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Earnings Call Analysis
Q2-2025 Analysis
Cello World Ltd
Cello World Limited reported its Q2 financial results of FY '25, showcasing a stable revenue trajectory amidst industry fluctuations. Revenue came in at INR 490 crores, indicating a slight increase of 3% year-on-year for the first half of the fiscal year, leading to a total revenue of INR 991 crores. Despite these positive indicators, overall profit margins remained flat, primarily impacted by slow export sales and container delays due to geopolitical tensions.
The Consumerware segment stood out with a positive growth rate of 5% year-over-year, contributing significantly to the company’s revenue. In contrast, both the Writing Instruments and Molded Furniture sectors faced a decline, emphasizing the challenges in the global marketplace. Notably, over 70% of total revenue originated from Consumerware products, while Writing Instruments accounted for 14% and Molded Furniture for 16%.
Gross profit margins remained stable at 52%, with Consumerware achieving a gross margin of 53.6%, Writing Instruments at 57%, and Molded Furniture at 45.4%. The EBITDA margin for the quarter positioned itself at 27%, with a net profit after tax (PAT) of INR 82 crores, reflecting a healthy margin of 16.7%.
An important highlight was the completion of a state-of-the-art glassware manufacturing facility in Rajasthan. Expected to ramp up production to an annual capacity of 20,000 metric tonnes, this facility will position Cello as the sole domestic player in all categories of glassware and tableware, thereby creating new revenue streams. The ongoing trial production is viewed optimistically, with strong expectations for Q3, driven by consumer demand during the festive season.
Looking ahead, the management maintains a growth forecast for the Writing Instruments segment of 12% to 15% over the next 2 to 3 years, while anticipating improved demand across their business verticals in the second half of the financial year. However, this growth is contingent upon market conditions normalizing, particularly concerning exports.
The past quarter wasn't without its hurdles; the company faced logistical issues pertaining to delayed exports. Specific countries such as Russia saw considerable challenges due to stringent sanctions impacting sales. However, management noted an optimistic turnaround in recent weeks, suggesting resumed normalcy in exports might lead to a recovery in sales moving forward.
Management also indicated ongoing investigations into inorganic growth opportunities, expressing interest in acquiring smaller companies with complementary product lines—specifically in the plastic manufacturing sector—indicating a proactive approach toward scaling operations and revenue potential.
In summary, Cello World Limited's Q2 FY '25 demonstrated resilience amid a challenging environment. With strong plans for capacity expansion in the glassware segment and a clear growth pathway outlined for its core business divisions, Cello is strategically positioned to enhance its market presence and shareholder value in the coming quarters.
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Ladies and gentlemen, good day, and welcome to Cello Limited Q2 FY '25 Earnings Conference Call hosted by ICICI Securities. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Nilesh Patil from ICICI Securities. Thank you. And over to you, sir.
Thanks, Rachael. Good morning, all of you. On behalf of ICICI Securities, we welcome you all to Q2 FY '25 Results Conference Call of Cello World Limited. We have with us Mr. Gaurav Rathod, Chairman and Managing Director; Mr. Atul Parolia, CFO. Now I hand over the call to management team for their initial comments on quarterly performance, and then we will open the floor for question-and-answer session. Thanks, and over to you, sir.
Thank you, Nilesh. Good morning, everyone, and a very warm welcome to our Company's earnings call. Joining me is our CFO, Mr. Atul Parolia and our Investor Relations Adviser SGA. The results and presentations are available on the stock exchange and on the company website. I hope you had a chance to look at the same.
Our performance during financial year '25 is in line with the overall industry trends. Revenue and profit remained flattish on a year-on-year basis for the quarter. We were able to maintain our gross profit level margins at 52%. The softer performance was mainly on account of a delay in a lot of containers due to the new Russian sanctions and the Red Sea scenario in export, mainly in the Writing Instrument sector. For the quarter gone by, our Consumerware business continues to show positive growth of 5% year-on-year, whereas Writing Instruments and Molded Furniture business degrew, which had led to the result being flattish.
On the CapEx front, I'm excited about the completion of our investment towards the state-of-the-art glassware manufacturing facility in Rajasthan. We have commenced trial production, and this facility is equipped with very high-end machinery and basically with state-of-the-art technology. With the recent commissioning of this facility, I would like to highlight that we are now the only domestic consumer product company across all kinds of glassware and tableware products. The installed annual capacity of this plant is estimated to be about 20,000 metric tonnes. The facility has initiated manufacturing of commercial batches and over the course of time, we will ramp up the production and introduce multiple new lines of products.
