Shankara Building Products Limited (SHANKARA) Earnings Call Transcript

Ladies and gentlemen, good day, and welcome to Shankara Building Products Limited Q2 FY '25 Earnings Conference Call hosted by Dolat Capital. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Varun Jain from Dolat Capital. Thank you, and over to you, sir.

Thank you. Good morning, everyone. So today, we have been joined by the management team of Shankara Building Products. So we have Mr. Sukumar Srinivas, Managing Director; Mr. C. Ravikumar, Director; Mr. Dhananjay Mirlay Srinivas, Vice President; and Mr. Alex Varghese, CFO. I would now hand over to Mr. Dhananjay for opening remarks, followed by them, we'll have the Q&A. Thank you. Over to you, sir.

Thank you. A very good morning and a very warm welcome to Shankara Building Products Limited Earnings Conference Call for the quarter ended 30th September 2024. Joining me today are Mr. Sukumar Srinivas, Managing Director; Mr. C. Ravikumar, our Executive Director; and Mr. Alex Varghese, our CFO. I would like to remind everyone that this call may contain forward-looking statements, which are predictions, projections and other estimates about future events. These statements are based on management's current expectations and involve risks and uncertainties that could cause actual results to differ materially. Our presentation for this call has been uploaded to the exchange. I hope you've all had the opportunity to review it. The first half of the fiscal year saw some micro weakness -- micro weakness amid election-led slowdown in construction activity compounded by a severe rains in several parts of India and softening in steel prices. Despite this, we are pleased to report that Shankara Building Products has demonstrated a resilient performance. We achieved a healthy steel volume growth of 25% year-on-year and a robust non-steel revenue growth of 35% year-on-year. Our overall revenues grew by 15% year-on-year, reaching INR 2,620 crores for the half year. Our Q2 revenue was INR 1,329 crores, a growth of 16% as compared to Q2 FY '24. As India's largest steel tube marketplace, Shankara continues its strong hold in the steel tube segment. We saw volume growth of 25% year-on-year, reaching 0.25 million tonnes in H1. Historically, steel tubes and pipes has been our key strength where we command our sizable market share. We have, over the last few years, started focusing on other steel segments such as flat, long, long products, roofing and TMT. Our overall steel volumes were at 0.4 million tonnes in H1. We are confident of achieving 0.8 million tonnes in FY '25 with an aspiration to grow to 1 million tonne volume by FY '25-'26. We have a strong distribution network and tie-ups with leading brands, including APL Apollo, AM/NS and JSW, which will help us achieve these numbers. Our non-steel portfolio also showed robust growth with 35% year-on-year growth in revenue in H1. A growth across all subsegments, including plumbing, sanitary ware, tiles, electricals, paints, hardware and accessories. Notably, our sanitary ware and tile segments grew by 33% and 46% respectively. The strength of our existing brands and expansion of our partnerships with marquee domestic and international brands continues to yield results. Our private label, Fotia, particularly grew in excess of 30% year-on-year. We are also excited to announce the inauguration of our 18,000 square feet experience center in Morbi under our brand Fotia in September, which offers an extensive collection of innovative designs and sizes. This center was set up as a strategic hub to enhance visibility of our brands as well as help us to expand our presence Pan India in the coming years with the long-term intention to explore opportunities in exports. In Q2, we launched new products such as Quartz sinks and adhesives under the Fotia brand. We continue to explore more opportunities as we move ahead. Overall, we are confident of the achieved -- we are confident of achieving a sustained growth momentum with at least 30%, 35% CAGR growth in the segment for the coming years. In order to sustain our growth momentum, our company has identified 10 strategic locations to set up fulfillment centers in this fiscal. We are happy to inform that we have successfully operationalized four new fulfillment centers in H1, which include our Fotia Experience Center in Morbi, a nonsteel center in Bangalore, a hybrid store in Kerala and a nonsteel center in Hyderabad. In the first half, we have grown rapidly in the Western and Central regions, around 60% and 40% year-on-year respectively in H1, together contributing to 18% of our top line. In this quarter, we