Cello World (NSE:CELLO) Q1 2027 Earnings Call

0:00 Ladies and gentlemen, good day, and welcome to the Cello World Limited Q1 FY 'twenty seven Earnings Conference Call hosted by ICICI Securities. Before we begin, a brief disclaimer. This conference call may contain forward looking statements about the company, which are based on the beliefs, opinions and expectations of the company as of the date of this call. These statements are not guarantees of future performance, and it may involve risks and uncertainties that are difficult to predict. As a reminder, all participant lines will be in a listen only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Please note that this conference is being recorded. I now hand the conference over to Mr. Manan Goel. Thank you, and over to you, sir. Thank you. Good morning, everyone. On behalf of ICIC Securities, we welcome you all to Q1 FY 'twenty seven results conference call of Cello World Limited. Today, we have with us senior management represented by Mr. Parag Rathur, joint managing director and Mr.

1:03 Atul Parulia, CFO. Now I hand over the call to the management for their initial comments on the quarterly performance. Then we will open the floor for Q and A session. Thank you and over to you, sir. Thank you. Good morning, everyone, and a very warm welcome to our earnings conference call. Joining me today is our CFO, Mr. Atul Parolia and our Investor Relations Adviser, SGA. Our financial results and investor presentation have been uploaded to the stock exchanges and are also available on our website. I hope you had an opportunity to review them. During quarter one of financial 2027, we reported revenues of INR $5.27 crore, while maintaining healthy profitability. EBITDA and FAT margins stood at 22.913.9%, respectively.

1:51 In our previous earnings call, we indicated that we would see a soft patch. In response to the rising input cost environment, we implemented price increases across most of our product categories. These price revisions enabled us to fetch better gross margins in a weak demand environment. The Writing Instruments division delivered a healthy performance during the quarter, registering 52% year on year growth, driven by a healthy contribution from the Cello brand. The Consumer Wear business, which is our largest product category, delivered a muted performance during the quarter due to multiple factors. Consumer demand continued to remain subdued as discretionary spending was impacted by inflationary pressure and the prevailing macroeconomic uncertainties. Steel bottle sales were not comparable with the corresponding period last year, and we did not have the imported inventory to support demand this year. We have already commenced our in house manufacturing of steel bottles at our Ardhisan facility.

2:49 Currently, eight manufacturing lines are operational, although they are yet to reach optimal utilization. We expect these lines to ramp up over the next few quarters, enabling us to gradually recover and cater to the demand in this category. Capacity utilization in our Glassware business remained at about 60%. Customer response to our product quality has been encouraging. However, the scale up has been slower than anticipated, primarily due to continued dumping from China. We also saw weaker export demand for most of our products during this quarter. Revenue from our Molded Furniture and Allied Products business stood at INR 80 crore, broadly reflecting the prevailing industry demand trends.

3:34 We also witnessed strong momentum across e commerce channels. These channels now contribute around nearly 16.3% of overall revenues while continuing to deliver healthy profitability. In this dynamic environment and broader macroeconomic uncertainties, our focus remains on the factors within our control. During financial year 2027, we will continue to strengthen our operational efficiencies, rationalize our product portfolio, realign our distribution strategy, deepen market penetration and improve our working capital discipline. With a focus on maintaining strong balance sheet health and a robust operational structure, we remain confident of steadily improving our performance as demand conditions normalize and the benefits of our ongoing strategic initiatives begin to reflect in the business.

4:22 With that, I would now like to hand over the call to our CFO, Mr. Adul Parolia, who will take you through the financial highlights. Thank you. Thank you, Harav, and good morning to everyone. I will be sharing the financial details for the quarter gone by. Revenue for Q1 FY twenty twenty seven stood at INR 526.7 crore and gross margin for the quarter stood at the healthy level of 52.4% sequential margin improvement. EBITDA for the quarter was INR 117.1 crore translating into an EBITDA margin of 22.2%. Profit after tax stood at 73.4 crores with a P and C margin of 13.9%. In terms of revenue mix, Consumer Way contributed 63.6% of the total revenue, followed by Writing Instruments 21.2%, while Molot PolyJet and Allied Products contributed remaining 15.2%.

