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Somany Ceramics Ltd
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Good evening, ladies and gentlemen. Welcome to the Somany Ceramics Limited Q2 FY '23 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. .
I now hand the conference over to Mr. Navin Agrawal, Head Institutional Equity at SKP Securities Limited. Thank you, and over to you, sir.
Good evening, ladies and gentlemen. It's a pleasure to welcome you to this financial results conference call on behalf of Somany Ceramics and SKP Securities. We have with us Mr. Abhishek Somany, Managing Director; along with Mr. Kumar Sunit, AGM Finance. We have the opening remarks from Mr. Somany, followed by a Q&A session. Thank you, and over to you, Abhishek ji.
Good evening, ladies and gentlemen. Welcome to the earnings call. I think the next, we also have our CFO, Mr. Sailesh Kedawat online with us today. To begin with, just to give you an industry outlook, the last quarter has been very volatile in all fronts. We've had a muted market demand that resulted in a flattish growth, in fact, slightly negative. This was due to various reasons, specifically because of the supply chain disruption in Morbi. We had a 1-month outage. We were not participating in that, but there was a huge issue with the truckers where there was hardly any material going in, so no trucks were available. So we had a good 15, 20 days of disruption in terms of volume because of that. .
We also had various other market pressure in terms of rain, et cetera. So those are normally generally there. So nothing specific. But otherwise, on a general front, there's been a muted demand from the market. One cannot point a finger as to why. Geographically, I think North, South, East, West, all of them have been impacted. We're being the strongest in the North as far as our volume is concerned, obviously, it was slightly a little less there, but otherwise, the disruption was every year. It was also coupled with apparent slowdown, which we are seeing in terms of interest costs rising because of that the real estate segment is going to get impacted. And I think that is all inflationary with the interest rate rising abroad and in India. That is going to keep being heavy on us for the next couple of quarters, maybe 6 to 9 months or who knows more. The green shoots of course, there were some very, very positive green shoots this quarter, which we will see the positive signs of that coming in the next following quarters and the year.
That was that there were 3 things which happened. Freight rates have gone very, very low compared to what it was last year, which is the export rate case, the ocean freight rate. Coupled with that, we had a huge antidumping duty slapped by Europe on Turkey. And coupled with that, we've had huge inflationary pressures of gas costs, I think way beyond what it rose in India, in Europe. So all of these 3 things is opening up Europe has a huge potential for Morbi players and this time also maybe for the organized players because a lot of the Turkish companies and the European traders are wanting to come and buy from India. And India has virtually no antidumping duty. We were expecting a high antidumping duty, but we then managed to get it at 7% only, which is negligible. That has been clearly offsetted by the freight costs going down. This is the industry scenario. Morbi still is not completely back about, about 100, 150 players are still short. They'll probably start opening slowly now.
Gas has not gone up. In fact, there's been a little bit of a rebate in gas in Morbi. Otherwise gas cost overall has gone up in the last quarter. So even they are seeing pressure on volume, but they're seeing a good amount of uptake in exports. And what we said initially, the export should grow to about 17,000, 18,000 from 12,000, 12,500 from last year.
Now coming to our numbers, our numbers, as you can see, there's really no point looking at the H1 numbers because last year, Q1 was muted because of the pandemic. So let's look at the Q2 numbers. We've had 9.3% growth as far as sales is concerned. And we've had a flattish growth, flattish quarter as far as volume is concerned. EBITDA obviously has been hit the maximum pressure on that has been basically on the power and fuel. That's the single biggest item, which has hit us. We've not had any price increases ever since the beginning of the year. So that has clearly affected the margin. And because volumes didn't go up, that further affected the margin. In fact, we ran our plants looking at 100%, looking at the opportunity where Morbi was shut, we should be able to push more materials. That also did not happen in the same robustness as we thought it could be. As a result, if you could see a lot of our cash has been moved to inventory. So our inventory has gone up from 34, 35 basis 45 odd days, give or take a take a day.
EBITDA you can see, is being hit as a result of the new volume and also in terms of gas. The positives are that we've been able to move a lot of our units to LPG alternate fuel. So in the quarter, 1 by one, we moved from 1 unit to 50% of the units now on LPG, and it's still work in progress. By the end of November, we would have approximately 60%, 62% of our units on LPG, which will definitely check the gas cost and LPG is significantly cheaper today than natural gas. To give you a flavor and preempting the question, the overall gas price in Q2 was up INR 5 from last quarter and more than -- almost 100% from last year's same quarter. Current prices, of course, have come down by a couple of rupees because of what Morbi gas rates have gone down, the BPCL, GSPCL gas rate has gone down.