also upgraded our e-commerce platform, www.BuildPro.store. We added a number of products including steel to the platform. The team is continuously working to strengthen our digital presence and provide a comprehensive building material solutions platform. Despite a tough macro environment, an approximate 10% downward correction in steel prices, we were able to maintain our operational profitability in H1. Our EBITDA for the half year was at INR 79 crores, a growth of 11% year-on-year with an EBITDA margin at 3.01%. Our EBITDA margins in the nonsteel segment remained steady at 6%. Q2 was a challenging quarter. The quarter witnessed a slowdown in the construction and infra segments. This was primarily due to heavy rains witnessed in most of our areas of operations. Steel prices softened substantially over the quarter. This was due to a subdued national and international demand, increased supply from China, which led to a steep fall in steel prices in the international market. This had an immediate impact in the domestic markets, too. The falling prices impacted our profits for the quarter. EBITDA for Q2 FY '25 stood at INR 38 crores and PAT stood at INR 15 crores. Our PAT for the half year FY '25 was INR 31 crores. Our profitability is impacted by the inventory loss due to falling steel prices and certain costs incurred in branding, advertisement and marketing towards long-term sustainable growth of our nonsteel business. The company continued its discipline in managing working capital. This is reflected in a reduction in our interest cost by INR 2.5 crores over the previous quarter. Our cycle was sustained at approximately 30 days. We are well on track to demerge our Building Materials marketplace business, which has consistently delivered significant value. To simplify our business structure and pursue our focused capital allocation strategy, the marketplace business generated INR 2,417 crores in revenue, and the manufacturing business generated INR 672 crores in revenue in H1. The Marketplace business continues to be a superior generator of returns with a ROCE of -- for H1 at 28%. We are continuously working towards optimizing operational efficiencies and competitiveness in the manufacturing business, which has led to a 50% growth in capacity utilization in H1. The demerger scheme has been filed with NCLT and we have received the creditor consent. We expect the scheme to be implemented before the end of this fiscal. Going forward, Shankara continues to remain bullish in our steel business. Historically, November to March is a positive demand season for building materials. In this environment, we are confident of sustaining our growth momentum for our steel as well as our nonsteel segments. We believe that steel prices are stabilizing. This will help us improve our margins and close the year on a better note. Shankara remains a unique business model, being the only organized player as an integrated marketplace, combining retail and wholesale business in the building materials space. We have over 126 fulfillment centers, including 92 retail counters. We have over 1 lakh customers spanning 10 states. We have a strong physical presence in Tier 2 and Tier 3 cities apart from metros. We represent all the leading brands from JSW, AM/NS, APL Apollo in Steel to Jaguar, Kohler, Kajaria, Simpolo, et cetera in fitting sanitary ware and flooring. We represent Havells, Jaguar lighting in the Electrical segment as well as Nippon in Paints & Adhesives. We have recently added Norton Abrasives, a subsidiary of Saint-Gobain and many more. We probably represent the largest number of brands and are present in the most number of verticals in the building material industry. We have a dedicated sales force who are in the field, meeting and onboarding potential customers on a regular basis. Apart from this, our last physical presence, we have a comprehensive e-commerce platform. This hybrid model set us apart from the competition. With this, I would now hand over the call to the moderator for Q&A. Thank you.

[Operator Instructions] The first question is from the line of Yash from Stallion Asset.

I just wanted to understand more about your marketplace business. So just to reiterate your guidance, do we believe that we can grow at 30%, 35% in FY '26 and '27? And our EBITDA margins can be north of 6% here?

So just to clarify, when we talk about EBITDA margins of 6%, that's exactly in our non-steel segment, and we are looking at that 30% to 35% growth in the non-steel segment. Overall, we're looking at the marketplace having a 20% to 25% CAGR in the coming years. And we're hoping that EBITDA will be anywhere up of [ 3% ].