We have begun Q3 on a strong note as the festive demand seems to be robust, especially in the Consumerware business. Combining this festive demand along with the gradual ramping up of the glassware production, we are confident of achieving better results for the next couple of quarters. From a growth perspective, we are keenly exploring other inorganic opportunities to complement our current business lines. We remain confident about our Writing Instruments business too going forward. And we still have the same guidance of about 12% to 15% over the next 2 to 3 years. We are in the process of adding more products in this segment, which will contribute to achieving our growth aspirations. To end with, we expect the second half of this financial year to be much better with an improved demand scenario throughout all our business verticals.
I will now take a pause and would like to hand over to our CFO, Mr. Atul Parolia, for financial highlights. Thank you very much.
Thank you, Gaurav, and good morning to everyone. I will be sharing the financial details for the quarter gone by. In Q2 FY '25, we achieved a revenue of INR 490 crores and EBITDA of INR 132 crores with a healthy EBITDA margin of 27%. Our PAT stood at INR 82 crores with a margin of 16.7% and growth of 6.7%.
Speaking about the business verticals, over 70% of revenue came from the Consumerware 14% from Writing Instrument and remaining 16% from the Molded Furniture and allied products. Consumerware gross margin was 53.6%, Writing Instruments margin was 57% and Molded Furniture margin was 45.4%. In terms of our channel mix, general trade contributed 74.6% of our sales, while export and online sales contributed approximately 8.5% and 10.8%, respectively, with modern trade contributing the remaining 6.1%.
Speaking of H1 FY '25, revenue was INR 991 crores and a year-on-year growth of 3%. EBITDA also grew in line with the revenue and stood at INR 267 crores. EBITDA margin was 27%. PAT was at INR 167 crores with a margin of 17%. Our cash flow from operations stood at INR 65 crores.
With this, I would like to open the session for question and answers.
[Operator Instructions] The first question is from the line of Praveen from Prabhudas Lilladher Capital.
So, sir, my first question is related to, as you had also highlighted that the export is down because of a delay in container and that lead to the Writing business decline. So how is the situation right now? Because Q2, the decline in the Writing is more than 15%. So how is the situation is shaping right now in this segment?
I think the current scenario is much better over the last month. Though the -- basically there was about 2 to 3 months delay in the containers. And those were lost sales that I don't think we can recover completely because in those fronts as well in those countries, that sale was lost. So, I guess, right now, of course, it's much better. The previous sale -- previous order that we had is now moving out. So I think situation seems to be better, but it is going to be challenging, especially in countries like Russia, where we still face challenges because of their domestic challenges that they're facing there.
Okay. So fair to understand that the things are improving, but still challenges is there. So achieving last year number would be a challenge for us.
No, not really in terms of -- because the domestic demand has also become much better. So I think achieving last year number in Writing Instruments should still not be a challenge for us, maybe even slight growth also is what we're expecting at least because the last quarter is always pretty good for Writing Instruments
And now moving to the next question is related to the gross margin. And in the gross margin for a quarter, if I look at that overall gross margin has also contracted and so as for the segments. So I can understand related to the Writing loss of business. But how is the other businesses like for the consumer also there is a decline in the for the gross margin for the quarter as well as for the moulded furniture. So is that a pricing-led? Or is that the RM led?
No. So it's a mix of both. So when it comes to furniture, it is RM-led. When it comes to Consumerware, it is a slight discount because of the very weak demand, there was some pass-on of discounts in the market for initial -- for some time. So, I guess, that is a mix of both when it comes to both the different segments.
So with the demand improvement, consumer gross margin also expected to improve. Is it...
Absolutely. Absolutely.
And lastly, on the glassware, which you had a commission recently and have given a 20,000 metric tonne of facility, how is the revenue potential there? And also, you had highlighted it's stepping up well in this quarter. So can you give some more color on that revenue potential and how is the sales especially going on?
Sure. So I think glassware plant is currently under trial production. So it's not salable production that we have started at this point of time. We hope to achieve this by the end of this month, we should have production that we can start selling.