Next quarter, we will see further reduction because oil has also come off and our LPG also should give us benefit. So our northern gas price was about INR 65, Morbi was also INR 65 and South was INR 75. Currently, that's come off and it's currently hovering around the INR 60, INR 62 figure, which we believe should go down further during the course of this quarter. Sales have also -- in October, we had a muted October that was expected because of Diwali, Dussehra and various other festivals, which all fell in 1 month. So that was again expected, coupled with the low growth any which way, the low demand any which way, so October was also muted, but like I said, it was expected. So hoping for a better November and December in terms of sales, and also in terms of gas pricing, although that would really show full results in the last quarter.
We have been managed to secure some quantities what we talked about last quarter in the South, which the current quantities, we have been able to tie up about 1.5 lakh square liters per month in the South and the same amount of quantity in the North. So going more geographical, and that's the rationale, which we discussed last time about why we divested in 1 of the Amora plants is because we wanted to go more regional. So that quantity has gone more regional, although it's an incremental quantity. The ceramic and the GVT is pulling away from PVT. PVT is down from last year's same quarter, 34% to 28%, whereas GVT is up from 28% to 33%, and ceramic has also gained by 1%, from 38% to 39%.
Sanitaryware bath fitting. Like I said, the entire market was muted. So sanitaryware and bath fitting has also shown only a growth of 3% over the quarter over last year same quarter, Y-o-Y. So we've had 2% growth in sanitaryware and about 5% growth in bath fitting. But this sector is looking good, and we -- our expanded capacity of bath fitting is already with us. I had mentioned that it will start in October. So that's already started. So that should start giving results this quarter and also last quarter. The average capacity utilization for tires has been about 88% in last quarter, 45% in sanitaryware. Sanitaryware generally quarter 2 is muted because 1 line shuts because of rain every year, it's the same thing. Faucets has now moved to 93%. Our brand spend has remained at approximately 2% of revenue. It should be at the similar level. In fact, from today onwards, we have a huge campaign breaking out on TV, and you will see a lot more of us even there.
Otherwise, the 360 campaign has been flagged off from the end of last quarter. Our net dealer addition for H1. Now this I can talk of H1 because it's not financial. That has been approximately 150 dealers, which have been net added. As I mentioned, price increases, we did not take anything more than what we took in June, early July, about 2%, 2.5%, which was again up till June after that last quarter, we have not taken any price increases. Forward statements, we still don't have any guidance on margins as I mentioned, because it's still extremely volatile as far as gas pricing and demand is concerned, but we definitely can say that the gas prices have come under check, and we should see a softening gas price regime for the next 6 months at least.
Sales growth, we are still confident that we should be doing a high double-digit growth between 15% and 20% in the high teens. So that is still on card, and we're looking forward to a better 5 months because these 5 months are clean 5 months without too many holidays, et cetera, which disturbed a lot of the H1.
So this is my overall brief on the Q2, and I will open the floor to Q&A, please. Thank you so much.
[Operator Instructions]
The first question is from the line of Achal Lohade from JM Financial.
My question was with respect to the supply side, has there been any impact of margin, took a shutdown of 1 month in terms of the supply from Morbi eventually, did it really lead to any price hike by the Morbi players or not at all?
So the outage, which they took was to not get any price hikes, but they were wanting to create more demand in the market and also to check any further reduction. So obviously, that has paid off from the point of view of no further reduction has taken place in prices since August, but they never did it for any price hikes. And as far as supply is concerned, all our joint ventures and all our partners, which are the partners from where we buy have all started their production -- or outsourcing partner.
Okay. So the JV plans were working, but the...
So the JV plant also, like I mentioned, we were not part of the outage. So the JV plants also were working till about 15th to 20th of August. But after that, we had to take certain parties over there or shutdowns there for the last 10 days because the vehicles were just not available for transportation. So I think they are arm twisted the truckers there to not give us material. So although we did dispatch the good weekend days, we also had certain issues with production, but that was more purely because there was just too much pile-up of stock because the supplies were very little from Morbi due to truckers being not available.