5:14 Generalized General Trade contributed 71.1% of the total sales. The online channel increased its contribution to 16.3% from the 10.4% in Q1 FY twenty twenty six, with profitability remaining in line with the general trade channel. Export accounted for 7.3% of the sales, while modern trade contributed 5.3%. On the profitability count, ConsumerAir reported a gross margin of 55%, Writing instrument delivered gross margin of 53.8% and Molded Furniture recorded a gross margin of 39.5%. With this, I would like to open the session for question and answer. Thank you very much. We will now begin the question and answer session. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we'll wait for a moment while the question queue assembles.

6:23 The first question is from the line of Rakshat Desai from IIFL Capital. This is Pulsi Pansaki here. Just wanted to understand on the glassware unit, at the time of meeting the CapEx, was the expectation that the China dumping is going to be a short lived kind of a phenomenon? So firstly, I think while we have made this investment, the conditions are a little different. The dumping was not as much. But in any case, the ramp up has been good. The revenues have constantly been increasing of the glassware plant. And at another 10%, 15% utilization, we will reach a healthy profitability.

7:14 So I think we still stand by the whole idea of putting up the plant and CapEx, and we should see the fruits pretty soon. And how much was the sales in the current quarter from the new plant? It has increased substantially. It is in the tune of about 30%, 35% increase over the last quarter. Over Q4? Over Q1 of last year. Okay. Okay. And what would be our capacity utilization at this point of time? Capacity utilization still stands at 60% only because we've been using older stock as well, right?

8:02 So we had a lot of stock that we have built up as well. So we have been eating up that stock and that is why the capacity remains at 60%. And when can we expect I mean, sorry, what can we expect in terms of sales from this unit for the full year FY 'twenty seven? There should be a healthy growth. As I said, we're already we've already seen 30%, 35% growth in the first quarter. So I think that should be the number hopefully for the entire year. Would we be expecting about INR 150 crores or no? A lot more than that. That was last year. So similar, will quite a lot more than that.

8:49 Okay. Understood. Secondly, on the rest of the consumer wear division other than the glassware, I mean, how has the growth been? What does the festive season look like? Is there going to be any kind of sort of phasing between Q2 and Q3 on a Y o Y basis, if you can give some idea? Sure. As I mentioned that on the consumer side, the major problem has been the steel product because we have had stock of situations. And while we have been producing at our new plant, it takes time for the plant to start producing all kind of items. So while when we were actually at our peak, when we were still importing, that time we had about 150 SKUs. Today, are paying with 20.

9:44 And this will increase to about 50, 55 over a period of the next couple of quarters. So I think that's how the ramp up is happening. We are left with very limited SKUs. The SKUs may be a bigger issue. But at the end of the day, that's the only way things are going to move as we have access to no other product line. Okay. And lastly, can you comment on news items regarding a promoter stake sale? What is the thought process behind that? What are the timelines? What is the extent of sort of shareholding that you would like to sell, etcetera? See, already as we have I'm actually here.

10:31 As already, we have explained in the MSC and BSE that we are nothing evident. We Sorry, I couldn't hear you. There has been a clarification that has already been put out. I think you can refer to that. And currently, there is no other comment on this that you would like to make. Okay. That's all from me. Thanks and all the best. Thank you. The next question is from the line of Praveen Sahai from PL Capital. Please go ahead. Yeah. Hi, sir. My first question is related to the consumer Opelware business. So how has been the Opelware business?

11:18 How has been the growth? How much the contribution has been? So it's a it's been a tough quarter overall for the consumer by category. So of course, there has not been much of a growth in the Opel by category for this quarter. But it is it is one of the worst quarter anyway for Opalware because the first quarter is the slowest. Opalware really picks up from the second and third quarter. So I think it looks like a good flagship season ahead, but it's been the growth has been muted for this quarter, I think, for OpenBear. Okay. And overall in the consumer business, how much of the price hikes have you taken? And is that enough for the the inflation in the commodity?

