The Chatter: Closing the Year Without Closure
Edition #40
Welcome to the 40th edition of The Chatter — a weekly newsletter where we dig through what India’s biggest companies are saying and bring you the most interesting bits of insight, whether about the business, its sector, or the wider economy. We read every major Indian earnings call and listen to the interviews so you don’t have to.
We’re always eager to improve—please share your ideas on how else we can innovate “The Chatter” format to better serve your needs.
In this edition, we have covered 9 companies across 8 industries.
As the year comes to a close, we’ve been taking a step back and reflecting on the work we’ve put into The Chatter. We’ve spent a meaningful amount of time building this, and we want to make sure it continues to be worth doing.
We’re constantly learning and thinking about what could be better — whether that’s improving what already exists, changing the format or structure, or even experimenting with new mediums.
As we head into the new year, we’d genuinely value your thoughts. What should we double down on? What should we rethink?
Wishing you a happy new year — and thank you for reading.
Logistics
Transport Corporation of India
Financial Services
HUDCO
Engineering & Capital Goods
TechEra Engineering (India)
Chemicals
Anupam Rasayan India
Software Services
Tata Consultancy Services
Cyient
Media & Entertainment
Saregama India
Textiles
Varvee Global
Building Materials
Kajaria Ceramics
Logistics
Transport Corporation of India | Small Cap | Logistics
Transport Corporation of India Limited (TCIL) is India’s leading end to end integrated supply chain and logistics solutions provider (LSP) and a pioneer in the sphere of cargo transportation in India. Leveraging on its extensive infrastructure, strong foundation and skilled manpower, the company offers seamless multimodal transportation solutions.
Recapping the challenges faced during the calendar year including geopolitical tensions.
“I was thinking about what happened in the whole calendar year and we started off with all the tariff disruptions and not forgetting the Indo-Pak skirmishes that happened. Those were some of the negatives and really had an impact on the market also on the local industry as well.”
— Vineet Agarwal, MD
Describing the weak summer season and its impact on consumer segments.
“We had a very weak summer as we recollect. Some of the consumer segments from the beverages or even air conditioners sector had a weak summer. Then MSMEs were down as well and capital goods sector was also not, had not picked up that much.”
— Vineet Agarwal, MD
Highlighting the positive impact of GST cuts on the auto sector.
“The silver lining of course in the last few months has been the auto sector with the GST cuts that have happened. That has triggered a really tremendous amount of movement across the country for the finished goods.”
— Vineet Agarwal, MD
Discussing the recovery in consumer goods post-Diwali and sentiment change.
“Volumes have started to move up in this third quarter as it always does. Post-Diwali things were still a little soft but now things are picking up. With the GST cut, the most important thing that has happened is the sentiment change. There are consumers that are wanting products, so we are seeing production restarting everywhere as well as restocking happening.”
— Vineet Agarwal, MD
Emphasizing the strong growth trend in quick commerce and warehouse expansion.
“Clearly the flavor of the day and the flavor of the last few months has been quick commerce. Volumes there have been tremendous. The growth has been tremendous. Addition of new warehouses has been really, really high and we are seeing this continuing.”
— Vineet Agarwal, MD
Explaining TCI’s limited direct exposure to quick commerce despite the trend.
“I talked about quick commerce as a trend. Clearly it is not a very large contributor to our business. It is a very small percentage.”
— Vineet Agarwal, MD
Detailing the growth drivers for TCI’s 10-12% revenue guidance.
“What will contribute to that 10 to 12% guidance that we have given is essentially the growth in all of the other things as well. Multimodal is growing a lot. We are seeing that rail traffic has increased and we do container transportation across different modes of transport whether it is sea or rail and road, and we are seeing that has started to pick up.”
— Vineet Agarwal, MD
Explaining TCI’s backend fulfillment operations for quick commerce and e-commerce companies.
“We do a lot of the backend fulfillment for our customers, for the quick commerce companies or for other customers, and that backend fulfillment centers, the warehouse centers, are growing quite rapidly. The growth will come from these areas: multimodal, automotive, as well as the backend fulfillment centers which are warehouses for quick commerce companies, for e-commerce companies.”
