Global Surfaces Ltd (GSLSU) Q2FY27 Concall Transcript - Sep-2026 Qtr
Moderator: Ladies and gentlemen, we'll start with the conference call now. I'll just hand over the conference to management. Sir, please go ahead. Good afternoon, ladies and gentlemen. A warm welcome
Moderator: Ladies and gentlemen, good day and welcome to Global Surfaces Limited Q2 and H1 FY 2027 Earnings Conference Call hosted by Valorem Advisors. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star, then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Purvangi Jain from Valorem Advisors. Thank you and over to you, Ms. Jain.
Purvangi Jain (Valorem Advisors): Thank you. Good evening, everyone, and a very warm welcome to you all. My name is Purvangi Jain from Valorem Advisors. We represent the Investor Relations of Global Surfaces Limited. On behalf of the company, I would like to thank you all for participating in the company's earnings call for the second quarter and first half year ended of the financial year 2027. Before we begin, a quick cautionary statement. Some of the statements made in today's earnings call may be forward-looking in nature. Such forward-looking statements are risk subject to risk and uncertainties which could cause actual results to differ from those anticipated. Such statements are based on management's belief as well as assumptions made by and information currently available to the management. Audiences are cautioned not to place any undue reliance on these forward-looking statements in making any investment decisions. The purpose of today's conference call is purely to educate and bring awareness about the company's fundamental business and financial performance for the period under review. Now, I would like to introduce you to the management participating with us in today's earnings call and hand it over to them for their opening remarks. We have with us Mr. Mayank Shah, Chairman and Managing Director; Mr. Ashish Agarwal, Chief Financial Officer; and Mr. Dharam Singh Rathore, Company Secretary and Compliance Officer. Without any delay, I request Mr. Mayank Shah to start with his opening remarks. Thank you and over to you, sir.
Mayank Shah (Global Surfaces Ltd): Thank you, Purvangi, and good afternoon to you all. Welcome to the earnings call of Global Surfaces for the second quarter and half year ended 30th September. For those joining us for the first time, Global Surface was established in 1991 and is headquartered in Jaipur, India. We are engaged in manufacturing and export of engineered surface of premium residential, commercial, and architectural applications. Our product portfolio comprises of six engineered quartz series which are Aurora, Kalmasa, Prismatic, Stratum, Quartzite, and Marfquartz, with applications across countertop, flooring, wall cladding, vanity, reception desk, and other interior surfaces. We operate two state-of-the-art engineered stone manufacturing facilities: one in Mahindra World City, SEZ in Jaipur and the other wholly owned subsidiary, Global Surfaces FZE at Jebel Ali Free Zone in Dubai. Together, these facilities have an annual production of approximately 1.14 million square feet square meters. Our international distribution presence is supported by Global Surfaces Inc. and Superior Surfaces Inc. in United States. At present, our strategic focus on improving operating efficiencies and profitability, we continued operation we discontinued our at our natural stone unit in Bagru with effect from 31st March 2026 following the board decision. Since then, only limited activities have been undertaken to complete the existing orders and facilitate an orderly closure. This transition is reflected in our H1 revenue mix, with engineered stone contributing approximately 98% of the revenue. Going forward, our focus remains on engineered quartz business, where we see opportunities to strengthen product diversification and improve utilization and build a more sustainable operating profile. Let me now turn to external environment. The key development for the engineered quartz industry during the quarter has been implementation of the U.S. safeguard Section 201 measure on quartz products quartz surface products. Effective 15th August 2026, the measure will remain in place for 4 years through tariff quota. In the first year, the the import of approximately 13 million square meters will attract an additional duty of 20
Mayank Shah (Global Surfaces Ltd): cent, while the volumes above the quota will attract a tariff of 50%. The quota is scheduled to increase over the period with applicable rates tapering to 19 to 47 per respect percent, respectively, by the fourth year. These duties are over and above normal duties and applicable antidumping countervailing duties. The The measure provides for a single global quota rather than country-specific allocation, meaning suppliers compete for the same permitted quota. While certain developing countries have been excluded, India has not received any exemption, and neither has UAE received any exemption. The significance of Indian exporters is considerable. Industry estimates indicate that quartz surface products to U.S. were approximately $223 million in '26 and represented around 72% of India's total quartz exports. The government of India has requested consultations with the World Trade Organization, while Indian representatives and representations and discussions with the U.S. continue. The broader U.S. tariff environment has also evolved. The earlier 50% tariff imposed in 2025 is no longer in force. The following the Supreme Court February 2026 ruling, the the temporary 10% global tariff expired in July, and 10% Section 301 tariff is applied on Indian goods in July 24. The interim India-U.S. Trade Agreement framework announced in February remains unsigned. