C: Mahesh Bhanushali; Chairman and Managing Director; MCON Rasayan India Limited

C: Nandan Pradhan; Whole-Time Director; Nandan Pradhan, Whole-Time Director

P: Unidentified Participant; Unknown; Unknown

+++presentation
Vinay Pandit: Ladies and gentlemen, I welcome you all to the H1 FY '25 Post Earnings
Conference Call of MCON Rasayan India Limited. Today on the call from the management
team, we have with us Mr. Mahesh Bhanushali, Chairman and Managing Director, and Mr.
Nandan Pradhan, Whole-Time Director. As a disclaimer, I would like to inform all of you that
this call may contain forward-looking statements, which may involve risk and uncertainties.

Also, a reminder that this call is being recorded. I would now request the management to brief us
about the business performance highlights and developments for the half-year that went by, and
your growth plans and vision for the coming year post which we will open the floor for Q&A.
Over to you, sir.

Nandan Pradhan: Yeah, good morning all. So myself, Nandan Pradhan and the -- if first I talk
about the business of MCON Rasayan India Limited. So MCON Rasayan India Limited as a
company, we are involved in the manufacturing and sales of construction chemicals, specialty
building materials, which help the builders, developers infra projects to make their product --
projects better to withstand the test of time and also to resurface -- refurbish the concrete
structures. So, we have got a range of products which encompasses to 100-plus products, and
they are distributed in 12 different categories right from admixtures to water wind systems, tile
adhesives, tile grouts, concrete repair products, and so on.

And we are mainly working in four different segments of selling. The first being the Residential
segment, that is the builders, developers, and the contractors who make residential and
commercial buildings. The second is the Infra segment where the government infrastructure is
there. So that involves roads, bridges, dams, flyovers, water treatment plants, reservoirs and all
those things. The third is the Repair Rehab segment, where it's about the concrete repairs and
concrete rehabilitation that is rehabilitation of the old concrete structures of government. Those
can be the bridges, the rehabilitation of the bridges, the dams, the flyovers or the buildings. That
is the old buildings which are more than 10 years old. Those go into major repairs. And also the
waterproofing of those buildings whether they're either leakage prone or subject to various wear
and tear due to the various effect of the environment. And the last, but not the least, is the Retail
segment wherein basically we are selling to the homeowners through the shopkeepers.

So all the cement, building material shops, the paint shops, the hardware shops, the tile shops,
those people are also keeping our product and selling it to the end user. So this is overall the
business, and due to certain technical error we have prepared the presentation, but unfortunately
could not be uploaded on the NSE. So, we'll have more of our verbal discussion. We'll not be
able to show you anything, but yes, the last two quarters have been fairly good from the
company's perspective. Yes, it was a challenging environment because the rains were very
extended this time. And rains has got a direct effect on our business because all the external
work, which encompasses waterproofing and repairs and new construction, concreting all gets
slowed down during the rains. And just prior to the rains, there was election in India, so that also
impacted the government projects in a big way. But still in spite of all these challenges, your
company did really well in terms of that we could -- if I say half year on half year we increased
the sales revenue by 25%. and PAT also has got a bit better. If I talk of utilization of our
manufacturing plants, then our Sarigam plant was utilized at around 87% while the new plant at
Ambethi near Vapi that was utilized around 67%.

So again, if I talk of ratios in terms of the products, then like in our previous meetings, we have
already said that we are trying to change the product mix. We are more of a dry-mix powder-
oriented company. We are shifting towards the liquids, the admixtures, and the shift was very
evident in this -- this year's product mix, like currently maybe around 45% of our product are of
the low-margin things. And the 55% have gone into the higher margin belt, right from tile
adhesive in powder segment, your concrete repair water wing systems, admixtures and the
protective coatings. So that way the entire product mix has changed a bit. Again, we ventured
into two new states in this year. One is in UP and the second one is Karnataka. And there also
products have found a good acceptance. In these two states, we have appointed almost 10 new
distributors who are selling our product. And also we have got repeat orders from the
distributors. That itself shows the benchmark that yes, we are being accepted.

