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Operator: Ladies and gentlemen, good day, and welcome to Grasim Industries Limited Q3 FY '26 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Ankit Panchmatia, Head, Investor Relations of Grasim Industries. Thank you, and over to you, Mr. Ankit.
Ankit Panchmatia: Good morning, and thank you for joining Grasim's Third Quarter Financial Year 2026 Earnings Call. The financial statements, press release and presentation are already uploaded on the website of stock exchanges and our website for your reference. For safe harbor, kindly refer to cautionary statement highlighted in the last slide of our presentation. Our management team is present on this call to discuss our results and business performance. We have with us Mr. Himanshu Kapania, Managing Director, Grasim Industries and Business Head, Birla Opus Paints; Mr. Hemant Kadel, Chief Financial Officer of Grasim Industries. Also joining them, we have with us Mr. Jayant Dhobley, Business Heads of Chemicals, Cellulosic Fashion Yarn and Insulators; Mr. Vadiraj Kulkarni, Business Head of Cellulosic Fibers Business; and Mr. Sandeep Komaravelly, CEO, Birla Pivot, our B2B e-commerce business. Let me now hand over the call to Himanshu, sir, for his opening remarks. Over to you, sir.
Himanshu Kapania: Good morning, and a very warm welcome to everyone joining us today. At the outset, we wish all of you a happy new year 2026. We hope that the year has begun on a positive note for you and your families, and it brings good health, continued progress and renewed optimism. As we step into 2026, we do so with a sense of confidence and purpose. While the global environment continues to evolve, the underlying strength of our markets, the resilience of demand and our disciplined execution gives us optimism about the road ahead. The new year represents not just a change in calendar, but an opportunity to build on momentum, sharpen our focus and deepen the value we create for our stakeholders. On that value creation, let me start sharing key updates on two of our latest growth engines. As announced earlier, our Paints business, Birla Opus CEO, Mr. Sachin Sahay, shall join us from 16th February 2026. Despite the absence of CEO, the existing Paints team delivered an extraordinary performance, reaffirming the company is being built on rock-solid foundation and has a long pipeline of leadership who can take on the baton when the need arises. During the quarter 3 of FY '26, Birla Opus, the third largest decorative paints player, expanded its revenue market share by more than 300 basis points year-on-year based on internal estimates and announced results of listed paint meters. On a quarter-on-quarter basis, Birla Opus accelerated its market share gains with revenue growth of nearly 3x the Indian decorative paint industry growth rate, inclusive of Birla Opus. Further, the combined revenue of Birla Opus and Birla White Putty business in quarter 3 FY '26, the revenue market share gap with existing #2 paint players is now reduced to around 300 basis points, based on the guided decorative segment revenues, which includes their putty business as well. In quarter 3 FY '26, Birla Opus sales volume has risen by 70% on year-on-year basis. Early this January, Birla Opus has crossed the milestone of 500 million liters of paint sales cumulatively. We believe that more than 6 million households are now experiencing superior quality of Birla Opus in a short period of 18 months. Birla Opus exponential growth is underpinned by rising brand acceptance, rapid expansion of distribution network, strong sales throughput from dealer counters to contractors and consumers, consistent differentiation through superior quality -- product quality and focused brand-building efforts. Let me give you final details of execution on the above. First, on brand reach. The presence of Birla Opus has crossed 10,400 towns across 35 states and union territories. We have covered all 50,000 population centers across India and more than 75% of the 10,000 to 50,000 population centers. The company will continue its expansion effort deeper into Bharat. The active quarterly billing dealers has grown in double digits, along with a single -- high single-digit growth per dealer revenue throughput on month-on month when compared with last year same quarter. Additionally, Birla Opus is transforming the paint consumer retail experience with company exclusive franchise outlets nearing 1,000 Birla Opus paint galleries. These galleries uplift consumer experience by selecting a paint brand, helping premiumization of the category. Institution sales continued to gain traction during the quarter, supported by increasing project wins and specification approvals among clients, including governments, builders, factories, hospitals and cooperative housing. The institution sales grew by 40% quarter-on-quarter. As institution orders have a long gestation period, happy to report more than 40,000 mid- and large-sized projects are in various stages of negotiation with nearly 25% build, thereby a strong project pipeline for future. Secondly, Birla Opus remains focused on driving secondary sales from dealer counters to contractors and consumers. The 10% free paint promotion continues on 10- and 20- data pack across all-emulsion top coats waterproofing range, however, excludes subeconomy and other categories. The company equally focused on building relationships with paint contractors, the key influencers. For them, Birla Opus has built an end-to-end first-of its kind digital platform to engage with contractors online on pan-India basis for product information, incentives and schemes, sharing consumer reach, offers assurance registration, complaint handling and much more. This platform is integrated with our unique track and trace system to monitor consumption by customers at pin code and dealer levels. We are also implementing AI-based projects to improve contractor connect and analytics. I'm happy