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00:00 We have with us Abhishek Somani, Managing Director and CEO of Somani Ceramics.
00:03 Now joining in.
00:04 Abhishek, morning.
00:05 Thanks for joining in.
00:06 Mr. Somani, it's been a better than expected quarter,
00:09 at least in terms of what the estimates that were put out by most analysts.
00:14 You want to walk us through it.
00:16 How did the quarter look?
00:17 Is demand locally seeing an uptake?
00:19 How is exports looking?
00:21 I know margins have got an improvement on back of low gas prices.
00:24 So as we go into FY25, what sort of expectations should we be setting?
00:29 First of all, thank you for having me on the show.
00:32 The third quarter for us was extremely poor.
00:34 And I think there was a little bit of a rebound of that on fourth quarter.
00:37 So fourth quarter made up a little bit of lost ground.
00:40 However, last year was a last year.
00:43 I think most of the products which were behind the wall in the construction
00:47 industry did well.
00:50 And anything which is in front of the wall, which means that electric switches,
00:54 tiles, sanitary ware, flies, et cetera, they did a little poorly.
00:58 Obviously so, because all the inventory which is there in the real estate
01:01 has already been consumed.
01:02 And all the real inventory which has been ordered now,
01:07 which has been sanctioned and also going to be delivered in the next one, two years.
01:12 So we believe that from H2 onwards, this demand for tiles
01:16 when the homes come for finishing is when the demand will go up for us.
01:22 I think this quarter is going to be, again, a lackluster quarter,
01:24 namely because of the elections.
01:26 So there's been very little movement in the secondary because of elections,
01:29 coupled with the extreme heat, with no labor availability.
01:33 So this one, two months, which was kind of expected,
01:36 not to worry because this is delayed demand.
01:39 It will come back in quarter two and definitely in H2,
01:44 because after the rains, that's when the things start really picking up.
01:48 Fair assumption for me, for us, Mr. Somani,
01:51 that revenues will potentially go in a double digit in the second half of FY25.
01:56 But that's being a little too optimistic.
01:58 Low or high single digit is what you are expecting?
02:01 We're currently expecting a low double digit for the entire year,
02:06 is what we are predicting.
02:07 And we're looking at mostly this growth coming through volumes.
02:14 Mr. Somani, good morning. Tamanna here as well.
02:17 I wanted to get a sense of what the export piece is looking like,
02:22 because that was also muted through last year, freight expenses, etc.
02:28 turned into an issue.
02:29 Is the outlook there improving and which markets do you think will possibly fire?
02:35 Yes, so last year, I think the export was somewhere between 19,500 to 20,000 crores.
02:41 So it did make up a lot of lost ground in fourth quarter again.
02:45 And this year it's back again to about 1700 crore rupees of export per month.
02:50 And this only is going to go up.
02:52 So we are hoping that the export this year will be up at least 2 to 4,000 crores over last year,
03:00 which means it will be anywhere between 22 and 24,000 crores of exports.
03:05 The markets which have really fired for exports is the US, Russia,
03:11 lots of many, many parts of Europe, Middle East and Africa,
03:15 obviously continues to do reasonably.
03:19 In terms of your outlook for average selling price,
03:22 do you see that improving over the next year?
03:26 No, average selling price for an Apple to Apple product, I don't think will improve.
03:30 If a value addition which will catch in,
03:33 our plants also which have been put in for more value added products,
03:37 will fire more of those products into the market.
03:40 So that is what will bring up the ASP for us.
03:43 But otherwise, like to like, I doubt there would be any huge price increase
03:48 until exports really goes to the 2,000, 2,200 crore rupee figure per month,
03:53 which it can actually.
03:55 So Mani, you've successfully reduced the debt from about 308 crores to 257 crores.
04:03 Can we be expecting it to turn debt free anytime soon?
04:06 Is that on the plans or you want to bring us up to speed with what's happening?
04:11 That anything on the expansion side as well would be helpful for us.
04:15 Sure. Most of our expansion is over and done with.
04:17 So all the capex which is to be done for the last expansion is already finished.
04:22 Our debt on a console level is approximately 170 to 200 crores.
04:28 So that is only on a downward trend.
04:30 In the next three years, this would be virtually nothing.
04:34 But I must put it on record that on a standalone basis, we're completely debt free.
04:39 On a long term debt basis and also on the working capital,
04:44 we do not use any of our fund based working capital.
04:48 On the console debt, the debt is standing on the books of the two.
04:54 The two major debts are on the two latest factories which you put up,
04:57 which is Sudha Sumani and Sumani Max.
04:59 That's where the debt is.
05:01 Nothing significant on our side of balance sheet.
05:05 However, those debts on those balance sheets have no recourse on Sumani.
05:10 There is no corporate guarantee or personal guarantee on those debts.
05:13 So they stand independently on each of those subsidiary joint venture books.
05:19 Right.
05:20 So Sumani, unfortunately we are out of time.
05:23 We'd have loved to chat longer, but thank you very much and good luck with business.
05:26 Hopefully we'll speak to you soon as well.
05:28 [MUSIC]