Now to cope-up with all this kind of growth, of course, our new plant is good enough and has got
fantastic manufacturing capability and capacity, but at the same time, the geographical distances
of various locations are also to be kept into picture. So, we entered into the outsourcing model
wherein we have tied up with various people and almost five manufacturing plants currently are
already operational, another three are expected in next 2 months to 3 months to become
operational. So, we have already got plant in Indore, we have got plant in Pune, we have got
plant in Ghaziabad and one more plant we are coming up in Bangalore. One already we have
started in Bhiwandi. One, we have started in New Bombay. So these are the plants which ensure
that the transportation cost, which was very high, can be offsetted, which will have a slight
improvement in the margins.

At the same time, it also increase our manufacturing capacity due to all these plants coming in.
So -- and the recent development is that we also been approved by Maharashtra Housing
Development Corporation, which is one of the very premium institute, and very few people
know about this. So this particular government organization takes care of all the Prime Minister
Awas Yojana happening in Maharashtra. So that was a big achievement for us. And just to
ensure that the -- and the major chunk of Prime Minister Awas Yojana is happening on the
Vidarbha belt and the Solapur belt. So that's why we did one major tie-up with the manufacturing
plant in Solapur. So, it's a FOCO model where they're operating based on our plant ideas, our
manufacturing ideas, our formulations, and our quality control parameters. And our team is also
sitting in that plant to supervise the entire thing. And from there we are supplying -- we will be
supplying to the entire Prime Minister Awas Yojana projects in the entire belt from Pune
upwards up to Nagpur. So yes, that's about the business in nutshell.

Yes, Vinay sir, that's what we have currently.

Nandan Pradhan: Okay. Right. So, the recent fundraise we did, it was almost INR 16 crores of
fundraise that we have done. And major reason for doing the fundraise is the requirement of
working capital because the speed at which we are growing and the speed at which we want to
grow in the next two quarters and the subsequent financial year, so for that working capital will
be one of the important parameters. The three major reasons for working capital, number one is
of course increase in turnover. So, increase in turnover and the cycle at which the payment
comes in from the distributors, especially when you go into new geographies so to offset that
thing, we need additional working capital.

Second is all this outsourcing model there the payment cycle is shorter compared to what we
used to have with our supply vendors. So again, there -- and it's a finished good. So again, the
working capital need increases. And number three, which is the increase in product range, like
we ventured into paint, ventured into admixture. So all this will require new type of raw material,
new type of packings like drums and buckets and printed buckets of multiple sizes and multiple
variants. So there also working capital is involved. So due to three major reasons we had to
infuse these funds into the company.

And this venture that Vinay sir is talking about, it's again the Solapur thing that we are talking
where we did kind of FOCO model with the franchisee. So here, the company has taken our
franchisee and they are manufacturing MCON range of product in their entire manufacturing
plant. They have got a beautiful manufacturing plant already established in Solapur, and the
papers have also been signed and everything. Now my QC team is working over there to set up
their laboratory so that once that is done, then we can start full fledge manufacturing from that
plant and can start supplying. Currently we are already supplying to the Prime Minister Awas
Yojana projects, but that is happening through our Vapi plant, which is already up and running.
So yes, that's it.

+++q-and-a
Vinay Pandit: Thank you, Nandan sir. We take the first question from the chat box. So, the first
question is from Guneet Singh. He's asking, what is the outlook for FY '25 in terms of top line
and bottom line, and what kind of growth can we expect in FY '26?

Nandan Pradhan: Okay, yeah. So Guneet ji, in the beginning of the year itself, we had planned of
around INR 80 crores. And currently also we are working on the same projections of around INR
80 crores for the FY '25. In the first half, we are short by around 20%, 25% of what we are
projected, but that we are sure we can cover up. Again, the challenges I already told in my
production, the rains and the election were the major challenges, but now the rains are almost
over and the Maharashtra election is happening in few days after that I don't think any election
season happening anywhere. So, yes, the ground is ready, our team is ready, the products are
ready, and the market is ready for us. So we are sure we can achieve that. Again, FY '26, again,
we are expecting robust growth because see, what is happening is that honestly speaking, we are
currently slow compared to the market. Like the market -- like every product segment that we are
operating in the market is more than INR 3,000 crores. So we are not even at 1% or 0.5% of the
market. So that's why whatever projections we are doing is already good enough or we have got
enough market for that. So that's not a problem at all. We can ensure that even next year we do
almost 80% to 100% growth where we end this financial year.