In terms of glassware, I think the sales should flow in from next month onwards. So we'll have a good 4 months of sales for this year. In terms of the overall trend as I've mentioned that October was a good month. So the festive season went well, though it was in the last 15, 20 days that we really got this surge in demand. So our secondary sales have been pretty good. So the channel -- whatever choking was there a little bit in the channel that kind of get freed up. So that is why I feel that the demand overall should be much better going forward.
Having said that, this year has been a little surprising because we have had months where we feel that things have been going good, and then the next month, again, things were not that good. So I think, hopefully, this trend is here to stay. And -- but overall, I think it will still take in the whole consumer space, another couple of quarters to really see very good robust growth coming back.
Great to hear, sir. And lastly, if you can give some more color on inorganic opportunity, which you highlighted in the opening remarks.
Right. So I think in organic opportunity, we have been exploring for a while. And last time I mentioned as well that we are almost -- we have a couple of things on the table. But due to some due diligence, I think we have kept that -- not on hold, but just dealing the whole process because we have some things that we want to be clear on before we go ahead. So there were some plastic companies, which is -- with similar product line, slightly different, a little more [ niche ] product line, which we were looking at. And it's still on the table, but that is one opportunity that we would like to close sooner or later.
Is it possible to give any size indication? Like, is it the same size of any of your product line or segment line?
No, it's a smaller company. It's not a very huge size, about INR 150 crores to INR 175 crores of revenue. So it's not a very big size, but it's got products that are complementary and synergetic to us. So, I guess, that was the main reason for looking at a company like that.
[Operator Instructions] The next question is from the line of Sumit who is an Individual Investor.
I actually have a question on the commentary from last quarter where you had mentioned that the heat wave was the major factor why domestic sales were low. And yet again, we are seeing the same reduction -- since a reduction, but very muted volume growth. So I understand that October will be a good month because festive season but are we seeing too much seasonality, therefore, in your domestic sales?
A lot of investors are in the company because you have a very domestic focused portfolio, which is very spread out, as you rightly said, but is it going to be really a wave with a crest and the trough every few months because I expected this quarter to be a lot better than April, May, June because of the elections getting over and the heat wave getting over?
No, I think the heat way and the election was one of the reasons for the last quarter. But this quarter, as I said, it has been a surprising year. It's not -- it has been -- as you mentioned, that an ebb and flow has been there because we see 1 month very good and the second month is not that good. But having said that, the export demand is majorly in the Writing Instruments, and that's where we have really seen the degrowth. And -- but the consumer segment still is growing pretty robustly. So I think that's not where the challenge lies.
Seasonality as always has been a part of our business. So you will always see bottles selling more in, say, summer but flasks and say dinner sets is a festive demand. So there is a seasonality aspect to our overall sales in any case. But that's been there forever. It's just how the product line works, which is also good for us because it kind of whatever shock that we get, maybe an external, whatever external shock, we're able to absorb that because of our diversified portfolio. So, I guess, it's more how the market has been and the demand situation more than us doing anything differently.
[Operator Instructions] The next question is from the line of Karthik Bhat, who is an individual investor.
Yes. I hope I'm audible.
Yes, you are.
So does this guidance of 15% to 17% growth for the full year remain intact , which you had previously given?
So I think we'll have to -- that guidance will change a little bit in the second quarter. But having added capacity for glassware and that will be new revenue that will come for us. So overall, I think that we should still achieve a good number because as I said, because of how difficult this year has been and how things have ebbed and flowed, it is tough to put a number at this point of time, though as I said October has been a good month and a good pickup in sales. We'll have to wait and watch how this year goes further.
Having said that, third and fourth quarter is slightly better for us on a year-on-year basis as well. So we should see slightly better growth in the next 2 quarters.
Okay. Hence considering the slight de-growth in exports. So if you can -- would it be possible to share which countries or which geographies we typically export to?
Yes. So basically, as I mentioned, there are -- so Russia for us is a big country that we export to. So that has been our challenge because of the sanctions that are there in place and they've further increased the sanctions. So it's become more difficult for them to trade. And though there are ways that they find out to trade, but it just gets delayed the whole process.
So I think that's one of the reasons. And others over the Red Sea, we have a big export to the states to America as well. And that has caused a lot of containers to kind of delay because it takes the Red Sea route. So, I guess, these are the 2 major countries that have caused the challenges and the de-growth in exports.
Okay. And so do we feel the need to kind of revisit the strategy for exports and in the context of this slightly sluggish demand, what are your thoughts as to how do we get back on the growth trajectory in the coming quarters.