to share that over 7.5 lakh contractors and painters have applied and experienced Birla Opus superior range of products on pan-India basis. This online platform allows us to remain always in touch digitally with the unorganized painter community and instantly transfer accrued benefits to their banks on a click of a button from their app anywhere, anytime and experience like UPI. Additionally, the centrally controlled tinting machine analytics shows strong color and consumption across geographies. With over 35,000 active tinting machines in operation during quarter 3, the tinting data shows interesting consumer insights. The top 2 [ Opus ] colors unifying the country include [ Fort Kochi ], a dark bluish gray color; and a [ Morning Birdsong ], a light, bluish gray shade, which are tinted by more than 30,000 dealers in the last 1 year. Thirdly, the foundation of our product strategy is built on R&D excellence with a portfolio designed for performance, durability and unmatched finish. Birla Opus has achieved what we believe is the fastest portfolio expansion by any brand in the industry. Today, Birla Opus proudly offers one of the widest product ranges of more than 216 products, 1,848 SKUs across emulsions, enamels, waterproofing, wood finish, wallpaper and others. This year itself, till now, we've introduced 40 new products, including the completion of retail waterproofing line, launch of painting tools and indigenously developed Italian few [ Alka ] range and many more. These innovations are not just additions, there are accelerators of growth, which is creating clear product differentiation, winning the trust of dealers and delighting consumers. The fourth powerful driver of Birla Opus is creating consumer pool by our sustained brand salience and differentiated marketing. According to Opus commission, Brand track study, the top-of-mind brand recall for bills has surged into double digits, positioning us as the second most recalled paints brand in urban markets. With over 6 million satisfied home users acquired in a very short period, Birla Opus brand acceptance will continue to accelerate, providing solid impetus to growth. From builders and government bodies to industry, total education institutions and MSMEs in the project segment to individual homeowners and housing cooperatives Birla Opus brand test is on the right. With a strong media presence in quarter 4 and high engagement campaign, our brand salience is set to sort even higher. Watchout for our latest Opus by campaign Colours of Togetherness in the ongoing T20 World Cup and upcoming IPL 2026 and many other regional and national impact properties on television, digital and outdoor media. Our premiumization efforts continue with PaintCraft recently launched Birla Opus professional painting services, fully GST compliant, transparent pricing, attractive EMI options end-to-end platforms from lead management to quotation to monitoring of services and quality approval, managed jointly by central and field team. This service has expanded to over 5,000 pin codes, and we tapped to open PaintCraft on pan-India basis through the 1,000 Paint [ gates ] at the earliest. Separately, on OPUS Assurance Services, where the company has given additional guarantee besides the standard warranty clause to redo the painting, including labor, if need arise; more than 60,000 consumers sites have been registered through nearly 30,000 contractors under this first of its kind program. The combination of PaintCraft and Opus Assurance will improve consumer experience, allowing us to sell higher-end products and premium services. The fifth powerhouse behind Birla Opus momentum is the second largest manufacturing capacity holder in the industry, a formidable 24% capacity share. With the launch of Kharagpur and a steady ramp-up of capacity utilization across each of our 6 plants, the company has executed their natural production strategy by producing fast-moving category products closer to their market, cutting down the drag of logistics cost and inventory and sharpening its service edge. With the completion of projects on time and within budgeted CapEx, the focus of the company now has shifted to improve productivity, efficiency operations and bring down significant variable costs through optimization. At the heart of our manufacturing journey lies a bold embrace of Industry 4.0 with IoT-driven automation helping standardization and consistency of quality. This excellence is now obviously validated. We are proud and excited to share that Birla Opus has received Integrated Management System certificate and compressing ISO 9001, 14001 and 45001 for all the 6 plants in one go. Achieving these certifications strengthens our organization framework and reinforces confidence of our customers, partners, stakeholders in our capabilities. Securing certification in less than 18 months of full-scale operation is an unprecedented milestone. It underscores our deep commitment to the highest standards of quality, safety environmental stewardship, compliance and operational excellence and marks a powerful step forward in our ongoing sustainability evolution. Before I move on to the next business, I wish to address the narrative about sluggish industry growth. Based on announced results of 4 listed paint [ measures ] and guidance on their decorative business. It appears the decorative paints, excluding Birla Opus, has grown by 1% to 2% by revenue but 7% to 8% by volume in quarter 3 FY '26 versus quarter 3 FY '25. Now when we add Birla Opus quarter 3 performance to these 4 players decorative paints business, industry revenue growth, including Opus, rises to 5% to 6% and volume growth jumps to 11% to 12%. In my economic understanding, a double-digit volume growth reflects a good to strong consumer demand. However, the pain of the industry is rate realization, which we believe is lower due to a combination of higher discounting and [ income ] players tendency to focus on low-value economy, subeconomy