Okay. And how many number of fulfillment centers do you intend to add in the next 2 years here?

So currently, we have about 126. We will be adding about 6 this year further. We've already added 4. So in the next 2 years, we will certainly be adding another 10.

I'll come back in the queue, sir. Just -- maybe just one more questions, sorry, if I can ask. In your balance sheet, I'm just looking at the interest-bearing trade payables. So I think you paid some interest on your trade payables, right?

Sorry?

Are there some trade payables which are interest-bearing in your balance sheet?

Management generally from time to time keeps evaluating the options of debt financing versus creditors as a means of funding working capital, which is very good. So we do have acceptances largely in our trade payables, partially. So I think the -- yes, to your question, the answer is yes -- only.

Okay. So these are all acceptances, right. Right. But I mean, why have the margins gone higher if you pay them early, just for understand.

Margins in terms of -- is it gross? Is it EBITDA?

No, gross, gross level, I'm saying.

The gross margins, if you really see, we have maintained a steady pace. There has been some impact in the gross margins primarily because of the inventory valuation, some of the hits we have taken because of the steel price that has come down. So that is one area where we have seen some. Otherwise, the gross margins have remained quite steady if you compare H1 last year to H1 this year.

Okay. Okay. Okay. And what is -- just last question. What is the number of trade acceptances in total trade payables, if you have that data?

Acceptance approximately around INR 450 crores is there.

Okay. INR 450 crores. Okay. Okay. Got it.

The next question is from the line of Aman Soni from Nvest Analytical Advisory.

Am I audible?

Yes, we can hear you.

My question is, what is the company demand outlook for the industry in Q3 and Q4 of FY '25? And there any specific trends and external factors that you anticipate will significantly impact demand in this quarter?

No. In the coming 2 quarters, we anticipate that it should be good because there is an infra revival. I mean, generally, now if you look at it, as we have mentioned in the opening speech that generally the quarters 3 and 4 post the monsoons is generally a strong demand quarter. So I do see that there would be a strong demand revival in the coming 2 quarters vis-a-vis what we saw in the last 2 quarters.

The next question is from the line of Jatin Damania from SVAN Investments.

Sir, a broader question. I just want to understand. You indicated that the -- on the non-steel, our margin is in the range of 6% to 6.5%. And in the previous call, you indicated a margin of near about 3% on the steel business. So just wanted to understand, if you look at the current quarter, despite the improvement in the operating leverage and the growth in the non-steel business, we have seen the sequential decline in the margin. I mean, did we have any one-off cost or inventory write-down during the quarter? Can you help us with that?

Yes. We did have a one-off write-off on the inventory cost in the last quarter.

Sir, can you quantify that?

Quantification is approximately around INR 12 crores.

INR 12 crores. Okay. And sir, when you look on the manufacturing operation, definitely INR 617 crores of the revenue that we did in 1H. Can you help us understand what was the capacity utilization? And how shall one look in terms of the margin for the manufacturing business?

Yes, sure. So now if you really look at the manufacturing businesses, which are probably the most hit because of the -- and the manufacturing largely in the line of steel. So now coming to the capacity utilization, we have improved the capacity utilization. So our primary focus in terms of the manufacturing is, a, first, we start improving the capacity utilization, which we have -- it has been languishing at around 30-odd percent over the last some years. So the first target was to take it up to at least 50%, which we have achieved in the first half, particularly in the last quarter. So that was number one is the strategy. Number two, we do see that going forward, definitely -- and the second strategy was to get it out of -- if you look at the first quarter versus the second quarter, manufacturing is in the positive side, which is again very, very important. So I think that the 2 clear objectives the company had, we have achieved in quarter 2. So now going forward, we will sustain the manufacturing capacity at this level with maybe a marginal growth further, a; b, there will be greater focus on improving the margins, which is what we hope to achieve in the coming 2 quarters.

So what margins are one to assume for the manufacturing business?