— Vineet Agarwal, MD
Describing the industry shift towards larger, consolidated warehouse facilities.
“The trend is shifting towards moving from smaller, multiple smaller places to much larger facilities where the inventory management, where the quality control as well as the deliveries to all these multiple channels is becoming more precise. Larger companies like us which have the bandwidth of creating infrastructure as well as delivering the quality, the KPIs that all these customers need, is driving some growth for us as well.”
— Vineet Agarwal, MD
Outlining TCI’s ambitious capex plans for the next 3-4 years.
“Capex wise, the last 10 years we did about 1,000 crores of capex. The next four years, 3 to 4 years, we are going to do 1,000 crores of capex. The current year we are looking at about 350 to 400 crores. We placed an order for two new ships that should come in by end of calendar year next year. Most of it will come from internal accruals with very little debt that we plan to take on.”
— Vineet Agarwal, MD
Responding to budget expectations and emphasizing infrastructure needs.
“The infrastructure spend that the government has been doing needs to continue. I have always been saying that we really build for the past. We really need to build for the future. We need to continue investing into infrastructure the way that we have been for the last two three years. We are a country where we are trying to catch up on infrastructure. So more and more on infrastructure is my number one request from the government.”
— Vineet Agarwal, MD
Explaining the rationale behind promoter stake increase and confidence in long-term growth.
“We keep looking at trends and we see that we can invest more into the company and we want to keep doing that. We are fundamentally very, very clear on the growth for the next 10, 15 years actually. So it’s always a good time to buy.”
— Vineet Agarwal, MD
Financial Services
HUDCO | Mid Cap | Financial Services
HUDCO is a key player in housing and infrastructure development, based in New Delhi. With a strong workforce across the country, it primarily provides financing for social housing and residential real estate by lending to State Governments and agencies, benefiting individual beneficiaries.
Confirming HUDCO’s growth trajectory and achievement of disbursement targets.
“We are following the path of growth and we had planned that by 2026 our AUM will become 1.5 lakh crores and we are very well on the track in terms of the sanctions, disbursement and NIMs and the spreads. The way markets are supporting us, the states are supporting us which is backed by the robust government of India policies towards the infrastructure creation for Viksit Bharat. So definitely we are on the track and initially in the start of the year we had already given the guidance that we will be achieving around 50,000 crores of the disbursement and we are very well on the track.”
- Sanjay Kulshrestha, CMD
Explaining the growth targets and massive infrastructure investment requirements.
“We are targeting a growth of 25% CAGR. The way the sectors are emerging, the states are coming with the essence of Viksit Bharat and we are working in all the states. All the states are coming up with large infrastructure projects because we need to create our new cities, we need to upgrade our cities. It has been estimated around 70 to 80 lakh crores of the investment is required between 2021 to 2036. So this is a 15 years kind of window in which we need to upgrade our cities.”
- Sanjay Kulshrestha, CMD
Clarifying the AUM target revision from earlier guidance.
“There will not be any shortfall. I am talking about the targets which had been given around 2 years back. We will be surpassing this 1.5 lakh crores and 1.6 will be the practical number that we will be achieving.”
- Sanjay Kulshrestha, CMD
Explaining why states haven’t utilized PMAY-2 funding extensively yet.
“It is a good thing that states are not requiring counterpart funding and they are financially sustainable and supporting the PMAY program. Presently they have that kind of FRBM limits available with them and they are supporting their own project which is 40% contribution, that is a counterpart requirement by the states. But we are very hopeful because the states require lot of funds the way they are planning their infrastructure. They need a lot of funds maybe in PMAY or AMRUT or Jal Jeevan Mission or road networks or new cities. But our target of three lakh crores by 2030 was apart from the PMAY.”
- Sanjay Kulshrestha, CMD
Explaining the interconnected nature of housing and infrastructure financing.
“If you see, housing is not alone. Housing is connected with the roads, trains, everything is connected and we are beneficiary of these kind of infrastructure finance.”