Vinay Pandit: His second question is, what is the maximum revenue potential from the current
capacity and what is the current capacity utilization level?

Nandan Pradhan: Okay, the current capacity utilization level of single shift is somewhere
between 70% to 80%. But yes, we can operate in 2 or at least 2.5 shifts. So double is very easy
for us. Number two, the utilization vis-à-vis the turnover is again dependent on the product mix,
because in the same capacity I can manufacture a product, which is INR 5 a KG, I can
manufacture product, which is INR 25 a KG. So, the turnover can just grow by 500% just when I
change the product mix. So to evaluate the exact value of what can be manufactured in this plant
capacity, it can be anything to the tune of INR 400 crores to INR 500 crores. So that's not a
problem, plus the additional capacity that we added so again, that itself, again, INR 200 crores to
INR 300 crores, so manufacturing capacity will not be -- I can say a obstacle for us in further
going in the markets. So, it's all about how fast we spread and how fast we get the orders so that
we can supply the product.

Vinay Pandit: Right. Thank you, sir. We have one more question from the chat box, from the line
of Raghavendra.

Nandan Pradhan: Yeah, I'll just -- I'll just update Vinay sir's message like maybe if you have read
or not read. That now, the PPT that I was talking of has been already uploaded, so if anyone
wants to refer that then they surely can refer that. Yeah, continue.

Vinay Pandit: Thank you, sir. So his question is what will be the margin for FOCO model and
toll [ph] model?

Nandan Pradhan: Margin as far as the company's concern, well, the margin -- the heat of margin
will not be much because it will be offsetted by the transportation cost that we used to incur. For
example, I will just give a small example like Solapur, like the FOCO model that we have started
in Solapur. So, transportation cost for me sending the product from Vapi to Solapur was anything
between INR 2.75 to INR 3.80 depending on the size of the vehicle and the quantity that has
been ordered. So vis-à-vis that which roughly converts to 5% to 6% and vis-à-vis that the saving
that I will be making through the FOCO model will offset the margin that I'll give -- be giving to
the franchisee. So the margin differential between what I sell from Vapi and what I sell from the
outsourcing partner will be maybe somewhere around 1% to 1.5% max.

Mahesh Bhanushali: Also extending to this because the products what we are manufacturing in
Vapi are more over of powder products, which are also an economical products. And when we
talk of FOCO models, so there we are focusing on specialized products only. Majorly what we
will be supplying will be the products which will be slightly on higher margin than what we
manufactured in Vapi. So, there is a reason it'll be not a big impact because of this FOCO model.
So, our pack may increase slightly.
Vinay Pandit: Okay. Thank you, sir. We’ll take the next question from the line of (inaudible).
You can go ahead please.

Unidentified Participant: Hello, sir. I have two questions with me.

Nandan Pradhan: Sure.

Unidentified Participant: In the past, you have indicated for 50% growth for revenues, however,
H1 doesn't mirror the vision. Could you please guide how will you achieve that in second half
and in future years?

Nandan Pradhan: Right. Yeah. So Mihir [ph] ji, yes, we are short by like, just like I told you that
by 25% overall what we are targeted, like we're targeted around INR 30 crore, we're around INR
21.5 crore, so yeah 70%, 75% we achieved. So we are short by that, but that itself can be
offsetted very easily. And still, if I talk of target of 50% growth, we are -- we will be going far
above that for sure. So that's not a problem at all, because the ratios if you see H1 versus H2,
then it is normally 35% to 65% ratio. So 65% of our turnover normally comes from the H2,
because H2 is the main season for construction chemical and other products. And plus this year
we have added not -- I cannot say added, but yes, we are increased the portfolio of admixtures.
So that is going to have big impact on our total turnover.

Unidentified Participant: Okay, sir. And my next question, how are you competing with large
players like Pidilite and Asian Paints in this sector? Because they're also present in this
Infrastructure segment?