I think at an EBITDA level, our immediate target would be to achieve 3%.

3%?

Yes.

Sir, last question definitely I mean if you can help us in give us the number in terms of the EBITDA in terms of the non-retail and what was the revenue contribution from the Ceramica and the traction of Ceramica in Karnataka, Maharashtra and Tamil Nadu?

See, the Ceramica, the tiles, there has been a growth of around 30% in Q2 compared to the earlier quarter. That is number one. Number two, as far as the traction in Tamil Nadu and Maharashtra, just a minute, we'll just give you the numbers in a moment. Tamil Nadu was in line with the overall. It was at around 35%. Maharashtra was a tad lower. I think it was around 20%.

Sir, how should one look at it because our key focus was on these 3 states, Karnataka, Maharashtra and Tamil Nadu. So are we seeing any significant improvement? Because I mean, I agree that last 2 quarters was the election quarter and the slowdown in the overall building materials segment. But going ahead, also one look at the performance in terms of the states and the Ceramica going ahead.

I think we will see good traction in the states that you mentioned. We are also now focusing on Telangana and Andhra Pradesh, which is also, again, a South-based state, so which is our geographical comfort always when we start any new product, we tend to focus more on the -- our -- the comfort zone geography and then we move forward. So yes, there would be continued renewed effort in the states that you have mentioned as well as we are adding Andhra and Telangana.

And sir, lastly, what was the APL volume in the last quarter?

I'll just give you the number. Just give me a moment. We did close to around 1 lakh tonnes with them in the last quarter.

The next question is from the line of Madhur Rathi from Counter Cyclical Investments.

Sir, it seems that our steel business is growing quite well. And like we have mentioned 25% growth expectation for -- in the volume terms for FY '26. So when can we expect to achieve the upper end of the 2.5% to 3% guidance in the steel business? Because in H1, you have done around 2.5% of low margins so on that segment?

Just to repeat on the last question, we just speak a little louder because after ending the question as such, you talked about steel has been growing. Then what was the question, please?

Yes, sir. So we have given a guidance of around 2.5% to 3% kind of margins we'll achieve in this segment. So when can we expect -- like can we expect the upper end of the 3% guidance for this year or the next year in this segment? Or what will drive us to the 3% kind of margin in this segment?

Yes. I think in steel, if you are looking at margins at an EBITDA level will be sustained going forward at that 3% to 3.5%. But we are very bullish about the growth. So growth will consistently keep happening.

Okay. And sir, since we are guiding a 3%, 3.5% margin on steel and 6%, 6.5% on the non-steel. So can we -- we have given a 3% upwards of 3% margin for our marketplace business. So is this on a conservative basis? Or do we need some kind of margin pressure due to inventory correction going forward? Or is there competition increasing from [indiscernible] in our main marketplace business?

Yes. No. I mean what is the connection with us to SG Mart, I didn't really get that.

Sir, I just want to understand like when we are saying that our margins, we are optimistic of more than 3% margin in the main businesses here. So why we are giving a margin of upwards of 3% when we are earlier giving for FY '24 a margin of 3.5% to 4% in the marketplace business. So I'm trying to understand, are we lowering our margin estimates because of some kind of competition increasing? Or with this inventory losses coming in, we are making it on a conservative basis our margin estimates?

Okay. If you see, the -- one is the competition, of course, is extremely strong. There is no doubt that we do have an extensive competition from many new players as well as [indiscernible], et cetera. However, I think the competition is slightly on a different scale. They are more on -- only on wholesale, why we do have a blend. So that is number one. Number two, we are expecting the steady state. last quarter, if you really look at the steel part of the business, the EBITDA were really lower. It was not even at 3% and 3.5%. It was at 2 plus. So it was lower, so which was impacted, as I mentioned earlier, because of the steel prices softening over the last quarter, et cetera. So I think given the current market scenario, given the competitive intensity and what we expect in terms of the competition to, I mean, be there. So I think this would be a very steady state. And I think the clear strategy is to push for volume growth.