So if I think given we will have inventories across our warehouses, branches, et cetera, this supply from Morbi units to these warehouses shouldn't really have any impact on the sales volume for this quarter, right? I mean I can imagine that there will be [indiscernible] from warehouses.
We have enough material, we have enough material. So that's what you are asking, I get that you're asking do we have enough material.
Yes. I mean what I was saying, you gave one of the reasons for the weak volumes was the supply chain issues from Morbi in terms of truckers.
That was only because of August. We would -- we probably would have had a couple of percent of growth, but otherwise, the demand was muted. So that problem, we will not have, but the demand is still muted. So that 10, 15 days of outage was there for everybody.
Understood. And Abhishek, just one more question on the demand side. If you look at the real estate launches for the developer, they seem to be doing extremely well. So what I'm trying to assess is that where is this weakness suddenly coming from? Is that just the interest rate? Is there something else which is pulling the demand, and how does it change it makes a month, 2 or whatever?
I can't put a finger as to how it is, where it is coming. All I can say is that -- at the end of the day, the real estate doing well is a great time for us, but then we start getting utilized for new production, new applications only a year, 1.5 years, 2 years after the new launches. So -- and anyway, we are not very affected with the real estate directly because we're not -- our revenue does not go too much into real estate, but I was talking more from an industry perspective also where Morbi is very, very exposed on the real estate. So clearly, they're seeing a slowdown over there, because new launches and people are waiting to start building or waiting to start renovating is where we are seeing a slowdown. And as far as real estate is concerned, with steel, cement all of that very up, there is a little bit of a delayed supply which they want. So there Morbi is seeing a slowdown. So overall, there is a clearly a slowdown. But really, I can't put a finger as to why. I can keep making analogies and keep making excuses that it was a rain or it was this or it was that, but that happens in the year. There's no big deal.
Clearly, Morbi outage was something which did affect everybody, but that was also, frankly speaking, kind of welcome if it becomes a yearly feature, all of us can then follow through and shut down plants or maybe 15, 20 days and take our routine maintenance then rather than taking ad-hoc maintenances. This time, we were caught off that because the truckers were out. So overall commentary is that clearly, in the building material sector, if you see other people's results also, not tiles, but others, there has been a muted volume demand across the board.
Right. And one more question with respect to the LPG, you have given a mix. But if you could talk about the -- why not propane, is there any issues in operating propane in terms of the quality or impact on the tiles, et cetera? And the cost for LPG, what is the price, effective price for it and for propane and for gas?
So propane and LPG pretty much have the same thing, just that propane comes in large cylinders, therefore, you need a lot more space and the peso licensing take it takes much, much longer. LPG is much, much quicker because they come in smaller. There is an alternative of getting that in smaller bottles, and therefore, we move to LPG from a time-sensitive point of view. There's no point getting propane down the line. There would be infrastructure and the licensing in place. So LPG, we were able to do very, very quickly. As far as 2 of our plants are concerned, they are running on propane because we already had an infrastructure there. So to answer your question, today, the gas price is approximately standard INR 65 a standard cubic meter, and if I adjust the kilocalorie value between natural gas and LPG, which is what we're using, that comes to approximately INR 50, INR 52 a standard cubic meter. Soc it's a good INR 10 cheaper than natural gas. And it does not move in the same direction as natural gas and does not follow it. It's independent of natural gas. So I hope I've been able to answer that question.
[Operator Instructions] The next question is from the line of Sneha Talreja from Edelweiss Securities.
Just couple of questions from for me. Firstly, with regard to you...
Ms. Talreja sorry to interrupt, can't hear you clearly.
Is it better now?
Yes, it's better.
Yes. So just wanted to understand that you have mentioned about demand slowdown a couple of times, and you are hopeful that in the next 5 months, of course, demand would pick up. Any signs that you're already seeing in the month of November? Or is it too early to talk about? Like festive season has now gone by. Any progress that you're seeing now?
Yes and no. I mean it's just been 10 days in November. So the whole hangover of Diwali is just going away with the traders and specifically with Chhath Puja around the corner, the East was also shut. So obviously, it will be better than the previous month. But how much better, I guess, it's a little too early to say.
Still, what is giving you the confidence of 15% to 20% is what basically I wanted to arrive at in terms of growth perspective in the numbers in terms of volumes that you've mentioned?