I mentioned that things have been improving. It's not that it has not improved. So we will be able to close those sales that we kind of missed in the last 2 quarters. So, I guess, should be -- it is definitely a better situation than before. Having said that, if something happens externally, it is definitely currently not in our control. What we are focusing, of course, on is growing domestic sales.
And I think that's the only thing that we can focus on because there is still -- things are much better and looking good. So, I guess, focus on domestic demand and trying to close these orders and plus adding more countries is something that we are looking at.
Okay. Okay. Sure. And any thoughts on FY '26 as of now, especially with this glassware facility also coming in as in what kind of growth can we look at in each of the segments? And what would be the key growth drivers as such?
Fine. So, I think, of course, glassware will be a driver for us. It's one of its kind facility in India. And we are basically substituting imports, so our idea is to completely use up this capacity in the next 2 years. So that itself will add a lot to our top line in the next coming year.
And with better demand, I'm sure we'll go back to the numbers of 15% to 17% as we have been guiding and have been achieving over the last 2 years. So, I guess, it's just a matter of time. Overall demand scenario has to improve for all of this to happen. And I think, as I mentioned, again it will take a couple of quarters to get there.
Okay. Okay. And you mentioned it being an import substitute product. So just wanted to understand which countries is it typically imported from currently? Do you have any?
So different countries, of course, China being one of the major ones. You have Thailand, Indonesia, China, Turkey, the Middle East, it's imported from all these places with China having a large share.
The next question is from the line of Sumant Kumar from Motilal Oswal Financial Services.
Sir, can you talk about bifurcation of volume and volume growth and the realization growth or degrowth, whatever?
So, I think -- Sumant, I think in our business, it's very difficult though there are numbers I can state but kind of -- because we sell a product from INR 10 to INR 5,000, if I sell more of the INR 10 product, you'll have volume growth, right? So it's a really challenging and should -- our business, I would suggest is not -- should not be looked in that sense. But having said that, our volume growth overall is 8% in the Consumerware business and our value is 5% at this point of time. But that also states that there is some additional sale in the low ASP or low average selling price product.
So can you talk about the Writing Instrument, we have seen a couple of degrowth. So what is the outlook for short term to midterm? And what are we doing for the growth for the segment?
Right. So I think in terms of Writing Instrument, as I mentioned that things have improved in the export side of things. So that should get us back on track. Domestic demand is decent. So I think there, we should be able to cover up the losses that we've had in sales over the past 2 quarters. So, I guess, we should still be able to cross a certain threshold of last year plus a little bit of growth in this segment.
Mr. Sumant, does that answer your question?
Yes. So can we see glassware can show a good growth in Q3 FY '24 -- FY'25 onwards?
Yes. So I think glassware majorly we will only be able to start selling in the next month. So it should add to a certain amount of revenue growth, but major growth should come in the next -- in the fourth quarter.
Okay. And wedding season is going to...
Sorry to interrupt you, sir. I would request you to rejoin the queue for your follow-up question. The next question is from the line of Ankur from HDFC Life Insurance.
Just you spoke about discounting and therefore, that impact on gross margins during the quarter given the weak demand, so if you could just talk about competitive behavior have those discounts been rolled back given your commentary on demand getting better? Or is it still more discount-led volume-driven kind of environment?
No. I think discount -- see if you look at the discounting as well, it's been very limited. It's not been a lot. If I look at other peers in the segment, we've seen major de-growth in gross profit margins across the segment. So we've been able to still maintain to a certain extent.
Having said that, at this point, a little discounting will, I think, be the case for the next couple of quarters. I don't think we can shy away from that because we still want to be competitive and at least maintain our [indiscernible]. So I think going forward for the next couple of quarters, this trend will be there.
Okay. And that kind of ties into the fact that you expect a few more quarters before growth really bounces back to that 15%, 17% levels, right? And therefore, then discounting kind of goes away, right? So that's how we should see it.
Correct. Correct. So I think as the demand picks up, the need for discounting of course comes down.
The next question is from the line of Percy from IIFL Securities.
So on the glassware plant, I just wanted to understand one thing. So this is a plant which needs to run 24/7, right? So you have a capacity of around 20,000 tonnes per annum, which is 55 tonnes per day. So does this mean that your production will be 55 tonnes per day from the time you start commercial production?