- Sanjay Kulshrestha, CMD
Clarifying that PMAY-2 disbursement expectations were not hard targets.
“It was not a target for the company. It was a support to the states without compromising on our larger perspective of AUM of three lakh crores. So we are very hopeful that states will be requiring, but other than that we have lot of programs, lot of projects which are sanctioned for the states.”
- Sanjay Kulshrestha, CMD
Discussing the impact of RBI’s rate cut on HUDCO’s cost of funds.
“The repo has just been reduced and we are very hopeful that bond price will also start coming down the way RBI is continuously supporting the markets through the infusion. Bank loan has been reduced immediately by 25 basis points and we had planned strategically that lot of loans we had taken from the banks. They are all repriced less than 25% and we had also been more competitive by this reduction of repo rates.”
- Sanjay Kulshrestha, CMD
Addressing the need to revisit the 3 lakh crore AUM target timeline.
“Regarding three lakh crores AUM, you are right on the number. We have to revisit these numbers maybe in 2027 FY. We had not started revisiting because we have to see the sustenance of our ratios also like debt equity or capital. All these things need to be seen. Then only I think more viable commitments can be made on the numbers.”
- Sanjay Kulshrestha, CMD
Outlining the path to becoming a net zero NPA company and recovery expectations.
“We are committed to become net zero NPA company and we are taking all sort of efforts to have that kind of number. In quarter 2 we had already achieved 0.07% of the NPA which is nearing zero only. There are lot of projects which are into NCLT or DRT and we are very hopeful maybe in quarter four a lot of projects may be resolved and we will be getting around 200 to 300 crores kind of money out of these projects. At the same time we had revised our one-time settlement policies also because these loans were sanctioned more than 20 years or 30 years back. We want to capitalize all these things so that the energy and the force can be given to the actual business.”
- Sanjay Kulshrestha, CMD
Engineering & Capital Goods
TechEra Engineering (India) | Nano Cap | Engineering & Capital Goods
Incorporated in 2018, Techera Engineering (India) Limited designs, manufactures and supplies precise tooling and components for the aerospace and defense industries.
TechEra is set to sign an MOU with India’s first private jet manufacturer to supply full aircraft tooling, marking a significant entry into a new, high-value segment.
“Now the time comes to tell you guys that we are in discussion with one of the first Indian private jet manufacturing companies. We will be signing the MOU with them soon that we will be manufacturing the entire tooling set for the full aircraft.”
— Nimesh Rameshchandra Desai, Managing Director, Founder & Promoter
This private jet tooling project is expected to generate substantial revenue and growth for the company for at least two years, starting this quarter.
“This is what the big thing coming up in little bit in this quarter and next year is going to be the boom because we have to support them till the first aircraft fly and then entire two years we will keep supporting them by keep the tool alive and in the working condition so that the they keep manufacturing the aircraft and flying.”
— Nimesh Rameshchandra Desai, Managing Director, Founder & Promoter
The company has secured a direct supply channel with the Indian Air Force, eliminating intermediaries and promising a significant strategic advantage and improved margins
“I got a call from our direct Indian air force at around 10:30... directly we’ll be supplying to the Indian air force henceforth there is no middleman which we used to do right now...”
— Nimesh Rameshchandra Desai, Managing Director, Founder & Promoter
TechEra is close to finalizing a substantial order for bullet-related components from L&T via an intermediary, encompassing full manufacturing and assembly.
“the third one though we are in another discussion and I think order will be finalized maybe in a couple of days maybe in a week... Actually the customer is L&T but we will be getting this order from another middle company but the entire part manufacturing assembly proving everything will be done in our company.”
— Nimesh Rameshchandra Desai, Managing Director, Founder & Promoter
The L&T related order for bullet components is anticipated to be in “huge quantity” due to continuous demand, indicating significant revenue generation.
“function reliability. It’s a big kind of bullet. ground supported equipment holding. So it is in a huge quantity because lot of firing happening. So that is the reason that it is in quantity requirement.”