So I said growth in sales volume obviously, we're coming out of a low base last year. So H2 will be a higher base. So what's giving me confidence is that we've gone through many cycles with so many years in business, and we've seen some very poor years in the last 15, 20 years. And in every scenario, H2 has always been 10% to 15% better than H1, in the worst of years and in the best of the years. That's the kind of average between 7% and 14% is the average, which is better than H1. So that's the kind of confidence taking some reference from what we've seen in the past. And we have seen cycles in the past in the last 5 years. Every year hasn't been a great year.
Sorry. So just for clarity, is 15% to 20% volume or the revenue growth?
Revenue growth.
Understood. And secondly, you also mentioned, a lot...
But Sneha on that, volume will also move up because we don't forget we have put 3 plants. So we are going to utilize that. So volume will also move up decently, very decently.
Double-digit is what we can assume safely?
I would think so, yes.
Sure. Understood. Second question is regarding gas prices. Since you mentioned you're moving towards LPG, what is the kind of an average now that we can consider for Q3, any rough sense that we can get?
Yes, of course, I can only say what we are -- the prices which we're getting now like I mentioned, 50% of our lines were converted to LPG. And it will go up to 60%, and that's about it. 40% will still be exposed to natural gas. A blended average will be natural gas at about INR 64 currently, and the LPG is about INR 50, INR 52. So you can take an average of 60-40 from that. I don't have a figure directly, but you can calculate.
That's helpful, sir. We can do that. And regarding the falling gas prices with respect to the falling prices that we are seeing now across the board, whether it be the gas prices or propane that we've already seen. Any price falls that you anticipate Morbi will take, that will be also a part of this because this has generally been a fairly competitive industry. So do we see any price falls happening shortly or -- because...
No, Sneha. I don't think price falls will happen because on one side, export has picked up. The dollar is also giving them a lot of boost, the lower freight, higher rupee dollar. So from that point of view, exports is really exciting. And mind you, 50% of Morbi also has moved to LPG. So that kind of price decrease has already happened even there. If you haven't seen a price decrease now, I doubt we'll see a price decrease later because whoever had to convert to LPG has converted and whoever cannot -- maybe another 50, 80 players will confer to LPG. So that the natural gas price is going from 64 to 60 is really not affecting because Morbi has already moved to that INR 52 price.
But prices will come off. I don't think prices will come off of GSPCL anymore. But I do hope and wish and pray that the South prices, which is were exposed on spot, should come down. And thereon completely on LPG, but that should come down, and we would be moving back to that. But in our northern plant, these were the biggest delta because I have constraints of space. Therefore, I have not been able to convert the entire plant to LPG, which is till exposed to a reasonable amount in gas. There, I'm linked, if you remember, we're linked to the crude 3-month moving average. And the crude last quarter, we were on the 3-month moving average looking at $120, $125 per barrel because that is what it was when the war started. And now we are looking at a INR 90 to INR 105 range and going down.
So Qatargas prices, which moved up from of INR 48 very sharply in 2 months, 3 months to INR 65 has already come off to INR 60. And I believe this will come up to INR 55 in the next 2 months because of the payer moving average, which is now capturing a lower crude. So from a gas perspective, I'm really not worried unless a nuclear bomb goes up, that is [indiscernible].
The next question is from the line of [indiscernible] from [ Raj Financials ].
I just wanted to know, sir, can you throw some light on what are the underlying item and the first comment of note to account, you have mentioned that the company has invested INR 40 crores in the right issue of subsidiary, Somany Max Private Limited. Can you throw some light on the same?
I'd let Sunit and Sailesh, either one of them take that question.
Yes. So this is towards the INR 170 crores CapEx rental project, which Board approved last to last quarter and it is in the process of commissioning. So the first promoter contribution by way of equity shares to the extent of INR 40 crores has been issued, and that is what we are referring to 80% subsidiary. So 80% of INR 50 crores comes to INR 40 crores which is at the Somany Ceramics. And another INR 10 crores, which is equivalent to 20% shareholding is by manufacturing partner.
What is it regarding to? I might have missed out earlier.
Yes, you completely missed out because it is a follow-up activity of the greenfield project, which is announced by us last quarter where INR 170 crores greenfield projects of large format slab tiles would be produced in this plant. So yes, it will be a state-of-the-art manufacturing facility, which would be producing a very large format slab types of tiles.
Okay. Got it. Also just wanted to know what would be your current capacity in tiles, 73 msm . And after the expansion that we are looking forward, what would be the capacity by the end of the year?