Okay. Sir, my next question is, sir, when I look at our non-steel business, sir, for the past 4 quarters, the revenue, although we have shown a Y-o-Y growth. But when we look at on the past 4 quarter basis, sir, our revenue has been staggered on INR 130 crores to INR 140 crores range. So is this that like why does -- can expect the growth to [indiscernible] in the past 4 quarters, it has been stagnant at a stagnant level, if could just help me understand this, sir.

So in the non-steel growth, we are seeing and from quarter 1 and quarter 2, we are having 35 percentage. So normally, second half will be on the higher turnover.So we are expecting that the second half, our turnover will grow up in nonsteel where the similar 30 percentage, 35 percentage will come.

Okay. So the second half, sir, more than cover the third year, fourth year growth by year and year guidance?

Yes, yes.

Sir, when I look at Fotia Ceramica, sir, we have given a gross margin guidance of around 12% to 15%. But sir, on a PBT level, is it profitable? And what kind of margin from a gross margin can you expect to flow to our operating profit level? That's the final question.

So at PBT, we are profitable at Fotia and like we have guided, we are at 12% gross margin. We are aiming with experience center coming up and with more marketing and other avenues that we can increase the gross margins. Currently, we stand around 7% EBITDA at Fotia, and we are looking at increasing the EBITDA and the gross margin. And...

Okay, just a final clarification you guided that there was some kind of inventory loss and higher marketing expenses for this quarter. So what was the marketing expenses that were higher on a Q-on-Q or Y-o-Y basis for Q2 FY '25?

Yes. The marketing expense was around -- the marketing expense was approximately around INR 3 crores to INR 4 crores -- INR 3.5 crores to INR 4 crores the total marketing expense we had in the first half.

Okay. So this was higher by INR 3 crores to INR 4 crores or it was INR 3 crores to INR 4 crores H1 to H1?

Overall, around INR 3.5 crores we spent for marketing in the first half.

Was just H1 of -- what was that?

Normally, we don't spend much on marketing efforts. And so this time, we've had a fair amount of product launches across the country, particularly in Kerala and the South. And we've had certain other branding expenses, which we have incurred in this last 6 months. So I think there were a lot of influencer events. We had brand launches, so on. So I think normally in the same period, we have barely spent about maybe around INR 50 lakh kind of a budget in the first half. So we have gone up by more than INR 3 crores compared to the normal.

And we also did this year sponsor part of the CREDAI National Conference that was held in Sydney. So we were part of that because we wanted to increase our presence with the builder community.

The next question is from the line of [ Ketan El-Chheda ], an individual investor.

If I look at your marketplace revenue and EBITDA that you have shown, it comes to about 2.8% for the first half of this financial year -- 2.8% EBITDA margins. Now I think if I heard correctly, you are saying that your non-steel margins would be around 6% or better and your steel would be 3% or better. So can you explain the -- why are we so low in this first half of the financial year itself? Because based on what you're saying, we should have achieved more better margins in this first half?

Yes. So I think primarily, if you look at quarter 1, we were largely on track. Quarter 2, I think the price of steel is very critical. 90%, 88% of our business is steel based. So when you look at the averaging out, though in the non-steel, we've maintained steady at that 6-plus kind of an EBITDA, where it has not gone down. In steel, I think we took an impact in Q2, which we have mentioned in our opening remarks as well as we have talked about it over the last -- I mean, a few questions. So steel price has softened. There has been a fair amount, a 10% to 12% kind of a decrease, which had approximately about a INR 12 crore kind of an impact on our margins. So I think that is the reason why if you look at Q2, EBITDA per se was only around 2.73% -- 2.83% was the EBITDA for Q2. So that explains the decline in Q2.

So do we hope to recover the margins in the steel business in the upcoming quarters and upcoming years?