— Nimesh Rameshchandra Desai, Managing Director, Founder & Promoter
The company’s competitive advantage stems from its decade of specialized operational capability and expertise in complex machinery, which cannot be easily replicated by competitors merely acquiring equipment.
“It’s a different thing to have a machine and capability to use that machine. If you have a 10 12 15 Crores you can buy the machine. But we have been in the field for 10 years all may not have that capability to work.”
— Nimesh Rameshchandra Desai, Managing Director, Founder & Promoter
The Managing Director projects significant growth and “leap steps” for TechEra in the next two to three years, driven by favorable industry conditions and strategic initiatives.
“I want to make you understand what we are doing where the company is heading towards and tiny tiny steps are being taken, or the right time comes now to take a leap steps in coming I think two three years the situation is very good for us right now so rest assured from my side as a promoter and as someone who has built this company from the beginning thank you.”
— Nimesh Rameshchandra Desai, Managing Director, Founder & Promoter
Chemicals
Anupam Rasayan India | Small Cap | Chemicals
Anupam Rasayan India Limited is a leading company in India specializing in custom synthesis and manufacturing of specialty chemicals. They cater to life science related chemicals such as agrochemicals, personal care, and pharmaceuticals, as well as other specialty chemicals like pigments, dyes, and polymer additives. The company emphasizes sustainability, utilizing continuous process technology, flow chemistry, and photochemistry, along with strong R&D and engineering capabilities to provide value to customers for intricate synthesis projects.
The acquisition of Jayhawk aligns with Anupam Rasayan’s long-term strategy to build a global CDMO platform.
“This acquisition is fully aligned with our long-term strategy of building a global integrated specialty and CDMO platform with strong customer relationships, differentiated chemistries, and multi-geographic execution capability.”
— Anand Desai, Managing Director
The acquisition positions Anupam Rasayan to benefit from geopolitical shifts and regulatory changes like the US Biosecure Act, offering an alternative US-based CDMO platform for global pharma companies.
“Importantly, we are exceptionally well-positioned to capitalize on emerging geopolitical tailwinds, particularly those driven by regulatory changes like the recently approved US Biosecure Act. By acquiring a US-based CDMO platform, we now offer global pharma companies an essential alternative for leading their supply chains away from restricted geographies.”
— Anand Desai, Managing Director
Jayhawk enables forward integration by allowing Anupam to produce N-1 molecules closer to customers, complementing Tanfac’s backward integration in fluorination chemistry.
“The third benefit, which I can talk about, is the forward integration. So, as you would know, when we did the acquisition of Tanfac, it was clearly an idea to secure raw material sourcing, and this was more of a backward integration, particularly in the fluorination chemistry. Now, with Jayhawk, basically what we are trying to do is that go forward, which is go closer to our customer, an idea would be to manufacture more of our key N-1 molecules for our customers.”
— Gopal Agrawal, Chief Executive Officer
The high-growth markets like aviation, semiconductors, electricals, and EVs present significant demand, and Jayhawk’s existing asset base offers sufficient headroom for near-term growth with selective capacity expansion.
“As far as the markets are concerned, I said, in the segment, whether it is aviation, semicon, electricals, EV, for example, I mean, the address of market is billions and billions of dollars. So, I think as far as the demand is concerned, there is no end to it. What we would be doing is that work with the team to see what are our strengths. And this is that, look at selective capacity expansion is what we do. If I have more talk about the current, let’s say, asset base, there is, I would say, as this decent amount of headroom, which will support our near-term growth.”
— Gopal Agrawal, Chief Executive Officer
The agrochem business is reviving with volumes returning, and significant revenue growth is expected from a specific advanced intermediate in FY27 due to strong customer forecasts.
“So again, Meet, I would say agro is kind of performing well. The volumes are kind of coming back for sure. And we do believe that it should start kind of contributing significantly. I mean, we did lose out, let’s say, in FY24 and 25. But we do expect agro to kind of come back. As far as the kind of the particular AI you’re talking about, I think we are getting a decent amount of forecast from our customer. And we, in fact, expect a significant increase as far as the revenue is concerned from that in FY27 both in terms of volume as well as in terms of growth rising.”