So we are at 62 million, 63 million square meters of own production, and we have 73 million capacity. As you know, 10 million square meters we buy from outsourced vendors. That remains the same. And this million 4 million, Sunit, this is 4 million, right? The Max tiles. So that 4 million, more or less 4 million will get added in second -- middle of the second quarter next year. So about July next year, this 4.5 million would be added, which would push the capacity up close to 77-odd million.
Okay. And sir, what was the reason for low growth in sanitary and bath fitting? Because as I understand, we still have a low base in that segment. And probably, if I may not get it wrong, we could have seen some growth in that segment of probably because of the low base.
So not already right. It is a low base and I think it's just been a very muted quarter in terms of overall demand. I think the dealers were also extremely cautious of buying because of price decreases -- often price decreases across the board. So generally, it's been a muted quarter for most brands in the sanitaryware segment, barring a few industry leaders.
Got it. And sir, lastly, where do you see margins improving? When do you see margins improving? I mean, going by your comments, I feel like the gas price would be muted or coming down in the next 6 months. So can you see a slight improvement in margins going forward?
Yes. Logically, absolutely yes. But it will largely depend on how much volume picks up because clearly, gas prices have come down. So there the margins obviously from this quarter onwards would improve. How much they would improve I'm really unable to say because it's been extremely volatile.
Yes. But we can see an improvement going forward from here on?
Yes, yes. For sure. Of course. I mean like I said, the gas price went up from INR 40, INR 50 to INR 64 literally in a quarter, and it's come off already by INR 4 or INR 5 and this LPG is only going to help us further. So we should be looking at another INR 3 to INR 4 decrease in gas prices overall. And next quarter, maybe a little more. And like Sneha had mentioned, would there be a lowering of pricing from Morbi, that doesn't seem to be on the cards. So I think if you are able to maintain this price of sales and gas price start coming off, obviously, that will show up in the margin.
The next question is from the line of Pranav Mehta from Equirus Securities.
I wanted to understand on your comment that the branded players will also be looking at exports. So if you can throw some light, will you be aggressively looking at exporting at least in EU and the North American leases wherein Türkiye was a very big player?
I'm sorry, who was the big player?
Turkey was a very big player, so...
So I think what is happening is a lot of our old contacts, which we had where we supplied very little, and they used to buy a lot from Turkey, et cetera, they are flocking again towards India to see how much material they can buy. So I think this time, there will be a decent amount of -- of course, our bases are very low. So I don't mean that exports will become my bread and butter. But it will definitely be much better than what we've seen in the past. Sure, sir.
And sir, my next question was related to the -- any update on the recovery of the one-off item that we had seen during 2019, '20. So any update on the same?
I'm sorry, I didn't get your question.
Sir, the one-off item that we had seen in terms of employee fraud and all this. So any update on recovery?
Yes. So we had mentioned that last time on the employee fraud, we have been able to recover half the amount and the rest of the half is still pending in a tribunal case. And the other fraud which happened, there is no further update on that.
[Operator Instructions] The next question is from the line of Rajesh Kumar Ravi from HDFC Securities.
I have a few questions. First of all, this 15% revenue growth outlook you mentioned for FY '23 or H2?
'23.
FY '23 because [indiscernible] number is above or around 30%, if I'm not wrong.
Yes, but then we -- the last year, Q1 was on the pandemic.
Okay. So no, I just wanted to understand if you will -- the second half, are you expecting to grow at a much slower pace?
Yes.
Okay. And second, on the gas cost, could you say the number across the 3 regions for Q2?
Sunit, you want to give them -- I'll give you that. So basically, currently, the gas price overall is approximately INR 64. And if we see in the quarter, it will come to approximately slightly under INR 60.
Sorry, for Q2, how are these numbers, Qatar, Morbi...
INR 64 -- INR 64, INR 65 in Morbi and Qatar and INR 75 in South. So because in South we moved 100% to LPG, blended, this year, this quarter should be approximately INR 59, INR 60 somewhere there.
Okay. As again INR 64 in Q2, we are looking at INR 4 to INR 5 low in this quarter.
Yes, yes. Maybe more INR 4 to INR 5 is fair.
Okay. That's quite a good thing. And this Amora capacity divestment, the current capacity that you're talking about will reduce by the first [indiscernible]?
Yes, but we've added the same capacity in other geographies.
So where have we expanded this?