Nandan Pradhan: Yes, yes. Mihir [ph] ji, so see large players are present, but again, the modus
operandi of theirs and ours is slightly different. We are more focusing on service. We are more
focusing on relationship. And in our case, directors are directly connected with the field. When I
say directly connected with the field, for example, I'm personally connected with quite a few
RMC manufacturers. I'm personally connected with my distributors, which doesn't happen with
Asian Paints' director or Pidilite director. So that personal connection helps us a lot in converting
the distributor from a big brand to a small brand like ours. And after being listed, we are also
considered as one of the brands', maybe of course not big, like we don't have those deep pockets.
So yes, the marketing campaigns are not that big or not -- not that huge, but the percentage
campaigns are far better of ours.

Unidentified Participant: Okay, sir. Got it. Thank you.

Nandan Pradhan: Thank you.

Vinay Pandit: Thank you, Mihir [ph]. We'll take the next question from the chat from the line of
Naresh, so, his first question is in terms of quality and price, how is our product placed when
compared to Fosroc?
Nandan Pradhan: Okay, so quality wise, yes, we are comparable to Fosroc and I have got high
regards and high respect for Fosroc quality and Fosroc product because they got fantastic
consistency in terms of quality. So, I appreciate, and we also target the quality of Fosroc every
time we benchmark ourself with quality of Fosroc, not with Pidilite, not with Asian to be very
honest with you. So yes, pricing wise we are almost 20% below Fosroc.

Vinay Pandit: Okay. His follow-up question is what is the revenue share coming from the
Government sector from now?

Nandan Pradhan: 20% currently vis-à-vis the total.

Vinay Pandit: And in the new states wherein we are entering, how are we planning to get several
contractors on board as customer who is presently having business with other construction
chemical company?

Nandan Pradhan: Yeah, so the key -- basically it's a copy paste model for us, like the way we
succeeded in Mumbai, the way we succeeded in Rajasthan, Jaipur, the way we succeeded in
Indore, in MP, the same way we are planning to do Karnataka, the same way we are doing UP
where there are three major fundamentals that we adopt to number one, having the best people
on board who are you can say conversant with the market and well-trained on the products. So
that technical selling has to be there. It cannot be the Me-Too selling and my product cannot be a
Me-Too product.

Number two, having good distributors on board, who are Pro-MCON, we are not looking for
investors in a distributor. We are looking for good salesmen in a distributor, who is ready to
promote MCON brand, because that local connection makes lot of difference for us. Like the
person who is sitting in Mysore telling that, boss MCON (Foreign Language) makes lot of
special connection with the civil contractor rather than MCON person telling it so that is the
second thing. And third, we have got that various promotional things for the contractors, like
token system is there and the schemes are there. So, all those things attract the contractors
towards MCON.

Vinay Pandit: Thank you, sir. We'll take the next question from Sumit Chopra in the chat. His
question is if we can explain the strategy behind outsourcing manufacturing when will -- when
we have sufficient unutilized (inaudible) capacity available?

Nandan Pradhan: Yeah. Okay. So, Sumit ji, so see what happens is for example, I've started
outsourcing manufacturing in Faridabad, okay. And I am manufacturing tile adhesive over there.
Now tile adhesive is INR 10 a KG product selling price, okay. Now INR 10 a KG product and
INR 3.50 is the transport cost from Vapi to Delhi. Now, if I have to sell one bag of tile adhesive
in Delhi, okay, my transport cost is which is a 20 KG bag, then my transport cost is INR 70 a
bag, and the product, which is INR 200 of a bag out of that, if INR 70 of bag is a transport cost,
then no one is going to afford it. Now, to create that kind of affordability and to ensure that this
transport cost can be offsetted, we need that manufacturing base in Delhi if you want to sell in
Delhi. So that's the reason when you spread geographically, you need those outsourcing partner
with you so that you can spread in a wise manner and also ensure that the profitability of your
distributors is intact.