category and deep discounted [Putty] business. Birla Opus offers revenue is without [ Putty ], and our growth remains balanced across all categories of paints with premium and luxury segment continues to contribute steady 65% in our overall revenue. We have taken 2% to 6% price rise in January and February against standard dealer price list across the range of products to test the channel and consumer reaction. Coming to Birla Pivot, the B2B e-commerce business crossed the INR 8,500 crores annualized revenue run rate, ARR mark and remains on track to surpass the annual revenue of INR 8,500 crores, way ahead of FY '27 guidance. In a country as dynamic and fast growing as India, the next great feet in e-commerce would come from building another marketplace, it will come from digitizing and organizing B2B procurement at a scale and complexity few have ever dared to tackle. That is exactly what Birla Pivot is doing, and we are taking one of the largest, most fragmented operationally intense spaces in the economy and turning it into a trusted tech-enabled, outcome-driven platforms. Our vision is bold and unambiguous to become the most trusted B2B e-commerce platform in India. And we're building it the right way by scaling a powerful buyer-seller network and compounding our advantage across the three pillars that truly matter in e-commerce: Price, assortment and experience. Let's start with price, because in B2B, pricing is only about competitive parity, it's about removing friction from the system. India's raw material ecosystem is full of inefficiencies discovery gaps, opaque comparisons, fragmented sourcing and complex multi-vendor procurement. Birla Pivot doesn't mainly negotiate price, we reengineer the economics of procurement, we align suppliers' inefficiencies with buyers' needs, enabling transparent discovery and comparisons, helping suppliers reach demand more efficiently and absorbing the operational complexity of procurement at scale. In other words, we convert fragmentation into efficiency and we pass that value back to consumers. On assortment, this is where Birla Pivot is fundamentally changing how business and individuals buy project materials. We are building a true one-stop procurement engine, 35-plus categories, 40,000-plus SKUs and solution aggregated from 300-plus top brands. The product category is covering everything from steel to tiles, cement to chemicals. This breadth isn't just impressive, it's transformational. It consolidates vendors, compresses procurement cycles, standardize buying decisions and [ stabilizes ] approvals and purchase planning. We are going to step further because in B2B, the ability to buy is often tied to working capital. And that's why Birla Pivot is enabling fast, easy, customized financing designed around real procurement needs so businesses can purchase with confidence, flexibility and speed. And then comes our biggest differentiator, experience because B2B is not just digital, it's physical, operational and relentlessly service-driven. Birla Pivot delivers B2C-like simplicity in a B2B world, powered by digital tools for order enablement and fulfillment, nationwide support backbone and consistent trusted buyer experience. We are not simply building a website, we are building a reliability at scale. We are making complex procurement feel effortless, dependable and repeatable. That's the moment when a platform stops being a channel and becomes a habit. This momentum is not episodal, it's network-led, value-led and scalable. As categories expand, network effects deepen and digital adoption accelerate, Birla Pivot is uniquely positioned to play a defining role in shaping and leading India's B2B procurement digitization growth story. This isn't just about growth, it's creation of a new infrastructure layer for Indian commerce. Moving on from new businesses and focusing on macros, India continues to stand out on a global growth map. India's domestic demand is resilient, investment cycle strength and policy support have kept growth momentum intact. The most recent Union Budget reinforced this momentum with several strategic themes. First theme is government's continued focus on infrastructure, housing and urban development would drive growth for Grasim's Cement business. India's push towards self-reliance, manufacturing scale and supply chain integration would drive growth for our chemicals business. The recent GST rationalization focus on improving India's per capita driven by higher disposable incomes, better quality housing and aspirational consumption would drive growth for decorative paints and premium textiles. Support for MSMEs by increasing finance democratization and integrating into organized supply chain would drive growth for Birla -- Aditya Birla Capital and Birla Pivot. Lastly, a balanced focus on renewable energy and energy security will drive growth for our Renewable and Insulator business. For investors seeking a single scalable entry into India's structural growth, Grasim represents a credible and well-diversified proxy. As India's growth story unfolds through these diverse themes, Grasim businesses remain deeply intervened with each of these structural pillars, presenting long runway of growth and value creation. Reflecting on this growth, I'm happy to share that Grasim consolidated revenue for the current quarter stood highest at INR 44,312 crores, an impressive improvement by 25% year-on-year with building materials, Financial Services, cellulose fibers, Chemicals and even premium textiles and Insulators firing on all cylinders. The 9-month revenue stood at INR 124,330; crores, up 19% year-on-year, demonstrating consistency of performance. Stand-alone revenue grew at even faster rate, reaching highest ever at INR 10,432 crores, up by 28% year-on-year, with strong contribution from both core and new businesses. I would now like to hand over the call to Hemant, CFO, to further discuss financials and key business highlights of other businesses.