I think this -- we had discussed this very much in length for maybe in the interest of everybody else, we can take this offline with you because the divestment and also a large increase in Amora tiles. So Amora Ceramics got reduced and Amora tiles went up very substantially. So net, there has been an addition, not a subtraction. We can take it offline.
Sure, sir, I'll take this offline. Also, what was your comments on the sharp rise in inventories in September?
Sorry.
The sharp increase in inventories September end?
We were running the plant at more than 100% capacity to get the advantage where Morbi has started, we should be able to get extra volume, but that really didn't happen. So a little bit of inventory buildup has happened because of that. And then also, there's been a muted demand in quarter 2, which also -- that also resulted slight build up in inventory.
Okay. So it should normalize in certain period.
Yes, absolutely.
[Operator Instructions] The next question is from the line of Karan Bhatelia from AMSEC.
So what CapEx are we looking for this year and next year? And [indiscernible].
Currently, the CapEx, the big one is Max, which we already have committed for. Other than that, we haven't really announced any other major CapEx.
Right. And on sanitaryware and faucets?
We just did a CapEx, we doubled with sanitaryware and bath fitting capacity. So there again, there is no massive CapEx other than balancing equipment, which we take as routine CapEx. So there's no major CapEx, which has been announced as of now, other than the INR 40 crores of various other balancing equipment, changing of printers, etc. which we do year-on-year.
[Operator Instructions] The next question is from the line of Manish Mahawar from Antique Stockbroking.
Abhishek, just specific to the industry, I think, lot of participants have asked the questions about the demand, right? Just wanting to understand what you've seen the 1Q to 2Q as the demand has slowed down as, I think, it's hitting across and the building material pace has slowed down. What is the specific reason or if you can show light in terms of Tier 2, Tier 3 cities, which market you are seeing, specifically any pockets where we are seeing this pronounced or muted growth?
No, I don't -- like I mentioned earlier, I do not have anything concrete to point a finger at which, for example, in October, we clearly have something concrete, which is all the festive things that happened in a single month. That generally is the case of this time, it's even more pronounced because both the Dussehra, Diwali, Chhath Puja all happened in the same month. But that is again 1 month every year, it happens. But for quarter 2, speaking of quarter 2. I really can't pinpoint anything which has muted the demand. We can keep arguing as to what happens, but I do not have a specific answer. I mean we've spoken to various dealers, and some of them have to say that cash flow is an issue in the market whereas our cash flow has been very good. If you've seen we've only shaved off more of that.
But some people are saying walk-ins are low, some people are saying it was extended rain. Some people were saying that we were waiting for crisis to come down. Some people were saying that a lot of spending is happening, priorities for this quarter after the entire world has opened has moved to other spending on holidays, et cetera, wedding, other purchases, auto, you've seen auto do well. But all those are things which are just here. If you had to ask me, I really do not have any specific answer as to why demand has slowed down all of a sudden. But again, on the same breadth, I would say, the demand has slowed down, but we are in a sector where we are shaving off market share from all other products like natural stone, wood, et cetera. So from that point of view, nothing is to be worried on a long term, even on a medium-term perspective. But in the short term, I really don't have an answer to it.
Okay. And but in that sense, in the retail -- hotels business or garment side are crosswalking this slowdown? Or is maybe retail dealer side you're witnessing the problem?
Across Tier 1, Tier 2, Tier 3, projects, et cetera. I mean across.
It's a broad, I think...
Broad, broad. Yes, yes.
Okay. So what I understand your guidance, if you are looking at a double-digit volume growth in this year FY '23 and maybe 15% to 20% revenue growth for this year as a whole, right?
Yes.
Okay. And then lastly, what's your expectation in terms of industry domestic and export for this year as a whole, maybe if there any interpretation of understanding that...
In what respects are you asking? Could you be more...
In the tiles industry.
True, but you're talking volume, value. What are you talking?
Volumes, what are the size perspectives to look at [indiscernible] market FY '22 size, revenue, and what the...
I think we should be at INR 38,000 crores to INR 40,000 crore figure this year, industry wise. Out of which about INR 18,000 crores would be exports.
Okay. Basically you are expecting a flat type of industry growth from a domestic perspective because I recall last year, the [indiscernible] INR 22,000 crores. So flat number we are looking at. So again...