No, it actually takes a little time to ramp up. So though the capacity is that much, maybe it will take about a couple of months, 2 to 3 months to ramp up. And we are able to run at, say, 70%, 80% as well depending on demand. So of course, it will depend on those factors, but the capacity is about 20,000 tonnes. So at the max, we can achieve this.
What's the minimum that you need to produce a day?
Minimum would be about 70% to 80%, as I said it would be 40 tonnes. So 55 tonnes a day, then it would be 40 tonnes.
Okay. Okay. And what is -- I mean, your capacity that you have put up 20,000 tonnes, what would be -- what would that capacity be as a percentage of India's total capacity for those kind of products?
So basically, today, most of it is an import, except for Firozabad where there are -- there is glass manufacturing, tableware manufacturing, but very -- the quality is not up to the level. So overall, this is about INR 2,000 crore market with imports and domestic put together. And so we are looking at about a 10%, 12% kind of a market share of this entire market.
Understood. So this -- supposing you start off with 40 tonnes production per day, are you confident that you will be able to sort of sell that product immediately given that, I mean, you're starting from 0 and going to 70% capacity almost immediately. So do you think you can capture that 10% kind of market share right at the outset? Or does it take time for you to find customers, et cetera? And if it does take time, what happens to the production which you have done in the meanwhile?
So I think it will take a little time. When I talk about little, the time frame is about 3 to 6 months where once it starts spreading in the market because we have 2 advantages. One advantage is supply because most of this product line is an import and a lot of people import it. It's quite fragmented. So, I guess, one is supply, one is the consistency of the price.
Because today, I'm importing say, 2, 3 people are importing, anyone is able to import and they distort the price in the market. So, I guess, these 2 advantages are very big. We just have to enter with a bang and I don't see any reason why we can't scale this up very, very quickly. So as I mentioned last, as well in about 2 years, we want to definitely finish the capacity.
Got it. And what's the net realization for glassware for your typical product portfolio at a net sales level, what would be the realization per tonne?
So it's similar to our opalware kind of margins that we enjoy here. Of course, once it has been ramped up at a lower level of capacity, it will be challenging to achieve a good level of margin. But at peak, we are able to achieve really good numbers.
Yes, not margin. I was asking the net sales per tonne, how much that would be? And is it different from opalware?
It's different from opalware, it's a lot lower per tonne. But having said that, it is -- there is a lot of value addition that still can happen in this product line. So it would be wrong for me to say that it is -- at what level it would be, but it is definitely lower than opalware. It's not at the same line.
The next question is from the line of Shirish Pardeshi from Centrum Broking.
I have 2, 3 questions. So on Slide 5, you have given the first half revenue is about INR 991 crores. I would say that about 67.6%. So about roughly INR 670 crores is your Consumerware business. And it's about 53.6%, the margin what you have mentioned in the slide. I'm more curious, can you step out what is the opalware business in this? And if glassware is going to be starting now, what would be the contribution within that 67%, say, next 1, 2 years?
Right. So I think I can give you broadly, we do not indicate numbers separately for the Consumerware vertical. We don't give it separately. But overall, it's about 30% of the business -- 25 actually percent of the Consumerware business came from opalware. And the glassware business would add another 15%. So at its height, both put together, it would be about 40% to 45%.
Okay. And directionally, once your final capacity gets build up to maybe about 40 tonnes what you're saying over the next 2 to 3 quarters. And subsequently, you will reach to 50 tonnes how this contribution of 68% -- 67% would settle for next 2 to 3 years?
So definitely, the Consumerware percentage would definitely increase because of this. And this will be a faster-growing segment. So of course, it will depend on the other segment, how they grow. But definitely, it will gain a little more percentage over the other 2 segments.
Okay. And just one more follow-up on glassware since you are doing the internal production, in-house production, will the gross margin will be subsequently higher than 53%, 54% for glassware?
Yes. So opalware also the margin overall is slightly more than our other businesses. The gross margins are slightly better. So for glass also, it will be similar, but not initially later -- in later months once we have completely ramped up the production.
My second and last question, how we should look at once this capacity comes full on stream? not [ '25 ], but [ '26 ] some margin story, if you can give some more depth.
So as I said that we first have to reach full capacity. In terms of efficiencies also, we need to reach out good efficiency. Currently, we have just started. Glassware is a production that takes time to settle. It's not something that settles within a month or a couple of months. But once it's settles, it settles for about 10 years, and you don't have to look at it.