— Gopal Agrawal, Chief Executive Officer
Software Services
Tata Consultancy Services | Large Cap | Software Services
Tata Consultancy Services (TCS) is a global IT services company with deep industry expertise. They offer a wide range of services including application development, digital transformation, AI, data and cloud services, engineering, cybersecurity, and products. TCS has been a trusted partner for many global businesses in their transformation journeys.
TCS views Generative AI as a fundamental, civilizational shift, distinct from previous tech cycles due to its unprecedented scale, speed, and potential impact.
“What we are seeing today is a new technology in terms of Generative AI. Of course, it’s a misnomer to call it just a technology. This is a fundamental shift. It’s very different from the previous changes, the technology disruptions we had, because of the scale with which it is going to impact and the speed with which it’s going to impact and the benefits that we can deliver from it. In fact, because of this reason, our Chairman called it out as a civilizational shift.”
— K Krithivasan, MD & CEO
TCS’s AI-related services have achieved an annualized revenue of $1.5 billion, demonstrating strong adoption among major clients and a significant 16.3% QoQ growth.
“Our AI-related services have garnered a total revenue of US$1.5 billion annualized. And I said, about 54 of the top 60 clients use TCS for AI. 85% of all the clients, greater than US$20 million, leverage TCS for their AI work. And based on the success we’ve been able to get in the market from our customers, our quarter-on-quarter growth on AI alone has gone up by 16.3%.”
— K Krithivasan, MD & CEO
Lloyds Banking Group partnered with TCS to migrate significant on-premise data sources to the public cloud, leveraging TCS’s proven experience and skilled engineers.
“So, the first thing coming into Lloyds Banking Group was a real focus for me on building much more modern, up-to-date foundational data capabilities. And in the work that was predominantly about migration of a significant amount of on-premise data sources... we basically partnered with TCS to migrate that to public cloud.”
— Mr. Ranil Boteju, Chief AI Officer, Lloyds Banking Group
The new AI data center venture will primarily target hyperscalers and AI companies with unique and demanding requirements, alongside public and private sector clients.
“The type of customers we are targeting for this AI data centre are hyperscalers and AI companies. These are the primary targets for us. And then, of course, we will also work with public sector and private sector customers. Now, the reason we felt the need that we need to really address this requirement is that the requirements are very unique.”
— Mangesh Sathe, Chief Strategy Officer
Despite significant ongoing investments, TCS aims to return to its aspirational operating margin band of 26-28%, up from the current 25.2%.
“Our intent would still be to make all the investments, and over a period of time, shift towards our aspirational band, the guided beacon of 26% to 28%. Currently, as of last quarter, we were at 25.2%.”
— Samir Seksaria, Chief Financial Officer
TCS has significantly improved its Return on Equity from 38% to 51% over the last five years, maintaining a lead of more than double the average of its closest peer set.
“If you look at the last five years, our ROE has improved from 38% to 51%. And if you look at our peer set of six competitors who are in our closest band range, their average ROE is at less than 25%, approximately 23.6%, and the next best is at 30%. So, we are 2x the average of our peer set.”
— Samir Seksaria, Chief Financial Officer
TCS sees a timely opportunity to build its advisory and consulting capabilities, driven by AI and analytics, recognizing that success requires integrated delivery across the entire tech stack, not just high-level advice.
“I feel this is the right window for us to look at a more updated model of advisory or consulting, which will essentially be more driven by AI and analytics, and coming from our place of strength, which is technology. Given some of the stack conversations we have had, I don’t think success can be just about providing advisory, it is also about going through all the other layers of the stack to actually help the customer deliver it.”
— Mangesh Sathe, Chief Strategy Officer
TCS expects its faster-growing new-age services, supported by strategic investments and partnerships, to increasingly offset any slowdown or drag from traditional services, despite current market sentiment.
