes at a global level, especially specifically in Germany and Central Europe.

1:02:26 Much of the strategy, you are right, the market itself has been flat. In fact, has declined if I compare it with four years ago to now. And much of our strategy is about daily share. And there are two, three things that have worked well for us. First and foremost, as a consumer preference, people are moving from high street retail to DIY. Right? Today, we signed on more shelves. So you visited OBL DM, like the Bauhaus and other big DIY chains. We have increased our shelf presence, and the idea is that we are gaining share on the expense of other competitors.

1:03:13 In high street retail, the share gain story has been playing out with product differentiations. So that's the that's the second leg. So I think what is helping us in doing this, and we have consistently shown the fact that if you compare even with the last three to four years, our volumes are either flat or there is a marginal increase, then the overall market has declined tells you at the macro level we have gained share. It is essentially coming from the fact that a lot of our competitors are also falling by the wayside. Either they are holding up or they are restricting their areas of activity and which is also somewhere helping us. So the the core fundamentals of the company and the fact that it stands for a certain brand and a premium positioning is helping in a market like that.

1:04:12 Same car is a big USB that we carry, which many of our competitors did not have in... Which is why they have folded. Does that answer the question, sir? Thank you so much. I really appreciate the answer. My next question is regarding the roofing segment. So like what is it that we, as well as the industry, have done better in this quarter that we have seen a year on year increase? Or is it due to just lesser rainfall, which has helped us in hindsight? For our industry, lesser rainfall is usually a negative signal rather than a positive signal.

1:05:01 So that has not played out, and that will... What has helped is adding two or three things. One, there was almost a pent up requirement for price correction in the market over the last two, three years. Because if you look closely at our numbers or any of our industry peers, the cost increase was much more than what we could pass on to the market. So somewhere that pent up price increase helped, and that held on the margin side. The second thing that's also helped is one of our close competitor product, which is steel roofing. There's been a massive run on the prices of those products, which had also opened up a bigger demand basket for us as an industry. So there has been good solid volume growth as well at the expense of this competitive product.

1:06:01 So I would say those are two big factors which have helped the industry in the first half of this year. Understood. Thank you. And my final question is, you had a guidance of, let's say, becoming a $1,000,000,000 company maybe a few years down the line. Which segment of yours do you think could be the leader in this run to $1,000,000,000 So what we've been talking about last several quarters is about doubling down our portfolio. And within our portfolio, was in one segment where we we have a clear part to doubling our revenue from where we were, say, at 500 crore level to a thousand crore level.

1:06:57 But the key growth engines in the India business would be around pipes and construction chemicals, where a growth path of three to four x of where the starting point was, say, a year ago is is what we are aspiring for. So in terms of both absolute and percentage growth, those would be in the two segments where we are putting on an EVM. Amazing. Thank you so much for your patience in answering all the questions. I wish you all the best and luck in both Parador as well as BirlaNu. Thank you. Thank you. Thank you very much. Next question is from the line of Vineet Joshi, an individual investor.

1:07:44 Please go ahead. My question for the management is, are we seeing any turnaround in European demand for housing based on your market intelligence that you have? And what is the proportion of sales that comes from non European region or Parador? And are we planning to make it more meaningful? For example, we mentioned that we are expanding the markets to US, Middle East and India. So what is the proportion right now, and what is the more meaningful target that we are expecting in the near future? Yeah. So are we seeing... And and I'm I'm making this comment with cross fingers because this should play out if...

1:08:41 And I'll also recall the past... The previous quarter. In Germany and in other markets in Europe, this is probably now for the last twelve to fifteen months, there's been an increase in the number of new house permits and new house constructions that have happened that have happened, which is a significant change in trend from what we have seen in the previous three year period. Typically, this cycle takes about twelve to eighteen months for it to start hitting demand for flooring products because ours is almost the last product that gets fixed. But we saw that play out in upstream players and building products like cement, etcetera, where there was a demand uptick.

1:09:34 So we hope that this will continue, and there will be a... With adequate lag, there will be an impact on the chlorine demand as well. So that is what at least the data suggests from from an economic perspective. This is both new builds and also renovations. So, yes, there is there is some data that is indicating a positive turn in those, especially in Germany. Your second question was on the market mix. Today, less than 10% of our sales in value terms is outside the European region.

1:10:20 The first milestone we are hitting is that in the next three years, it should cross the 20% mark. So that's the shift in portfolio that we are thinking. Of course, this will be assuming that there would be a certain growth in the core European market as well. Thanks. Thanks for answering the question. So one more question that I have is around so one more question that I have is around use of technology for your relationship with retailers. So right now, how do we sort of integrate our ordering process with the retailers? Are we using some app based ordering or what kind of... How do we fulfill their needs? How do we understand the demand?

1:11:14 Can can you throw some light on that as well? We can take this offline, and I'm happy to spend more time. But at a headline level in the India business, a lot of our retailer demand and retailer engagement is being driven by a WhatsApp based AI driven tool, which is allowing us to capture the demand at a retailer level, process the demand at a distributor level for them, and ensure fulfillment, and allows us direct access to the retailer community, including our ability to drive customized promotions and cross selling, upselling opportunities.

1:12:00 So it's a it's a specific tool which is driving it. It's not a standard retailer management system, but it's something that we deployed. First deployed about six months ago and is giving us fantastic results. Thanks. Thanks for answering your question. Thank you. Thank you very much. That brings us to close of today's call. I would like... I would now like to hand the conference over to the management for closing comments. Yep. Thank you everyone for your participation today and your continued engagement with BirlaNu. For any further inquiries or information, please feel free to reach out to our investor relations desk.

1:12:50 On behalf of the entire BirlaNu family, I wish you and your families a wonderful festive season. Happy Diwali to all of you, and enjoy the week ahead. Thank you once again, and have a wonderful day. Thank you very much. On behalf of BIRLANU Limited, that concludes this conference. Thank you all for joining us, and you may now disconnect your lines. Thank you.