Hemant Kadel: Thank you, sir. Good morning, everyone. It's my pleasure to interact with you all again. Happy 2026 to all present on this call. I am very proud to say that we have closed the calendar year 2025 on a high note with two of our new businesses on track to achieve their stated goals. As on 31st December 2025, the TTM consolidated revenue is nearly INR 170,000 crores, growth of 14% compared to FY '25 revenue. Currently, stand-alone revenue on TTM basis stands at INR 38,191 crores, up 21% compared to FY '25. Based on the current quarter revenue, stand-alone businesses are now at annualized revenue run rate of higher than INR 40,000 crores. There has been a strong underlying growth across all the businesses. Consolidated EBITDA grew by 33% year-on-year to INR 6,215 crores. Stand-alone EBITDA grew at a faster pace with growth of 57% year-on-year to INR 585 crores. Starting with key business, Building Materials, revenue for the segment grew by 30% year-on-year, driven by all-round performance across Cement, Paints and B2B. Led by the sector's strong outlook, UltraTech is steadily expanding both size and scale. UltraTech's clear vision and disciplined execution have led current capacity to reach 194.06 million metric tons with clear sight of reaching a capacity of 240.8 million metric tons by March 2028, which is a CAGR of more than 10%. The capacity expansion is clear from -- critical from three or four perspectives. Firstly, it reinforces our role as a key enabler of India's infrastructure and development journey. Secondly, it enables us to grow ahead of industry curve. Third, it narrows demand and supply gap across critical markets nationwide. And lastly, it further strengthens UltraTech's leadership position. While capacity expansion remains core to our growth, we have embedded a culture of efficiency to ensure that our growth is resilient, sustainable and cost effective. Underpinning this strength is our EBITDA growth, which grew by 29% year-on-year with an EBITDA per tonne of INR 1,051. Our MD has already covered Paints and B2B e-commerce business. Hence, let me now directly come to our core businesses of Cellulose Fibers and Chemicals. Highlight for these core businesses is that while we can keep on discussing them individually, irrespective of commodity cycles, both the businesses combined have delivered consistent EBITDA. Leadership, innovation, sustainability, capital allocation and cost effectiveness are key tenet to such consistency, which are an integral part of Grasim's growth strategy. Starting with Cellulose Fiber, the business has delivered EBITDA of INR 491 crores, growth of 48% year-on-year. This is driven by three factors: first, improved realization due to favorable product mix led by exports; second, operational efficiency due to volume growth; third, declining input prices, mainly pulp and caustic. The demand for cellulose fiber in China continues to exhibit stability due to global tightness in supply. In India, we have seen similar strength despite removal of Quality Control Order. Due to this inherent strength, we have seen prices for cellulose fiber decoupling with other competing fibers, which are on a declining trend over the past few quarters. Unlike cellulosic fiber, which are largely stable, have started to recover. Cellulosic Fiber segment also includes cellulosic fashion yarn business. The business performance for the quarter was subdued due to cheaper imports from China, which has created oversupply and lower downstream demand. Secondly, Chemical business, the revenue growth of 5% year-on-year was largely driven by volume. Caustic soda sales volume for the quarter 3 FY '26 stood at highest ever 313,000 tonnes, up by 4% year-on-year. While CFR SEA prices are down on Y-o-Y basis, domestic caustic prices are showing some resilience led by stable demand and rupee [ depreciation ]. EBITDA in Chemical business was lower by 4% year-on-year due to higher equity realization and lower profitability in Specialty Chemical business. Higher ECH price resulted in lower profitability in Specialty Chemical business, which was partially offset by lower BPA prices. Coming back to the consolidated business, in the Financial Services, it is one of the fastest-growing businesses in our portfolio. This is driven by their multichannel approach aimed at providing customers with seamless experience across channels of interaction. The revenue was up by 29% year-on-year, led by all-round performance across lending, asset management, insurance and advisory services business. Total lending portfolio, which includes NBFC and Housing Finance, grew by 30% year-on-year to over INR 190,000 crores. On a strategic front, we would like to highlight the recent announced partnership with Advent International, which also marks an important milestone for Aditya Birla Capital. During the quarter, Aditya Birla Capital Board approved a primary capital infusion of INR 2,750 crores into Aditya Birla Housing, valuing the business at approximately INR 19,250 crores on a post-money basis. Advent will hold roughly 14.3% of Housing Finance, with Aditya Birla Capital retaining about 85.7%, subject to customary shareholder and regulatory approvals. In other businesses, starting with Renewable business, Aditya Birla Renewable grew by 82% year-on-year, largely led by higher capacities, which now stands at nearly 2% peak capacity compared to 1.2 gigawatt quarter 3 FY '25. Aditya Birla Renewables has announced a strategic investment by Global Infrastructure Partners, which is a part of BlackRock. This deal marks one of the largest primary private equity commitment into an Indian renewable company. GIP will invest up to INR 3,000 crores, comprising of an initial INR 2,000 crore commitment with a green [ shoot ] option of INR 1,000 crores, subject to customary regulatory and closing conditions. Post this deal, the renewable business is valued at an [ EV ] of INR 14,600 crores. I'm happy to say that this partnership is expected to accelerate Aditya Birla Renewables growth trajectory as it builds on its operational and contracted capacity of nearly 4.3 gigawatt of peak capacity portfolio across solar, hybrid, floating solar and RTC assets and targeting scaling capacity beyond 10 gigawatt of peak capacity in coming years. This transaction brings not only capital, but also the GIP's global infrastructure operating experience to support disciplined expansion and contribute meaningfully to India's energy transition goal. As regards CapEx, post commissioning of Kharagpur plant, we have completed majority of the planned capital expenditure in decorative paint business. The capital expenditure spent on YTD basis is INR 1,310 crores. Focus now remains on Phase 1 of Harihar Lyocell project for additional 55,000 metric tons per annum capacity of specialty fibers. As on 31st December 2025, net debt of the company stood lower at INR 6,882 crores compared to INR [ 8,277 ] crores in the same period last year, with net debt to TTM EBITDA healthy at 2.1 level. Let me now open the floor for Q&A.