So, I guess, you are looking at it from that perspective. We hope to completely scale up by March and be there. That's the wish and aspiration to completely be at full capacity and also being able to sell that capacity by the next year and over the next 2 years, we should be able to exhaust this.
Just one question, like industry has seen a very strong discounting in the last 30, 40 days. Do you think there is a preempting of competition in the glassware also from the discounting point?
So glassware, I have not -- I'm not seeing any other peers coming in. When I'm talking particularly about the glassware segment that we have just put up. So, I guess, there, it's just imports that we are substituting. So from that perspective, I don't see any pressures on margins.
Just one last follow-up. This glassware you will put it in the match pricing or you will take the premium pricing?
No. So we will basically be at the similar pricing as what imports is coming into. So I think that's the strategy.
The next question is from the line of Ritwik [ Sheth ] from Arkay Ventures.
Yes. A couple of questions. The glassware plant would be commissioning. So what kind of product portfolio we are targeting from the glassware segment?
So in glassware, we majorly have drinking glasses or tumblers, all kinds of drinking glasses. We have will have storage containers, bowls, other tableware like plates, dinnerware. So this is the entire portfolio of the glassware plant and also hot drinks, so tea cups and mugs.
Got it. Okay. And what can be the peak revenue once fully utilized from this segment -- from this plant?
About INR 230 crores to INR 250 crores we can achieve without value addition. If you -- if we start say decoration, coloring, there are a lot of other value additions that can be done to this product line that can further enhance the revenue.
Okay. Okay. And what would be the payback for this plant after completely ramping up?
So the payback should be about 5 years, 5.5 years.
Okay. Okay. Got it. And just one question, would there be any kind of cannibalization between the plastic and the glassware products for us?
No I think we've see the demand for different products being very different. Also the channel that we sell-through. So most of our distribution is also quite separate. It is not -- there is some overlap, but most of it is a different channel through which we sell. So -- and the product line -- and end usage is also very, very different. So a tumbler is, you will only be able to sell a glass tumbler, I don't think you can sell a plastic tumbler. So I think the product itself has a different use. So I don't see any cannibalization as such.
Okay. And just one final question on this. What is the CapEx for this plant?
CapEx is about INR 250 crores.
[Operator Instructions] The next question is from the line of Deepesh Sancheti from Manya Financial Services.
My question is specifically about the merger of Wim Plast and Cello World. Any -- what is the rationale of demerging Wim Plast and merging it into Cello, if you could just explain?
So, I think, we previously mentioned this as well, there are 2 rationales, one is that there is -- we do not see any point in running 2 separate listed entities as the business is not very different. Secondly, there is a lot of manufacturing facilities that Wim Plast has, so in different parts of the country wherein we can share manufacturing facilities with our other plastic product lines. So, I guess, these were the 2 major rationales for the merger.
Okay. And also with this merger, the entire money which Wim Plast had given to Cello World as a loan for about 8% that also gets merged, right? I mean there is -- absolutely, there will be no loan on Cello then?
Yes, that's right. But as you know, we have -- while that QIP proceed, we have said that we will repay that loan. So already we've repaid that INR 100 crore loan to Wim Plast. And moreover, I mean, all the points will come to Cello World and that's right, what you're saying is right.
Because it will become a 100% subsidiary of Cello World.
Okay. So effectively, a Wim Plast shareholder will get 86 shares for -- of Cello World. That is right?
Yes, you're right.
Now I wanted to understand in terms of Cello World because it's a very good deal for Cello World. Wim Plast was trading at what [ 10p, 12p ] and we are trading at [ 60p ] but my specific question right now is that since you are into 3 verticals, are we looking at actually demerging these 3 verticals in the near future or maybe going ahead? Because I'm sure that all the 3 verticals are completely unrelated to each other, right?
No, I think -- I don't think we are looking at that because otherwise, we would have not merged this back into Cello World. Because I feel though they have different product lines, there is a lot of synergy between these product lines because on the manufacturing side, our furniture is very, very similar to our other plastic manufactured products. So, I guess, I think there is synergy standing outside was not making sense, and that's the reason that the merger is happening.
What I'm asking is that there's a plastic division, there is a pens division. And then there is glassware as well as all the Consumerware business. maybe having 3 verticals would enhance shareholder value in future. I mean, this is not that I'm proposing right now. So maybe in future, when all these 3 verticals can be listed separately?