12:08 Right. So I think the price increase has been different across the first product line. So starting from 7% to almost 20%. So so the price actually have been quite significant. And that is one of the reasons also why volumes have dropped in this particular quarter because it takes a little time for these price increases to take effect. But we have seen crazy increases in input cost, and we had no other choice but to increase our prices. But these prices are absorbed in the market? Yes. Now has been absorbed because over time and that is why you see a little dip in demand a little bit because of the QIAKY. But now I believe it has been absorbed in the market.

12:55 Right. Secondly, on the in house manufacturing of steel bottles, already you highlighted it will take a time for a ramp up. So by when you are expecting to... Whatever the sales which got impacted because of non availability of the imported product, get compensated with your in house manufacturing. So I think we are ramping up. As I said, we are at only about 20, 25 products currently, and we used to play in around 150 odd SKUs. So I think we will, of course, reach fifty-fifty five SKUs, which were contributing our major sales. And it will take another couple of quarters to really see the full impact of gaining the entire payback of what we had lost due to the nonimmediately.

13:44 Okay. Okay. And lastly, on the molded furniture from the last three quarters, we are seeing a decline in the number. So what what is that the reason for that and when you are seeing this outlook to improve? Yeah. Think Molded Furniture, we have always said that we don't expect much of a growth in this particular segment as it is a heavily crowded segment. So for us, your just preservation of current revenue and good profitability is the key. We do not see any great future growth in this particular category. But we would like to maintain our revenue and maintain our profitability in this segment. So this segment is not going to be a revenue driver for us, you know, even in the future, as I've always said.

14:34 Yeah. So is that a declining mode continuing the, you know, the entire year? Not declining, it comes back. It's more than one JQC across the years. It's always been a similar number. It kind of goes down in one quarter, but picks up the next quarter. So because there are a lot of other institutional sales also that comes in. So it depends on the timing of that as well. So it's not that it's going be a declining trend. I think we should try to or we will be kind of maintaining the top line. Okay. Thank you, sir. All the best. Thank you. Thank you. The next question is from the line of Anuparek from Anandrati. Please go ahead.

15:26 Yes. Hi, sir. Am I audible? Yes. Yes, sir. Yes. So my first question is on the Writing Instrument segment. Our gross margin is contracted after the Cello acquisition. So what would be the steady state of margins we can assume going forward? So I think you are right that it has kind of gone down a little bit, but that's because we are realigning our complete product range in the Cello portfolio. Because when we bought it, there were a lot of items that were not making money for the company. So I think we have rationalized those products. We are introducing newer products in place of that. So it is kind of transitionary, this effect.

16:12 We should see similar numbers to the UNOMAX brand that we have been operating in by at least in the next couple of quarters, you should see similar numbers for both brands. I understand. So on the Glassware and the Opel there, how much if you can just quantify the year on year growth or the growth in revenue in q one of f f twenty seven? And was the gas issue has affected or does does the issue still persist? So in terms of numbers, on the Opel Glass side, it's been a marginal growth.

16:57 It's not degrown. And the gas issue, the availability of gas is now there, but it is of course at a very high price, which is about almost 80% higher than the price that we were getting in March. So of course, there is an impact on margins due to that as well because a lot of it could not be passed on during the quarter. But we have taken price increases and that has kind of helped negate some of the input cost increases. But the gas price increases have been extremely substantial. So is the issue still there and we are we are we planning to more price hikes? More, sorry? More price hikes? No. So I think I don't think we will be able to do any more price hikes. I don't expect it to go above this level at this point of time.

17:53 But I don't think we can do any more price increases because a lot of the products that were coming from China, the prices have not increased there. The input cost for them remains pretty much the same, while it has increased substantially for us. So I think but hopefully, it will not go up beyond this. It already, I believe, has reached its peak. Understood. So... And sir, what was the sales contribution for excess bottles in q one FY twenty six and versus q one FY twenty seven? So I think Q1 FY 'twenty seven, it has kind of dropped substantially, and that is the main reason why you see a degrowth in the consumer base segment. It's because Q1 of twenty twenty we had a lot of material. We were playing in about one hundred and one hundred and one hundred and ten SKUs. And today, we're down to about 25.