Operator: [Operator Instructions] The first question comes from the line of Navin Sahadeo with ICICI Securities.
Navin Sahadeo: Yes. I hope I'm audible.
Himanshu Kapania: Yes.
Navin Sahadeo: Yes. And also thank you for the detailed initial comments. Two questions. First, of course, on the paints business. So needless to say, the company has done a commendable job. I believe for the quarter, the revenues given like INR 8,500 crore run rate for the Birla Pivot and numbers that are published for UltraTech. Our sense is paints would have done roughly INR 1,200 crores kind of revenue in this particular quarter, which, of course, is great from the start that we have had. My question is the growth is seen maturing. In the sense, in Q1, a similar sort of a very rough cut working suggested INR 1,100 crores kind of a growth in the June quarter, similar flattish in September, and now we are at INR 1,200 crores give or take some margins there. I mean, some buffer there. Now to reach the scale of INR 10,000 crores exit by Q4 '28, which is a run rate -- I mean, which is around INR 2,500 crores revenue over the next 9 quarters, we need to grow at 40% CAGR year-on-year for us. So I'm just trying to understand, first of all, what different than now the company will do or what convinces us now given that the growth is maturing in the last 1, 2 quarters, how should one look at this target realistically being achieved and in that what is also the industry value growth into consideration? That's my first question.
Himanshu Kapania: Thank you, Navin. So while you have done your internal calculations, I'm not going to either accept or deny it. But all I can say, both on quarter-on-quarter basis, we had a robust more than double-digit levels of growth. It's closer to between 18% to 20% on a quarter-on-quarter basis. On an annualized basis, these numbers are tending towards the 3-digit growth. So I don't know what numbers you have in your calculations and using words called mature, when we have grown on a year-on-year basis by 300 basis points in the paint industry and we see a similar kind of consumer uptake in the current quarter. On an overall basis, we are seeing across geographies, very strong demand for Birla Opus paints and a large number of existing dealers who have joined us have increased their throughout and they continue to grow at levels of strong single-digit on a quarter-on-quarter basis. And we continue to add new dealers at a double-digit level on a quarter-on-quarter basis and on H1 and H1 -- half year -- on half yearly basis. So that is the part one. Second part, which is besides consumer and dealers, we're also getting very good attraction from the contractors and as I mentioned in my opening speech, more than 7.5 lakh contractors have joined hands. And these volume -- these number of contractors give us confidence that the growth will continue. We are still a single-digit market share player. We have a large capacity. Our presence is now on a pan-India basis. We've reached every 50,000 population town. We have reached more than 75% of 10,000 to 50,000 population town. So the growth are happening. We have a large portfolio of businesses. Consumer demand is building up, and we remain confident and remain -- we continue to guide that we will deliver the INR 10,000 crores in the third year -- in third full year of operation.
Navin Sahadeo: Understood. So despite the price increase that we have taken, as you said, across 2% to 6%. Despite that, you are saying we are confident to achieve the revenue target.
Himanshu Kapania: So there's a price -- so you understand the philosophy of price increase. We always want to maintain a particular distance from the market leader. And we felt this distance was slightly more than that was necessary, and we're bridging that gap. That is the objective of price increase, and there is no other objective. And if you also want to test at what is the -- what demand of consumer contractor remains at the revised price. This is our first...
Navin Sahadeo: Yes, go ahead, please.
Himanshu Kapania: No, that's fine.
Navin Sahadeo: Okay. My second question then was on your Birla Pivot business. And of course, extremely fast execution, much, much ahead of expectation. But we had also, I think, hinted, the first time we gave this target the road to profitability or breakeven for this business was also like a $1 billion kind of revenue run rate. So is it now fair that since we have achieved almost we are there, this business is breaking even or will start making positive contribution? How should one look at profitability for Birla Pivot from now going ahead?
Sandeep Komaravelly: Thanks, Navin. This is Sandeep here. On the profitability front, we are making progress similar to how we have done -- how we have executed on the revenue side and the growth has been excellent over the last few quarters. We've been making good progress on bridging the gap so that we can get to breakeven as well. I think from our current estimates, we will exit FY '27 at a breakeven level, that is our current estimate.
Operator: Next question comes from the line of Rahul Gupta with Morgan Stanley.
Rahul Gupta: Two questions. One, continuing on the Pivot point. I remember earlier you had made a point to -- earlier you had guided to break -- cash breakeven by 2030. So you are now front loading it, accelerating it to fiscal '27 end, right?
Sandeep Komaravelly: Rahul, I don't think we give the guidance of 2030 earlier, but as I mentioned, in response to the earlier question, FY '27 exit, we should be exiting the year at breakeven, yes.