Mahesh Bhanushali: And also in terms of if you talk of Vapi plant, the capacity of Vapi, our be
Ambethi plant and Sarigam plant. So, we have a West zone to cover from that plant, and the
manufacturing capacity will be utilized in West zone of India. So that's a showcase factory.
Whenever there is an approval process, like any government department visiting or you have any
developing -- big developers, big contacted visiting our factory. So we, we make them visit our
factory and we show the process how we manufacture, which is a miniature, other FOCO model
or outsource model is a miniature of this factory. So that's what we try to prove that our quality is
intact. You buy even mud product from Vapi, you buy product from Rajasthan. So that's how
this model will work.

Vinay Pandit: Right. His follow-up question is how much would be the opportunity size for
MHDC housing projects?

Mahesh Bhanushali: How much would be, sorry?

Vinay Pandit: The opportunity size.

Mahesh Bhanushali: Opportunity size, see, normally if I talk in general than in a construction
project the total value of project around 1% is the consumption of the overall construction
chemical, which is a mix of admixtures, tile adhesives, wall putty, paint, textures, and other
ancillary products like bonding agents, A, B, C, D, everything. Okay. So if I take that wall mark
feature -- figure over here, then the opportunity size is somewhere to the tune of INR 800 crores
of the Prime Minister Awas Yojana or the MHDC.

Vinay Pandit: Right? So, there's one more question from Rajesh Swaminathan in the chat. When
-- can we quantify in terms of top line and margins the impact of Awas Yojana for us?

Mahesh Bhanushali: Top line and margin, well, in the current financial year we are expecting the
top line to get around 15% from the Awas Yojana, the overall top line. So that is the impact. And
margin, well the margin may not be that big impact because again when the volumes are there,
the rates are very competitive because there are other people also who are going to fight. It's not
that we are the only one approved brand. There are other two, three brands to compete with. So
yes, the margins will be -- yes, they will be better because again, limited competition, not
everyone is getting that specialized later, but still the margins that impact will not be that big.
Yes, top line, it'll be big impact.

Vinay Pandit: The next question is from the line of Nishant Gupta. His question is, could you
please share financial guidance of revenues for the next three years and target EBITDA as well
as PAT margins?

Nandan Pradhan: Well, it's more of a forward-looking statement, but yes, 100% growth year-on-
year is something that we are surely targeting for and we are also prepared for that kind of
growth in terms of team size, product range and everything. And EBITDA, it will surely improve
maybe not in double-digit percent year-on-year, but yes, single-digit percent EBITDA will surely
improve. So EBITDA improvement will be seen in years to come by.

Vinay Pandit: Sure. We'll take the next question from the line of Ashish Singhal [ph]. His
question is how has been the sales in the month of October? Does it give confidence that we will
be able to achieve the sales turnover of about INR 60 crore in H2, which management is now
targeting?

Nandan Pradhan: Yeah. October has been a good month. Not the best month I would say. Like I
would've expected it to be better, but unfortunately the rains continued in the October month
also. But still it has been a very good month in terms of sales figures. And we are sure that that
will help. Like you can say that the vehicle has taken the speed and it's ready to launch itself, so
that launch is ready and in the next five months, we'll surely overcome the deficit that we have
faced in the first half of the year and try to achieve somewhere between INR 80 crores.

Vinay Pandit: Thank you. The next question is from the line of Vatsal [ph]. His question is what
is the long-term stable state margins for the company EBITDA?

Nandan Pradhan: Like I told you, like it'll be anything between 16% to 20%. That's what we are
focusing on.

Vinay Pandit: There's a follow-up question from Naresh. His question is, how many vendors
have been shortlisted for MHDC project for supplying construction chemical?

Nandan Pradhan: As far as I know, as of now four.

Vinay Pandit: Anyone else wishes to ask a question, please raise your hand or put it on the chat
box.

Mahesh Bhanushali: So there have been a few questions in the chat box regarding the QIP
participants and whom all it has been allotted to, if you would like to share.

Nandan Pradhan: I think it has been uploaded on the NSE because I don't remember it off-hand
like this, like who are -- who have been allotted. Yes, one or two names that I can remember.
HDFC is one of them, which has been given and…

Mahesh Bhanushali: Yeah, Antara [ph] is there. Antara [ph] is there. Tattvam [ph] is there.
Swiyom [ph] is there. List is already been uploaded Vinay sir.