18:52 So I think it's a substantial degrowth in steel segment, which has contributed to a degrowth in the consumer segment overall. I see. In terms of the CapEx plan for FY twenty seven? Yes. I think CapEx plan, there is nothing major coming in this year. It's only going to be maintenance kind of CapEx that we will be maintaining. Having said that, there could be an addition of a few lines in the steel segment, which we will plan soon. So that is the only CapEx budget will be very small. So we have set up eight lines and two more are pending?

19:38 We are planning a few more. Yes. Okay. And when can we expect, sir? Oh, that will, of course, come by next year. So we will be placing orders soon for that and... Because we wanted to first ramp up the production on these lines. So while we are doing that, we are also planning for the future where we will have to add lines. So this this should be commissioned early next year. Okay. And sir, lastly on how has been the demand in July? And what is the channel inventory level now? Like is it below the normal or normal or above normal level? I think the channel inventory correction has happened in this quarter as primary from the company has dropped, but secondary has improved. Though it was not a very good environment for demand.

20:30 But still, there been a slightly better secondary that is coming, so which is, I think, going to help us in this quarter. Thank you, sir. Thank you. Thank you. Before we take the next question, we would like to remind participants that you may press star and one to ask a question. The next question is from the line of Karan Gupta from Asset C Meta Investment. Please go ahead. Mr. Gupta, your line has been unmuted. Please go ahead with the question. Yes. Am I audible? Yes. Yes. Absolutely. Yeah. So a couple of questions. On the demand side that you're seeing not very good environment, are you also facing some bit of competition from the domestic players in your consumer wear segment.

21:30 In which segment? Consumer wear segment. Yeah. Yeah. Or has been the competition in that segment for steel bottles, maybe for glassware, opalware? Right. And that is one thing. And the second one is on the glassware, opalware. What is the, you know, contribution of overall consumer there in quarter one and how it has been in the quarter one FY twenty six. Yeah. Yeah. And you can also share the capacity utilization. I think for glass where you said 60% right now. So for the Opelware also, you can share. So that's two questions, then if you allow me to then add one more. Sure.

22:20 I think on the Glassware, Opelware is an Opelware is at 80, 85% for this year, and Glassware stands at about 60% utilization. And overall, consumer website, there has always been competition. Competition. It's not that there has not been. So and of course, while when demand becomes worse, the competition intensity increases a little bit. But given that, that is transitionary, I think as demand situation improves, then I believe the next couple of quarters should be good when second details have been better than primary. So I feel that overall, there is a place for every competitor.

23:08 Yeah. So that's how that's how consumer where it's stacked at this point of time. Okay. And the percentage of sales last year over year in quarter one, if I can see? I think it is slightly increased from last year as it has contributed a little more than the other segments. So partially the marginal increase, I would say. So around 30%? Okay. Okay. And so for FY 2728, just broadly, the target is to ramp up Classware, Openware capacities or what... I mean, for the FY twenty seven, twenty eight target. And what's the marketing spend that you've done in quarter one So I think two major factors. I think Openware Glassware, we want to keep increasing our share of the market, which we are doing already.

24:09 Glassware, even more significantly than Openware. Openware, we are almost complete capacity, not much capacity is left. Apart from that, steel is, of course, one thing that we want to ramp up because that's going to give us the maximum revenue increase plus profitability. Because while we have started production, it has lower efficiency levels, margins are lower. And as it increases, we should see better margins also in that particular category. I think we are running for two definite things this year. One is of course, glassware ramp up and the plant ramp up. Okay. And still at capacity utilization?

24:57 We are in very well. Hello? Hello? Yes. Steel wave capacity utilization in quarter one? Steel wave there no fixed utilization at this point of time because the efficiencies are not fully there. As the efficiencies ramp up, I think by in the next couple of quarters, we should be at peak efficiency. The next question is from the line of Achal Lohada from Nuvama Group. This is Achal Lohada from Nuvama. Team, I have a couple of questions. First, you know, if we look at the kitchen appliances company's results for last two quarter and particularly last quarter, you know, they are they are showing actually very, very strong growth.