Rahul Gupta: Okay. That's great. And my second question is on the continuation of the points you -- point you made on the paint. You are testing waters with 2% to 6% hikes in January. Now it's early days. Can you please help us understand how the acceptance has been? And if we look at the industry which has been struggling with the discounting, how should we look at the overall industry from here on? Or let me put it this way, how volume versus value gap should move over the next year for industry and you?
Himanshu Kapania: So first and foremost, as I mentioned in the previous answer, there was -- the gap between the leader and us was high, and we've used this price increase primarily to be able to bridge the gap. We obviously still are a single-digit player. And our aim is to bridge the gap between our capacity, which is at 24% to our current revenue market share. So that is part one. It's early time to be able to say what is the response to the price increase because we've had certain of a range of products where we took price increased on 28th of January and the remaining range of products is happening on 25th of February. So it will be better I respond to the consumer and contractor response after the quarter 4 results are there, because we are still in the process of executing the price increase. But on a mid- to long-term basis, what is our view about the industry. We remain very bullish if there has been -- as I mentioned in my opening speech, the industry in quarter 3 has grown by 10% to 11% or probably even 12% by volume. The challenges have been over focused on economy, subeconomy and putty-based business. So if we stop the down trading and if you notice, Birla Opus wants to operate a bit more balanced approach, it is making every effort to premiumize the service with the launch of its paint galleries and where, obviously, the ratio of premium and luxury is significantly higher. And the same is true for our painting services. We've been making every effort to premiumize and ensure that in the mix our rate realization remains at similar levels to the volume. And our attempt is volume and value to both move in tandem. As far as the industry is concerned, we believe that this year, the industry may -- including Birla Opus, may grow by 5% to 6%. FY '25, it has grown by -- almost it was nil. And FY '27, we are hopeful that it will come back to an 8% to 10% growth levels.
Operator: Next question comes from the line of Nirav Jimudia with Anvil Wealth.
Nirav Jimudia: Sir, just one question on the chemical side. For the Epoxy business. I just wanted to have your thoughts, a, with the trade deal donw then with the U.S.A. now and Chinese currency also appreciating by close to around 8% to 9%, how do we see our exports to the U.S.A. market in the medium term? And on a longer-term basis, with now EU FTA also in place, how do we see our volumes in terms of exports to that region as well?
Himanshu Kapania: Thanks, Nirav. Thanks for your question. Can you hear me?
Nirav Jimudia: Yes, loud and clear.
Himanshu Kapania: Both are positive for us in a way. So as you know that in epoxy, particularly in liquid epoxy resins, the Koreans have been available in India due to their FTA, they get a certain advantage where they can bring in product without the duty. And also, they had preferential access to U.S. as well as Europe. Now clearly, that advantage is going to go away. If you look in terms of timing, then the U.S. deal probably will get actioned before the American deal. So I am seeing a positive upside on export of epoxy from India to the U.S. Now how much quantity that will be, how that will ramp up, et cetera, is a matter of individual customer qualifications and those kind of things. That's a little bit too much detail to get into right now, but we do see a positive impact on that side. Similarly, if you look at Europe, as you know very well, Nirav, the European chemical industry is struggling with high costs, both from a perspective of energy, but also from a perspective of extremely high labor costs. As you know, a lot of restructuring has been announced in Europe, you know equally that Westlake has stock operations on their Rotterdam site. I think the India-Europe FTA, in the longer term will have a much more significant impact on the Indian chemical industry, probably in my personal opinion, more than the U.S. Of course, the speed at which Europe will ratify, all this will get down into law, et cetera, will be a little bit slower, but I believe that will be more sticky. So both these agreements, Nirav, are, I think, positive for the industry.
Nirav Jimudia: Got it. Yes. Sir, just 2 clarifications here. Sir, a, do we import any raw material from EU, which were earlier subject to taxes and now with this deal, could help us from the chemical business point of view also and from an overall business point of view also? And b, any volume guidance which you would like to share from the epoxy business point of view for FY '27?
Himanshu Kapania: Yes. So if I look at imports from Europe, yes, we have. I would not like to get into the details of what that is, but those are like -- they're not a large part of our basket. So I don't see really a large benefit from that. What I may think of is if glycerine prices continue to remain high, then the propylene route to ECH has its own competitive advantage, right? And several of the propylene-based producers are Western based. But there is a logistic cost hurdle. So let's see how this plays out in the long term. If you look at volume growth, then if I look year-on-year, our overall epoxy business, liquid proxy plus formulations this year has grown or at least for the year-over-year, we have grown by about 6%. I expect this rate to ramp up next year. Now how much it will ramp up by as a matter of speculation, but I expect that rate to ramp up further.
Nirav Jimudia: Got it. Safe to...
Himanshu Kapania: None of the fundamentals changed.
Nirav Jimudia: And safe to assume that this ECH price corrections, which have happened on the upside would translate into a similar increase in the prices of epoxy, which generally gets passed on a lag basis?