Last year, it was INR 32,000 to INR 33,000 crores. You're absolutely right. INR 32,000 crores, INR 33,000 crores was the total industry size. Out of it, export was INR 12,000, INR 12,000 moved to INR 18,000, which is the same INR 6,000 getting added to INR 32,000, INR 33,000 crores to make it INR 38,000 crores to INR 40,000. You're, absolutely right.
But we are looking at a very handsome market share this year basically. Because 14%, 13% growth...
In other words, yes.
Understood. And last point, lastly, what was your expectation of the sanitary and bathware part of business? I remember last call, you guided for 35% to 40% growth.
Yes. So I'm still looking forward to a 30-plus percent growth in that segment.
[Operator Instructions] The next question is from the line of Shrinjana Mittal from RatnaTraya capital.
I just wanted to ask a question on a quarter-on-quarter basis, if you can help us understand what -- is there any increase in the nonfuel item cost also because in your [indiscernible] growth margins have come down. There is fuel cost have broadly quarter-on-quarter at tracking level [indiscernible] not gone up so much. Is there something there? Or is it sort of...
Yes, even there, all our glazes are exposed to fuel because there also the firing is done on natural gas. So that also went up. Some raw materials, imported raw materials, Ukrainian clay, et cetera, went up. But again, we don't use much of it, so I don't want to talk too much about that. But yes, the glazes went up and a lot of the compounds for the glazes come from abroad. Freight rate is still high. Now they've started coming off. So that also went up. Paper was something which went up in the early part of last quarter, but then start stabilizing. And as you know, fuel prices going up, which made a difference in our freight cost. Input -- inward freight costs also had a major difference where diesel went up. So overall, I think the biggest culprit remains to be fuel and anything which was exposed to fuel.
Your next question from the line of [indiscernible] from Raj Financial.
Just wanted to know our debt has increased a bit. Do we have any plans to reduce it going forward in, say, a couple of years or any target on that figure?
No, that really hasn't increased. I think Sunit can give you an overview of that.
So can you just quickly touch your precise point.
So I just wanted to know if we have any debt reduction target and next couple of years. Currently, our net debt is around INR 359 crores. So if that would reduce to sizable amount? Or will it stay in the same range? I just wanted your view.
So certainly, it would reduce going forward because larger part of it is the [indiscernible] which was amortized and scheduled. And that's too statistically in a much bigger size in one particular company that is a [ South plant ], where we have the initial project on the first page and some expansion. So we take another ticket size of term loan. So on an average on a consolidated basis, we keep repaying around INR 45 to INR 50 crores annually. That is something which we will keep reducing year-on-year. However, there would be internal increase in short-term balance in the shape of working capital, but obviously, that would not be to that extent. So year-on-year basis, obviously, there would be reduction in total debt gradually.
But as far as any reduction plan is concerned, there is no reduction plan as such. Since we made this clarification earlier as well that debt is more relevant number for us on a stand-alone basis. And in the standalone basis, there is hardly any debt. Precisely, there is no debt, it's more of a build of [ accounting facility ] which is actually in a way payable, but because of the accounting reportings [indiscernible] payable to short-term borrowing. Otherwise, [indiscernible] stand-alone basis.
Also just wanted to know, our tiles utilization levels are pretty high. So by probably next year, we'll be adding some more capacity. But is there any major expansion plan going forward in next year or so, because we're almost reaching peak capacity utilization, I think so. I understand we have tie-up with JVs and other players, other vendors. But do we intend to take any significant expansion in capacity?
As of now, it's the Max plant, which we are focusing on. So probably 6 months down the line, we should be in a better position to talk about that one. We've also got [indiscernible] how deep rooted this muted demand is.
Thank you very much. That was the last question in the queue. I would now like to hand the conference over to Mr. Somany for closing comments.
Sailesh, I'd like you to do the closing comments.
Thank you, Mr. Somany. Thank you all the participants at this conference. This has been -- as Mr. Somany said, this has been a tough quarter, not only for us, but for industry, in general. But I think we're forward to profitable next quarter, right? We should -- our operating margins is increasing with 2 factors happening. Factor number one is what Mr. Somany said, the conversion from RLNG to LPG is moving there, which should, in any case, get us some help in the margin. But we are softening -- we're seeing softening of gas prices also. So these were the factors. If nothing goes drastically wrong from here, I think we're looking for a good next quarter and a good next half year.
Thank you, everyone, and we shall welcome you again for the earnings call of Q3. Thank you.
Thank you. On behalf of SKP Securities Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.