25:56 Right? So while we we are to an extent adjacency, we haven't really seen as much. So I'm just curious, you know, is there a disconnect out here? Is there any specific product or region or competition aspect which is kind of impacting the growth in general? I think, see, there are kitchen appliances not completely comparable, you know, to us because, you know, it's it's more of a plan by... There are cycles in in that business, And it is kind of cyclical. If you see while it has improved, the entire industry has done well. So you will have to see it from an industry perspective for us as well. Because I think we are right in the middle.

26:43 We are not luxury. We are not planned consumer durables. We are right in the middle somewhere. And I think when there is inflationary pressure, initially, we get squeezed. But I think later on, it starts doing better. So I think I would look at it from that perspective that the industry overall is a discretionary industry. It's not planned by our consumer durable industry. And I think in the durable side, there is a cycle that is playing out, and that is why you see increased demand there. We do appliances as well. We saw fantastic appliances this quarter, appliances cookware while we are very, very tiny in that category, we saw a significant uptick.

27:30 So I think it's more from the industry category perspective that things have happened in that side of product electrical appliances, any any update on that? Are we expecting anything on next couple of quarters or it is still sometime away? What? Sorry. Electrical appliances? As in kitchen appliances, the electrical appliances like the mixers and all that stuff. They're already doing that segment, though we do very niche products there. We that is what I was telling you about that we saw also a decent growth in that particular category. Though it's a small category for us, it's growing. It's growing at a decent pace. And we are trying to be on the profitable side of things there. We don't want to get into very marquee products. So I think that is why we have taken our own niche in that particular product line.

28:26 Got it. And any guidance on the overall growth and margins for FY 2027? Think it's I up don't want to have at this point, I would not like to guide for anything. I think we'll have to see how things improve in the next quarter. And I am very hopeful of things improving quickly. But I think I'll be in a better place to give you guidance in the next quarter rather than this quarter because of what has transpired. And of course, we are positive on the next quarter. But I think I'll be in a better position in a couple of months. Got it. Just a clarification, you mentioned the inventories are normal, right, in the channel or they are slightly higher than usual?

29:18 No. I I think it has actually dropped because if you see our primary does not happen as much in this quarter. But because there was old stock and which was priced at a lower price, that has started clearing off. So I think our channel partners sit at a comfortable position at this point in time. Got it. That's all for me. Thank you, Bharat. Thank you. Thank you. The next question is from the line of Akhil Parekh from three sixty one Capital. Please go ahead. Thanks for the opportunity. My first question is on the consumer segment. If I look at last three years, right, and I'm not talking about last few quarters, but FY 'twenty three to say first quarter of forty seven, sales are largely flat for last three years, including the declining sales for first quarter. So what has changed, right? I mean, I'm sure there has there would have been some kind of introspection internally with the management.

30:20 There is something we just changed in last three years. And at the same time, what we do see in last year is the ceiling of quick commerce has gone up across the categories. So is it to be... Does the channel issue is there or there is a brand issue? Or is there a category issue, which is kind of hurting our growth rate? That is my first question. So I think consumer wear is not being flat. It has grown over the last three years. While Writing Instruments and Molded Furniture has been flat, and that is why you see a very flat number. So I think Consumer Wear as a segment has been growing. There have been different challenges at different times that we have faced. One of us, for the last two, three quarters, it's been the steel wear.

31:08 Before that, it was the glassware kind of ramp up issue and the dumping that we saw from China and continue to see. But apart from that, this is a growing kind of a channel. Last two years for most consumer wear categories has been low. So it has been an industry problem rather than our problem alone because we saw phenomenal growth from 2021 to 2023. The growth was almost upwards of 30% in this category, which dropped to about 8%, 10% over the last three years. So I think it will improve overall. We have entered the right categories. Glassware, we have taken a big bet on.

31:53 Steelware, as we ramp up, it will contribute very well to the top line because a lot of imports have now been cut, so before anyone could import. So I think we are going to see a market share gain there over the next couple of years. And I think these categories are something that are also trend based. As we go along, we have always said that we will enter newer categories and synergistic categories, which are all the only category, which will also fuel growth. So I think every two, three years, the consumer base category needs a refresh, needs smaller niches to be added. And that is why you see good margins in this particular category.