Himanshu Kapania: Yes, there is usually a time lag associated with that. As I mentioned, in the epoxy value chain, there are competing routes, right, glycerin-based ECH and propylene-based ECH. So what may be a pass-through for me may not necessarily be a pass-through for somebody else, maybe globally who may be propylene integrated. So depending on where crude prices, propylene prices, glycerin prices, the pass-through mechanism has a different cyclicality. But in the longer term, it all always passes on, right? It's always a matter of time. But the exact speed by which it passes on depends upon these 3, 4 factors.
Nirav Jimudia: Sir, last clarification, if you allow. This quarter, we have seen a dip in our epoxy revenues. So was it more because of the volumes were lesser this quarter and that should start correcting next quarter onwards? Is this the right assumption to make?
Himanshu Kapania: Just let me quickly check the data. Yes. So volumes were slightly under pressure on the liquid epoxy resin side. Actually, maybe the better way to see it is we decided not to take certain volumes where we thought the margin was getting too squeezed. That's probably the better way to see it. If I look at the non-LER business, all the formulation specialties, so the specialties within the specialties, there actually, we have not had any volume issue. It's on the margin where perhaps the lowest profitable part of our LER business, we have been a little bit unwilling to allow our margins to get compressed too much.
Operator: Next question comes from the line of Amit Purohit with Elara.
Amit Purohit: Thanks for the detailed data points on the paint. Just to recheck, sir, on the overall sales that we sold, you talked about 500 million kiloliters. That was since the time we have been into the market, right? Is it kiloliters or did I hear it correctly?
Himanshu Kapania: 500 million liters, not 500 million kiloliters.
Amit Purohit: Okay. That is -- since the time we have started operations. Yes. Okay. And secondly, sir, I also wanted to understand when you talked about 300 bps lower than the second player, that includes putty and everything, right, at this point of time? Market share -- exit market share you were talking about or...
Himanshu Kapania: I am saying what we said in the statement, opening remark, Birla White, the Birla Opus revenue for quarter 3 and guidance given by #2 players. In our assessment, internal estimates, now the gap is 300 basis points. I hope it's clear. And it is only Birla White's putty business. It does not include any other business.
Amit Purohit: Sure. And sir, we've talked about increase in new dealer addition. I just wanted to understand the typical profile of these dealers. If you could just qualitatively highlight these are large dealers or these are dealers largely from the market leaders? Or if you could just throw some highlight because typically, I mean, there is different types of dealers. And initially, when we started off, obviously, there were challenges to reach out to the very, very large dealers. What is the state now, I mean, in terms of acceptance?
Himanshu Kapania: We are getting blend from all category of dealers. In our internal assessment, we've broken the dealers into A category, which are more than INR 3 crores; B category, which is INR 1 crores to INR 3 crores; C category, which is INR 30 lakhs to INR 1 crores and D category into less than INR 30 lakhs. Most of the dealers are coming in, in the A, B, C. The small numbers will also come in the B category, but our focus in the A, B, C category.
Amit Purohit: And lastly, the price increase that we highlighted, that is more from a testing perspective? Or is there any raw material pressure, which kind of -- or do you think that from now on, the brand is strong enough to kind of take pricing and still it adds value to the entire channel as well. Just wanted to know your outlook as you highlighted that next year FY '27, the growth in the industry could be closer to about 8%. So the pricing volume graph should it reduce in the FY '27? That's the last question.
Himanshu Kapania: First and foremost, there are no current raw material pressures. Second, we've been consistently maintaining that we are at a lower price than the market leader and we felt the gap was higher, and we reduced the gap. That has been the strategy around there. It is not a price increase strategy per se as you're reading it. Please read it that we would like to maintain a certain gap with market leaders, and that's -- and we want to test at that gap, what is the consumer response. There was an X gap that existed and we reduced that gap.
Operator: Next question comes from the line of Pathanjali Srinivasan with Sundaram Mutual Fund.
Pathanjali Srinivasan: A couple of questions. So firstly, could you explain a bit on our share of retail business and institutional business because I believe we've grown pretty fast in our institutional business, but I was just trying to figure out if the base there is lower? Or are we created more towards institutional business?
Himanshu Kapania: So to our understanding, the industry, retail and institutional business mix is 85-15. We are not yet there on that mix. We are still single digit on the institutional business. Retail is much faster to take off and institutional has a much longer gestation period. The message that I was communicating is that we have a strong pipeline. And over -- hopefully by FY '27, we should be able to come closer to the industry average between 12% to 15% on overall contribution from institutional business.
Pathanjali Srinivasan: So could you give me some numbers for where we are in terms of range here?
Himanshu Kapania: As I explained, we were a single-digit number, and we have a strong pipeline of institution, but retail continues to be the stronger forte for us at this point of time. But institutional is growing faster...
Pathanjali Srinivasan: Sure. And just one more question around. So this number of saying 18% we've grown last quarter and all of that. There's just one part though where I've not been able to figure out. Like I met a couple of dealers from the time we started and more recently. And I have seen some of them saying that they've either stopped doing business or they're finding it difficult or something like that, while my sample size is very small. I want to know like what is an acceptable level of pushback or a reduction in dealers when we expand dealership and what are our targets here and where are we...