Yes. So I think we believe that the steel prices are bottoming out currently. We have seen a rollover in the month of October as well as November as we speak. So we are fairly confident that steel prices will remain flat over the next -- at least this quarter. And there is a scope of a marginal increase going forward but that is something that we cannot really predict. But the only thing is we are reasonably confident that steel prices will remain relatively stable in the coming quarters.

Okay. And with respect to the acceptances that you've had since Q1 and Q2 of this financial year, I just wanted to know in the previous years, ever did we have this kind of an acceptance-related costs in our finance cost item? Or it is only this financial year that we had this?

Yes. In the previous year also, we had interest-bearing acceptance were there.

Okay. But then they are lower in quantum?

Yes, the quantum was lower.

Okay, okay. And if you also could explain if I compare H1 of last year and H1 of this year, the employee expense has also increased by 16%, if I look at your Slide #13. So could you help understand, is this because of addition of manpower and staff? Or how much it would be because of the price hikes and appraisals that you have given to the staff?

Yes. The thing is in this financial year, we added around 80 additional staff we have taken, so which has resulted into higher employee cost. Apart from that, the regular yearly increment we have given. So those things has affected in the increase in employee cost.

One of the key things we have done this year, particularly in the non-steel, we have added a few senior level people to handle our Fotia brands, et cetera, et cetera, at multiple levels. And we have opened up in Gujarat in a big way in Morbi, we have added a number of people. So these are all -- and there's been a substantial management bandwidth also addition. So I think these approximately have led to the about 16% that you mentioned, out of which about 9% was the increments that have come in and the balance is the addition of staff.

Okay. Okay. And one question I had with respect to the Morbi experience center. If you could just help me understand how are we going to benefit by opening an experience centers in Morbi because I understand for the market, this business, I mean you would have a lot of your customers visiting your stores. So if you open an experience center in Morbi, which is, I understand it's a tile hub of the India, the country, but how does it help us improve the sales because most of your customers would be visiting your stores which are spread across different states and different locations?

Yes. So I think Morbi is where we also get all our manufacturing done, number one. Number two, there are lots and lots -- Morbi straightaway reaches us all India. It gives an all India exposure, a; b, it also gives us an international exposure because Morbi being the hub, you have a number of buyers who come from all over the country to Morbi, particularly at a trade level, even at a builder level, and there are a lot of international buyers who come in. So I think this is the most compelling reason why we need to have a base at Morbi, where you have a much larger experience center. We've got 18,000 square feet over there vis-a-vis at our various retail stores, et cetera, which could be 2,000; 1,000; 1,500, et cetera. So the larger space attracts larger crowds. It is a sourcing hub. It is where a lot of visitors coming, larger space, more designs to show. So I think Morbi is very compelling for us to have an experience center.

Okay. And if I may ask, how much of the cost we have incurred in setting up the experience center? And is this part of the CapEx? Or it has gone as the operational expenses?

I think we have spent about INR 3 crores in the setting up of the center and it has largely gone towards CapEx.

The next question is from the line of Neil Bahal, an individual investor.

Just wanted to check -- I'm a new investor here, so I'm like trying to get a better handle on everything. Just wanted to check on the interest cost. I saw till December, the interest cost was about INR 8 crores to INR 9 crores, which has suddenly spiked and I understand it is because of payables having interest outgo. You mentioned in the last call that it's likely to revert to normal at some point. Do you have any better clarity as to when this interest cost could go back to INR 7 crores to INR 8 crores per quarter?

The first thing is the normal taking at INR 7 crores, INR 8 crores could be a challenge. However, if you look at the progress from Q1 to Q2, there has been a decrease of around INR 2.5 crores between the two, quarter 1 and quarter 2 in the interest cost. So we are working very hard to see that can we bring it back to a much more controllable level, bringing it back to about INR 8 crores, INR 9 crores is a challenge. If you look at Q4 last year was around INR 9 crores. So there is a strong about INR 9.75 crores, almost INR 10 crores. So I think there is a very, very concerted effort from our side. So if we can stabilize at least maybe around INR 11crores, INR 12 crores in that region.