32:38 If it was run of the mill commodity product, you would have seen very low margin, very high revenue growth. So I think that's not the play that is there in the Consumerware segment. Consumerware is a very specialized segment. And I think we should look at it from that way and we should look at it from brand building perspective over years rather than a very quarter on quarter or a year on year growth. I think while a lot of people have not grown, they have not maintained margins at all, we are at least trying our best to kind of maintain a healthy bottom line while still maintaining our top line. So yes, that's how I and the entire management kind of views this particular category.

33:25 And we will know there are good years and barriers in this category and somehow the last couple of years have not been that great. But hopefully, the next few will be much better. So, you highlighted online sales is 16% of our total revenue. Will you be able to share how quick commerce has scaled for us for the last three years? The commerce has done also extremely well in the last one odd year. I think this channel is bound to increase quite significantly over the next few years, as I've always mentioned. And I think we are also taking a good amount of share of that market. So I think it's good things.

34:11 We are reaching directly to the consumer rather than the dealer in the GT channel being the influencer. The product itself is reaching directly to customers. So we are trying to promote more and more of our products in this channel. And I think as this channel improves, customer loyalty, customer brand equity keeps increasing. And lastly, on the glass and steel, at prevailing price, can you repeat sales from the glass facility and the steel facility? That's the last question. So at peak, glass would be at about INR $2.50 crores to INR $2.75 crores revenue, which is from the plant, of course. And then we have other allied products as well.

35:00 And at peak steel where plants currently with eight lines should be at about INR 300 crores. But of course, it's a brownfield after that. So we'll be adding we'll keep on adding our lines as we go along. And that we expect hopefully to get completely Sorry, new Mr. To next Parekh, may we request you return to the question queue for a follow-up question. Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants in the conference, please limit your questions to two per participant. The next question is from the line of Utkarshopani from Anandrati. Please go ahead. Sir, my first question is like if we remove the stainless steel model contribution, ex of the so what would be the revenue growth in the house rate category in this June quarter versus previous June quarter?

35:56 So I think if I exclude the CELLO category, we see a modest growth in the consumer category, still a low digit. But overall, yes, if we had grown in that category, it would have you know, a decent growth in the overall category. So I think I think a modest four, 5% growth would be there without excluding the steel category. So what he was asking, excluding steel, excluding open wear and glassware, what would be the revenue growth in the housewear category in this June quarter? So I think we do not give those numbers out separately. So I think, you know, that I cannot be answering that on this call. Okay. And sir, like, despite we have taken a good amount of price hike, our consumer where the gross margin has contracted by 120 bps on a by o y basis in this June quarter.

36:49 So just wanted to understand what is the reason for the fee? And do you expect the gross margin to remain stable at around 55% level, which we have clocked in this June quarter going forward? Or it can differ sharply because of the change in the product mix in the coming quarter? So I think if you look you should actually look at it from quarter to quarter. Quarter on quarter, it has actually improved. Having said that, there is it has declined year on year due to, of course, 150 segment, which has not given us enough margin because it's in manufacturing now and it is not completely ramped up. Sales increase in glassware will also not give very good margin because currently, that revenue is not fetching enough profitability.

37:41 So as you rightly said, the product mix as it changes, we see a little difference of one, two percentage points, but it's always going to be in that one, two percentage points. It's never going to be like 4%, 5%. We're never going to see that. Okay. So you're saying that the gross margin we should expect in the band of around, say, 54% to 55% in the coming quarters' time. Will that be the right understanding? We should see that constantly. It should be improving rather, I would say. Okay. And sir, lastly, like you have mentioned that we have taken 7% to 20% price hike across the product category. So can you just specify what will be the average price hike we have taken in the houseware, opal ware and glassware, and when this price hike has become effective? So I think it became effective at different times.

38:30 Know, houseware, you know, again, houseware can be from 10% to 20%, depends on, amount of polymer used, the different materials used. So it's not a standard average that I can give you. Ovalware glassware has been about 12% to 14%. So I think it's different for different product lines. I I don't have an average for you here. But, yeah, overall, it's been about... And if you want an overall average, it would be about 12% to 13% overall company level or the consumer level. Okay. And so, sir, like Sorry to interrupt. Mister, may we request you return to the question queue for a follow-up? Just a follow-up on this one, sir. The reason why I wanted to understand is that, like, the benefit of price hike, whether that full impact would be visible in the September quarter or that impact was visible in the June quarter number?