Himanshu Kapania: So the -- it's a large dealer universe. They are overall 100,000 dealers. On an average in a quarter, about 50% to 60% of the dealers are active. We are also experiencing a similar levels. In fact, our sense is about 70% to 75% in the quarter are active around that. And we are satisfied with the number of people who onboarded with us with the number of people who are active in a given quarter. So from that perspective, we are very satisfied both in the expansion of -- expansion pace of dealers, both in the existing towns and new terms as well as the throughput pace of improvement of dealers. We are -- most of the leaders who have joined us and have been consistently -- have continued to stay with us. There's obviously -- we are very focused on our collection and there are dealers who are pay masters are the ones probably you may be referring to.
Pathanjali Srinivasan: Got it, sir. Just to continue on that. I just wanted to know what is our policy with printing machines that we've given to dealers and where dealers have not been doing as much business as we like to them? How are we dealing with them? And are we -- have we started collecting money for tinting issues that we've given to dealers?
Himanshu Kapania: No, we don't collect money for -- as we already explained, we give the dealers free-of-charge printing machines, and that remains a consistent policy even in FY '26 and going forward. Only if a dealer does default on his payment for a long period of time, are there any actions that are necessary, but it's a few and far and are probably not relevant for this national platform.
Operator: Next question comes from the line of Prateek Kumar with Jefferies.
Prateek Kumar: My first question is on paints. Can you just confirm again the -- while you talked about your revenue expectation maintaining for FY '28, what do you think on profitability? Other related question, you have like seen some increase in interest expense during the quarter sequentially and depreciation. Is this completely related to capitalization of 6 plants? Or also, is there any working capital changes which you expect because you're also increasing mix in your business?
Himanshu Kapania: I just want to be clear, what your question is? You are referring to overall Grasim results, and you're saying that the interest and depreciation component gone up. Is that what you're referring to?
Prateek Kumar: Yes, that is right.
Unknown Executive: Yes. So in Grasim, if you are referring with the last year, the borrowing for the purpose...
Prateek Kumar: Q-on-Q, I mentioned.
Unknown Executive: Setting up the new plant was being capitalized. On the 15th of October, we have commissioned our last sixth plant. And now from quarter -- next quarter onwards, there will be no capitalization and all the interest costs will be coming to P&L account. Did this answer your query?
Prateek Kumar: Yes, sure. So there's no material working capital changes because we're shifting business -- paint segment business to more institution. That doesn't have...
Operator: Sorry for interrupting. Mr. Kumar, your voice is breaking. Can we just come a little closer to the mic and speak?
Unknown Executive: In paints business, we have capitalized over all the 6 plants and no major CapEx is spending at all.
Himanshu Kapania: If your question is on data, we are well in control as our debtors and working capital is not a challenge. We repeat again that the interest component in the past, a portion of that was getting capitalized. And now it will not -- the portion has significantly fallen because from 6 plants now down to around 15th October, it's only 1 plant. And that also, a part of it was no more capitalized. And the same applies to depreciation. As now all the 6 plants are fully commissioned, the full depreciation is reflecting in the books.
Prateek Kumar: And the other question was on Paint segment profitability, which you're expecting for Fy '28. You maintain it as like turning positive by FY '28.
Himanshu Kapania: Yes. We maintain our guidance. I'll repeat within 3 years of full-scale operation, we will -- we are targeting to be able to reach a profitable #2 position.
Operator: Next question comes from the line of Shreya Banthia with Oakland Capital Management.
Shreya Banthia: Am I audible?
Operator: Yes, you are.
Shreya Banthia: So my question is regarding the Chemical segment. So if you could share what is the current share of renewable energy in the Chemical segment?
Himanshu Kapania: Just second. It is around -- exit rate is around 20%, 23%, right? And we expect -- we actually are targeting to reach an exit rate of over 40% by end of FY '27, if you want to make a projection.
Operator: Next question comes from the line of [ Vipulkumar Anopchand Shah with Sumangal Investments ].
Vipulkumar Anopchand Shah: So when we will start sharing the revenue and EBITDA numbers of our paint business?
Himanshu Kapania: Shortly.
Vipulkumar Anopchand Shah: Shortly means, sir?
Himanshu Kapania: Yes. We are -- even today because that's why the -- there is a portion of the material that has been produced and was not sold, and they are still reflecting revenues which they're getting capitalized. We're expecting to complete that, and we will move on to -- we will share with you the exact dates when we do that. But there is still -- so that's why this gap between capitalization, that's why the numbers, what market calculates is there is a gap, and we want to finish all the materials that we have produced before commissioning and consume it, which remains in the capitalization.
Vipulkumar Anopchand Shah: So should we assume that from next financial year, you will start sharing those numbers?
Himanshu Kapania: We'll definitely come back.
Operator: Ladies and gentlemen, due to time constraint, that was the last question for today. We have reached the end of question-and-answer session. I would now like to hand the conference over to the management for closing comments.
Himanshu Kapania: Thank you so much for participating on the Grasim call. We're now going to close the call.
Unknown Executive: Thank you.
Operator: On behalf of Grasim Industries Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.