So I think, of course, it depends on the growth potential of all these verticals because at the end of the day, when I talk about glassware, steel or plastic, they're still a consumer-focused category. So at the end of the retail sale of the consumer looks at it from a similar perspective, not from a different perspective. So, I guess, of course, if we say tomorrow, glassware becomes too big, then kind of it would probably make sense.
Okay. And going ahead, are we expanding the glassware segment also? Or we are looking at first commercializing and commissioning the entire plant into full capacity?
No. I think our first thing is to completely commission this plant, get it to capacity and sell the capacity of this plan. That itself will take the share of glassware in the total business quite higher. So I think that's the first idea. Later on, of course, as we have scaled up our opalware as well, if there is a chance and if there is a market, of course, we will scale even further.
[Operator Instructions] The next question is from the line of Karan from Asian Market Securities.
So, Gaurav, with respect to the opalware plant, so what was the capacity utilization in the second quarter and how are we seeing that ramping up for the rest part of the year?
So currently, we're at about 75% capacity utilization on the opalware plant. We have about 25% still to go. So I think by about next year, we should be completely using up this facility. So not this year. We will not be able to completely utilize the full capacity, but we still be at about 75% to 80% utilization.
Right. And also, can you comment on the new product launches for the first half across categories and Y-o-Y as well?
So I think new products in terms of category, we have not added, glassware will be one thing that will be new, but was within...
So at the company level -- what are the new product launches -- new SKU launches at the company level?
New SKU is more evolutionary. So there is a certain type of bottle, so we make different varieties of the bottle. So every year, we launch about 300-odd products. Even this year, it's been in line. And of course, we reduce also a few. It's not only that we keep adding. So about 100-odd products have been launched in the first 6 months, but it's more evolutionary, more design specific that say there is 1 bottle, the other bottle is the same purpose, but slightly different or a newer design. So it's more a trend game rather than a completely new addition of product lines.
Right. And last question from my side. How is -- what kind of changes in selling price we've seen for opalware and glassware in the last 1 year at the industry level?
At the industry level, see there is also -- there has been actually a lot of deflationary pressures that have come in. So overall raw material prices and energy costs have come down dramatically since the last year. So I guess that is the only discount that has been passed on. So from the P&L perspective, it really doesn't have -- it's not changed much at our end in terms of realization.
The next question is from the line of Ankit (sic) [ Aniket ] Kulkarni from BMSPL Capital.
So in the last couple of calls, I think we had spoken about the possibility of merging Wim Plast. So have you had any thoughts about the same and, I mean, what is the idea behind this right now?
So I think we've been speaking about it. And I think now we have just taken this call. So it's already out there that we have now initiated the process for the merger. As I have mentioned earlier as well that the rationales are 2. One is that we don't see a separate entity standing out as a listed company. So there is no point and basically, it reduces our compliance while having it under Cello World.
Already because Cello World owns about 55% of the company in any case. So it's only about 45% that is being acquired. Also, we would be able to use these facilities as Wim Plast has a lot of locations where it's manufacturing capacity is there. So we can use it for our other plastics product lines as well. So I think these are the 2 major rationale.
The next question is from the line of Karan Bhuwania from ICICI Securities.
I just wanted to understand what are the distribution expansion plans we have, especially if you can speak about in the Writing Instrument segment, what are the plans we have in terms of distribution expansion?
So I think there are -- of course, there are certain gaps still in the Writing Instrument segment. Geographically, we have been growing the domestic distribution. They're pretty much covered, but of course can be -- till last year levels, we were at about 120,000 outlets, which has grown about 15,000 to 20,000 outlets have been added in that, but there is still some way to go. We should be at about 2 lakh plus, and that's what we are aspiring to get to.
Gaurav, is there any specific time line you're looking to achieve this target?
So it's an evolving process. It keeps getting added. By the end of the year, we should be at about more than 1.5 lakhs. So by -- in the next 8 to 9 months, we should start looking at touching that number.
[Operator Instructions] As there are no further questions from the participants, I now hand the conference over to the management for closing comments.
Thank you. I would like to thank everyone for being a part of this call. We hope we have answered all your questions. If you need any information, please reach out to us and our Investor Relations partner, LGA. We would answer all your queries. Thank you.
On behalf of ICICI Securities, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.