39:23 So I think it has been mostly it's there in the June quarter. There were, of course, delays on some of the product lines, which did not see a rise in April, which saw a rise in May, for example. Or there were some channels that saw a rise in May. So I think it could be partially in both quarters. I wouldn't take the full impact, but it's 90% there, I would say. Okay. Thanks a lot, sir. Thank you. The next question is from the line of Sumant Kumar from Motilal Oswal. Please go ahead. Yes. My question is for Cello Pen. How is the business ramping up? So I think Cello Pen is ramping up well. Why we have not seen the full revenue impact as of today, and there is a reason for that because when we took over the brand, there were a lot of product lines that were making losses for the company. So we have rationalized those products. We have started introducing newer product lines.

40:27 And overall, it's a good ramp up. It's a profitable ramp up. And I think though we might not see the full numbers that our previous U. Company was doing, But we will see a decent revenue growth this year and a good margin. Mr. Kumar, do you have a follow-up question? As there is no response, moving on to the next question. The next question is from the line of Raja Kumar Vaidyanathan from RK Invest. Yes. Good morning. Can you hear me? Yes. Yes, I can. Yes. Thanks for the opportunity. Sir, just two questions. The first question is, you mentioned that there is no much CapEx plan in the medium term.

41:20 I just want to know what is the plan you have for the cash on the balance sheet? Are you looking at any inorganic opportunities? Or are you looking at doing any buybacks? So I think we've always said that we would look at inorganic opportunities, and we continue to do so. Currently, there is no nothing on the table that we've got, but we keep looking out for opportunity. So if we get something, I think we could preserve that cash for only that reason that we want to grow. We want to we don't want to have ineffective use of this cash buying back or we rather deploy it in a newer business and which we will do so when we get the right opportunity.

42:09 Okay. Got it. And the second question is, do you use PVC as a raw material? Sorry? PVC. Can I get your question? No. Do you use the... This plastic resins as a raw material? Because I just want to know what is the current inflationary impact of that. Yes, of course, we use polymers in our plastic product lines. So that had an impact of 12% to 20% across different products. So there is PPP, PPC. So there are of course different polymers and have had different inflationary impacts. Okay. But is it coming down or you don't see it abating? It has come down transitionary, there was, but there has been another rise because of the continuing conflict at this point of time. And as crude goes up, it impacts us directly.

43:05 It all depends on crude prices. Okay. Got it, sir. Thank you so much. Thank you. The next question is from the line of Nelesh Doshi from Prospero Tree AMC. Please go ahead. Thanks for the opportunity. Good morning, sir. Am I audible, sir? Yes, yes, you are. Thank you. Thank you, sir. Sir, my first question is that regarding the writing instrument segment. What particularly attributes to the 52% revenue growth for the writing instrument segment? And I think the GP margin for this segment has come down by three to 4%, but GP has increased by 39%. So overall, at the company level, this segment might have increased the contribution at EBITDA level as the profitability level. Is it my correct understanding?

43:54 And do we succeed to increase the finished product price because there there was a sharp increase in the crude oil base raw material price? So that's all. Right. So I think the rising instrument, as I mentioned, the Cello brand contributed this year. That is why you see a growth, which was not present in the last quarter of last year in the first quarter of last year. So I think that is the rate that we have seen. The contraction in GP is because it is transitionary. We are introducing newer products in Cello. As I mentioned, there were products that were not profitable for us, so we have rationalized those products. And as we ramp up revenue, we should see GPs increasing in this particular product line.

44:43 Yes, while having said that, the numerous GPs have gone up. So I think it has compensated for that particular decline. And raw material prices, you mentioned, of course, as the crude oil prices have gone up, the raw material prices have gone up. So as our prices have gone up, and I think that is why you see the GPs have not contracted, instead has become slightly better quarter on quarter. Thank you. Thank you. Thank you. Thank you. The next question is from the line of from Bania Finance. Please go ahead. Yeah. Hi. Am I audible? Yes. Okay. My first question was regarding the merger with. Has the process been completed or the share...