“Kumar, as pointed out, our overall new-age services revenue is growing faster. First of all, you’ll understand that, there is moderation and subdued performance due to overall market sentiment; that’s the overhang we have. But within that, new-age services are growing faster than traditional services. With increased investments under a stronger strategy around new partnerships, new investments, and initiatives like data centres, and our new strategy, we believe new-age services will grow faster to offset any deceleration or drag in traditional services.”
— K Krithivasan, MD & CEO
TCS will establish a special purpose vehicle, HyperVault, with an equity partner (TPG) and an anchor customer, to manage the AI data center investments, thus maintaining a structured and prudent financial approach.
“So, to answer your first question, there is a special purpose vehicle. We’ll be making the investments with locking in an anchor customer. And as I talked about the structured investment, we will be leveraging the balance sheet. We have also announced an equity partner i.e TPG. We have announced creation of a subsidiary HyperVault which is formed as a special purpose vehicle to invest in AI DC.”
— Samir Seksaria, Chief Financial Officer
Cyient Limited | Small Cap | Software Services
Cyient Limited, founded in 1991, is a global technology services company based in India. It specializes in geospatial, engineering design, IT solutions, and data analytics. With headquarters in India, it serves a global customer base through subsidiaries in various countries. The company offers services such as digitization, CAD/CAE, software development, consulting, and analytics, catering to industries like manufacturing, utilities, telecommunications, transportation, local government, and financial services.
The enormous power consumption of AI presents a significant challenge and market opportunity for developing power-efficient chips.
“Worldwide, leaders have pointed out the fact that power is the single biggest deterrent to the adoption of AI... Globally, the AI electricity demand will reach 21% by 2030, which to put it in context is roughly the same as the combined electricity use of India and Japan put together today...”
— Krishna Bodanapu, Executive Vice Chairman and Managing Director
India possesses significant semiconductor design talent but lacks a global standalone leader, a gap Cyient Semiconductors intends to fill.
“20% of the world’s design talent is available in India for this segment, but there are no standalone semiconductor leaders from India, and that is what we are excited to address and build on.”
— Krishna Bodanapu, Executive Vice Chairman and Managing Director
The custom ASIC market is experiencing rapid growth but is underserved, presenting an opportunity for Cyient Semiconductors to support mid-tier customers with specialized needs.
“Demand for custom chips is growing three times faster than standard products, yet the market remains structurally underserved, and mid - tier customers are left without dependable partners for higher levels of integration and low volume production.”
— Suman Narayan, Chief Executive Officer, Cyient Semiconductors
The acquisition multiple of approximately 3x revenue for Kinetic Technologies is considered competitive compared to the semiconductor industry median of 5x-6x.
“overall the multiple will work out to be around three times revenue. And if you look at semiconductor company in terms of the global benchmarks, the median multiple for this kind of a company is anywhere between 5 x to 6x.”
— Ramya Mohan, Chief Financial Officer, Cyient Semiconductors
The semiconductor product business is expected to achieve gross margins in the range of 45-50% next year.
“In this sort of business, mid 45 % to 50% margin is definitely possible. And that’s where I think we will end up next year as well for this business.”
— Suman Narayan, Chief Executive Officer, Cyient Semiconductors
Cyient’s long-term ambition for its semiconductor business is to become a global leader in fabless semiconductor design, particularly as an Indian company.
“our ambition in this business is to become one of the world’s leading fabless semicon houses, especially out of India.”
— Prabhakar Atla, President and Chief Financial Officer
Media & Entertainment
Saregama India | Small Cap | Media & Entertainment
Saregama India Limited, a part of RP Sanjiv Goenka Group, is India’s oldest music label and a leading film studio. It holds the largest collection of Indian music copyrights spanning multiple languages. With over 4000 hours of TV content and innovative initiatives like Saregama Carvaan and Yoodlee Films, the company continues to innovate and evolve in the music and entertainment industry.
The deal ensures Saregama exclusive rights to all future Bhansali Productions’ film music, securing a premium content pipeline and eliminating competitive bidding wars.