Vinay Pandit: Sure. Because one of the participant messages that they're not able to see the list
on the exchange. That's why.

Nandan Pradhan: Okay. We’ll -- we'll check it and if not uploaded, surely we have to because
allotments has to be done.

Mahesh Bhanushali: Sure, sir.

Unidentified Participant: Yeah. Am I audible?

Nandan Pradhan: Yeah, you are Priyam [ph] tell Me.

Unidentified Participant: Just wanted to understand, did I hear it correctly when you say that
50% of current year revenues will be coming from PM Awas Yojana, like INR 40 crores out of
INR 80 crores will be coming from that scheme only?

Nandan Pradhan: No, no, no.

Unidentified Participant: No, sir, like…

Nandan Pradhan: No, I said 10% to 15%.

Unidentified Participant: Okay. Yeah, yeah. 10% to 15%. And going forward, when we are
looking at a 100% year-on-year growth, so assuming we achieve INR 80 crore this year,
assuming we achieve INR 150 crore next year what kind of margins can we assume, say for FY
'26 and '27? I get your point that over long-term 16% to 20% margins can be sustainable in this
company, but assuming we'll be entering new geographies also and probably wherein we'll be
competing with larger players. So over the next two years, three years, do you think that the
margins will remain range mounted around 12%, 13% or that 16% to 20% will start coming in?

Nandan Pradhan: No, I -- I'm sure that the margins will be what they are or will be better. The
only reason is we are consciously working on the product mix and we are selling certain products
which are a high margin product vis-à-vis what we were selling earlier. So the ratios are
changing like ready mixed mortar earlier, we are selling 42% this far half year we are done 37%,
so 5% we have reduced that and 5% we are increased in admixtures with again, a slightly high
margin product. So that way we are changing the product mix consciously to ensure that the
margins remain intact or become better.

Mahesh Bhanushali: Priyam [ph] competition is definitely there, but as we have got a very good
product mix and a good product portfolio, so which is what is helping us to compete them.

Unidentified Participant: Okay. And after the recent fundraise, at what scale of revenue do you
believe considering the working capital requirement in this business that we won't require any
further fundraise? Is it at around INR 300 crore, INR 400 crore? What level do you envisage in
your business plan?

Nandan Pradhan: See basically Priyam [ph] what happens is that the fundraise vis-à-vis is the
turnover, it's depend on two things, okay. One is the speed at which we grow, okay? If we grow
at the speed like what we are targeting as of now, 80% to 100% year-on-year, then maybe around
INR 200 crores, INR 250 crores we can sustain with this fundraise. But if we increase the speed,
because the way the government projects are coming in and the way we are also targeting, you
never know. And if you include this…

Unidentified Participant: No, that's why I didn't ask a number of years. I just asked like revenue.
So INR 200 crore to INR 250 crore revenue can be achieved with the current balance sheet
strength…

Nandan Pradhan: Correct. Correct. Correct.

Unidentified Participant: …is what you're telling?

Nandan Pradhan: Yes.

Unidentified Participant: Okay. Okay. Okay. Okay, sir, that's all from my side. Congratulations
going -- all the best going forward.

Nandan Pradhan: Thank you, Priyam [ph]. Thank you so much.

Vinay Pandit: Thank you, Priyam [ph]. If any other participants have any questions, please raise
your hand. Since there are no further questions. Shall we end the call, sir?

Mahesh Bhanushali: Yes, Vinay ji, if there are no questions, then we can end it. And…

Vinay Pandit: Okay. Would you like to give any closing comments, Mahesh ji.

Mahesh Bhanushali: Yeah. Thank you all the participants, all the stakeholders and all the
investors who have been trusted us, and we would request everyone to keep on trusting us, your
company. As we always commit, we are on the verge of growth and we are not going to stop
there. So, thank you everyone for trusting us.

Vinay Pandit: Thank you so much, sir. And thank you to all the participants for joining on this
call. This brings us to the end of today's conference call. You may all disconnect. Thank you.

Mahesh Bhanushali: Thank you.

Nandan Pradhan: Thank you.

END