45:29 Because the shares seems to have not credited into the investors account. Yes. We have not completed the allotment of the shares because of some technical glitches we are facing. Maybe in the few weeks, actually, we will complete that process. Okay. My next question was regarding the inventory gains. Now since the oil that we saw that last quarter, there were a huge oil price increase. I'm sure the company had a lot of low inventory. And so if you can quantify how much was the inventory gain, especially in polymers at PVC? And also, if there's any any effect on any other products on our consumer business or consumer business?

46:16 So I think I think why we had some gain on the inventory in terms of, you know, when the volume of price increased, but, you know, a lot of the prices in, you know, channels like modern retail, e commerce did not increase. The prices have not increased, you know, almost till mid May. So a lot of that was already passed on rather than being holding it with others. We couldn't do it. So the idea is that while the gains have happened, the gains were nullified by still lower prices in some of the channels. So I think that's how things find out in this quarter. If in future also, if you have... Since we are seeing a huge volatility in crude oil prices, will any price increase will also be transferred to the customer?

47:16 Sorry to interrupt. Sorry to interrupt. On group, of course, has been a very volatile situation right now because we are seeing falls and rises in prices pretty much every day. Even gas prices, for example, in the glass side of things has been very volatile. We are about 60% now, almost 80% today, the price is up from where it was in March. So I think there is huge volatility at this point of time. Right. All the very best. Thank you so much. Thank you. The next question is from the line of Karan Gupta from Asset C Meta Investments. Please go ahead.

48:03 Yes. My question on the marketing spend, how much the percentage of revenue that you've done in quarter one FY 'twenty seven. And going forward, for the consumer real segment, mostly, the brand name, is, you know, for the plastics segment, not in the kitchenware and kitchen appliances that we can just see in the malls or maybe in the stores. So for the kitchenware and overall consumerware, how do you, you know, positioning your brand in terms of marketing?

48:55 I think we've we've always maintained about two and a half to 3% as advertisement marketing cost. Mhmm. And that continues to be the case even in this quarter. So our our spends are about 3% of overall revenues. Okay. Okay. And do you think you should be little bit aggressive in that brand building side in terms of kitchenware? I think because we have multiple brands also. I think I think in our category, most brands, you know, are, you know, more than more than, you know, with above the line marketing. We focus more on, in shop, we focus more on the ground level.

49:45 And that is a little cheaper than above the line marketing. And I think that works out better for us because above the line marketing, we have seen is more of a waste in marketing efforts rather than having any direct impact. So recently, we have also upped our game when it comes to digital marketing. And though it is it's a good medium and it's much cheaper medium to operate in, and it is very effective. So I think we should see effectiveness of marketing and advertisement rather than pure spend. And that's how we are looking at it. So in terms of distribution channel, do you see the growth in the modern trade or online side rather than the general trade that you have, you know, a major portion, 75% think it's... E commerce has, of course, I wouldn't say modern trade, but on the e commerce side, things have, it's picking up a lot more than GT. While GT is growing modestly, e commerce is growing more aggressively.

50:55 I think that is across for everyone. I think that is the case. And there is a little shift in buying patterns. So I think we are present in every channel, whichever growth is good for the company. The percentage of online sales distribution channel for the quarter one FY twenty seven? So I think online sales, as you mentioned, is about 16% of our total revenues and 70% remains GT. Oh, significant pickup from 05/26. Correct. Yes. Thank you. Thank you. The next question is from the line of Anuparak from Anadrati.

51:41 Please go ahead. Sir, one last question. You mentioned that we have seen volume decline in the houseware category due to the impact of price hikes and weak consumer demand. So do you expect the similar trend to continue in the coming quarter? I think the coming quarter should actually improve basically because the channel inventory is lower than what it used to be. Because of the pricing changes, our channel partners bought less material because they were liquidating their older material at lower prices. So I think since that has happened to a significant level, I think now we should see better momentum.

52:28 Thank you. As there are no further questions from the participants, I would now like to hand the conference over to the management for closing comments. Thank you so much for the call and hopefully we'll have fantastic quarters coming up. Thank you so much. Thank you. On behalf of ICICI Securities, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.