“The other very important part of this deal is that now Bhansali Productions will exclusively sell all its future film music to Saregama only, basis a pre-agreed formula. That means we are guaranteed a steady pipeline of premium marquee film music, eliminating any competitive bidding.”
— Vikram Mehra, Managing Director
This partnership is expected to provide 30-40% of Saregama’s total Hindi film music content, significantly bolstering its market share and content security.
“Saregama anticipates that around 30% of all its Hindi film music content is now going to be coming from this deal. The number can even go up to 40%.”
— Vikram Mehra, Managing Director
Saregama was drawn to Bhansali Productions’ strong financial discipline in film production, which aligns with Saregama’s own IP creation philosophy.
“What really attracted us towards this studio is the financial discipline with which these guys go back and attack their films. From outside, it looks like these films are very grand, they are very grand, but there is a serious amount of financial discipline that’s going in. And which resonates with the philosophy that we people have within Saregama as far IP creation is concerned.”
— Vikram Mehra, Managing Director
Saregama will continue its regular music acquisition strategy, but the Bhansali partnership addresses concerns about competitors internalizing music rights by securing a consistent supply of marquee content without competitive bidding.
“Our normal music acquisition will continue. We are looking at a scenario where some of our competitor’s music labels over time have taken a position in the film business. And whichever films they were producing or financing, music of those films were not coming out in the open market for bidding, which was bothering us a bit. Hence, we got into our own video production business, not been very successful at that. Hence, we have got out and said, let’s tie ourselves with somebody who is very, very successful and works with them.”
— Vikram Mehra, Managing Director
Saregama has established clear benchmarks for valuing music rights as a percentage of production cost, based on star-cast, directors, and marquee status, informing its aggressive acquisition strategy.
“For every movie that we people have purchased over the last five years, this is a new Saregama which buys movies very aggressively. We have a clear-cut linkage back which is going in, that which kind of movies, and we typically define movies right now depending on their star-cast and the kind of directors that are attached to it, that the marquee films typically go at what percentage of the cost of production. Those things, benchmarks, are all sitting there with us.”
— Vikram Mehra, Managing Director
The deal’s valuation is primarily based on Bhansali Productions’ future financial performance, not its past achievements, aligning Saregama’s interests with the production house’s future success.
“I know I am repeating I think the third or the fourth time, the beauty of this deal, we are not paying for past glory, we are respecting the past glory. We are paying for future performance. The better those guys do out there and do the performance, better their valuation can be and happier it will make us.”
— Vikram Mehra, Managing Director
Textiles
Varvee Global | Nano Cap | Textiles
Aarvee Denims and Exports Ltd, established in 1988, is a global player in the textile industry with a strong presence worldwide. The company, nurtured by experienced promoters from Arora & VB Group, showcases in-house manufacturing capabilities and cutting-edge technologies for stringent quality control. Its vertically integrated production process enables rapid response to market needs, offering diverse designs with swift turnaround times.
The company strategically pivoted from denim to the non-denim segment due to current market conditions and better growth prospects in the latter.
“Initially, we revamp the machines and the setup, and after completing the process, what we figured out was: the denim market is not in that kind of expansion mode right now. But the non-denim category... So I thought: let’s pivot to the non-denim segment.”
— Jaimin Kailash Gupta, Chairman & Managing Director
The company is strategically transforming from a textile-only business into a multi-vertical enterprise, aiming to use internal accruals for future diversification into other sectors.
“Initially, the goal was to run it as a textile company, but now we have realised we want to make it an enterprise company, not limited only to textiles... The name change reflects that we may focus on other verticals too. For the next 3 to 4 quarters, we will focus on making the company 100% operational and generating internal accruals, which can then be invested into other verticals.”
— Jaimin Kailash Gupta, Chairman & Managing Director
The high EBITDA margins of 45-50% from job work are expected to be sustainable, though they might slightly normalize from the reported 50%.
“Yes, it may shrink to around 40 – 45%, but not below that. So this should be a continuing margin range, around 45% to 50%.”
— Jaimin Kailash Gupta, Chairman & Managing Director
The ₹10 crore capex for converting to non-denim capacity will be entirely self-funded through the sale of existing assets, avoiding any new external financing.