So for the next financial year, FY '26, can I assume that it could be in the region of INR 11 crores per quarter?

That's our objective. I mean any forward-looking statement from my side, we'll always try to work towards the best. So that is a very, very serious attempt that we are trying.

All right. And from your presentation, post demerger, I see that most of the payables are going to the marketplace. That means most of the debt is also going towards the marketplace. Am I correct in my estimate that large part of this debt or interest costs are going to move to the marketplace business?

Yes, yes.

So it's not clearly mentioned, but if you could -- or the CFO could tell me what is going to be the exact debt post demerger in marketplace and in manufacturing?

So what is happening is the figure what we have given is as on H1 of this financial year. So going forward, in the Marketplace, we'll be in the manufacturing place, we'll be having the debt of approximately around INR 100 crores. And including acceptance in the new company, we'll be having around INR 450 crores -- INR 450 crores will be there. Also around INR 550 crores of the bank debt will be there.

Yes. And so this would be acceptance debt and plus the INR 100 crores debt of normal term loans that you have?

No, no, we are saying about acceptance and debt together we are saying.

So the total debt is right now INR 550 crores is what you're saying?

Correct. Correct.

Okay. So INR 450 crores there and INR 100 crores there. And just again, I'm so sorry to ask a basic question. The marketplace is the business where there are no assets. It's an asset-light business, right? But it will also be selling steel products or it will only be selling non-steel products?

It will sell steel products also.

Right. So the things that you produce at your manufacturing will be sold in the marketplace also? Is there some transfer pricing policy like cost plus something that you sell over here?

Going forward, we would like to sell most of our products that we produce directly and we will bring it down to -- for our marketplace, we will reduce the quantum of what we sell from our own production, a. B, yes, there is a very clear ambulant pricing when we do look at the transfer from our manufacturing to our marketplace.

Got it. Also post demerger...

Let me add another point to your earlier question on interest costs going up. Also, we have to keep in mind and note that the basic rate of interest itself has been increasing. So about 0.5% of the increase in interest cost has come because of the sheer fact that interest cost itself have increased. So I think that itself adds, if I'm not mistaken, to around INR 1.5 crores, INR 2 crores over the half year compared to the previous year.

Got it. Got it. Also post demerger, now the whole point is efficient capital allocation. Let's say this happens by Q4 or Q1 of next year, the complete demerger happens. We don't expect the debt in the marketplace to increase, right? Because then it will be completely separated from the manufacturing. So if any growth in manufacturing that you wish to do, that debt would be only over there increasing. And if the ROCE and the cash generation in the marketplace is going to be strong, should I expect that the manufacturing -- sorry, the marketplace side, the debt would keep reducing every year?

That is the attempt, yes, definitely.

Could you -- I know it's forward-looking and you can't really say, but a range or an estimate of what kind of debt can reduce every year?

Can we work that out and come back to you? I mean we'll take your contact from the call. And probably -- I mean, the attempt certainly is to go ahead with the reduction. But if I have to quantify it at this stage, we'll revert to you on this.

Perfect. If anybody from the team could just send me an e-mail or just call me and would tell me would be great.

Definitely. Definitely. Can we just get your e-mail ID right now so that we don't have to waste any time on getting it from the sources.

Yes, yes. It's neil@negencapital.com.

The next question is from the line of Parikshit Gupta from Fair Value Capital.

Hello, am I audible?

Sure, you are, loud and clear.

Congratulations on a good set of numbers. I have a couple of questions on the non-steel segment of the business. My first question is on sanitary ware. So I understand that it contributes to about 44% of the non-steel revenue. However -- and you reported around 35% of growth in this revenue number. However, when we look at the sanitary ware companies among the listed ones are showing a very mild growth in terms of their top line to the tune of, say, mid- to -- mid-single-digit numbers. However, we understand that there are many private players that also exist in this space. So I just wanted to understand if this 30% plus growth is skewed to certain players?