“Denim-to-non-denim conversion won’t require more than about ₹10 crore capex, and that capex will be funded by selling machines that are not required. So there won’t be infusion of new funds, selling some machines, buying some. This transition can be done without new funding.”
— Jaimin Kailash Gupta, Chairman & Managing Director
The job work model significantly limits working capital needs to ₹15-₹20 crore for ₹100 crore annual revenue, as customers provide core raw materials.
“Because we are doing job work, working capital requirement is limited. Our raw material investment is mainly colours and chemicals; the core raw material is supplied by the customer. To achieve about ₹100 crore annual revenue, working capital required is around ₹15 – ₹20 crore, which we initially infused.”
— Jaimin Kailash Gupta, Chairman & Managing Director
The company is aggressively ramping up its non-denim production capacity, targeting 50-60 lakh meters per month by April from the current 30 lakh meters.
“We will focus on non-denim. Capacity ramp: from about 30 lakh meters, and by April it can go to 50 – 60 lakh meters.”
— Jaimin Kailash Gupta, Chairman & Managing Director
The company boasts a diversified customer base of 25-30 clients, with no single customer exceeding 15% of sales, mitigating concentration risk.
“As on date, there is no single customer contributing more than 15% of sales. We have around 25 – 30 customers producing in our factory. So customer base is diversified.”
— Jaimin Kailash Gupta, Chairman & Managing Director
The long-term vision is to transform into a diversified enterprise across multiple verticals like infrastructure or chemicals, beyond its current textile focus, leveraging backward integration opportunities.
“For a year, revenues will come from textiles, but over five years, the goal is simple: make it an enterprise company with multiple verticals, maybe infrastructure, renewable energy, maybe chemical sector, because materials we procure can be backward integrated.”
— Jaimin Kailash Gupta, Chairman & Managing Director
Building Materials
Kajaria Ceramics | Small Cap | Building Materials
Kajaria Ceramics Limited, the largest manufacturer of ceramic and vitrified tiles in India, leads the industry with cutting-edge technology and a wide range of products. With a strong manufacturing presence and a diverse product line, they offer quality tiles across all price points to customers.
[Concall]
Kajaria achieved over 150 crores in annualized cost savings through various operational efficiencies across the company.
“During the year, we have achieved cost savings of more than 150 crores on an annualized basis. These efficiencies came from multiple areas including a reduction of manpower, cutting down travel expenses, reduction in re-engineering of cartons, and reduction of cost of packaging material, better raw material negotiations, and overall plant operations of the company.”
— Senior Management
Under a new governance framework, issues were detected at the subsidiary Keravit Global Private Limited.
The fraud involved an employee creating a fake vendor account under his own name to siphon funds.
“As part of a stronger governance framework, certain issues were identified at one of our step-down subsidiaries, Keravit Global Private Limited, while we were in the last phase of this process.”
“This current episode may not have come to light had we not begun this process of systems, processes, and MIS audits that were initiated as part of Kajaria 2.0.”
The fraud was initially uncovered when reviewing CAPEX investment and identifying completed projects still categorized as open Capital Work-In-Progress (CWIP).
“We were checking our total CAPEX investment. During that process, some capital work-in-progress (CWIP) was open. Even though the project was already complete, it was showing as an open category, which led to the investigation.”
“in the last financial year, the CWIP in this particular subsidiary was to the extent of 6-7 crores, which was a lapse on our part. While doing the vendor onboarding, we noticed this amount was going up. That is how it came to light.”
“We were putting up a new sanitaryware plant in Keravit Global. He [employee] took advantage of the large CAPEX intensity to siphon off funds.”
— Senior Management
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The statement by the Cyient MD that AI will consume 21% of global electricity is incorrect. I am not sure where he sourced that figure, as projections estimate it to be between 3% and 5%. The 21% figure likely refers to specific nations, such as Ireland, where data centers are already consuming 21% of the electricity
Couldn't agree more. The continous integration approach!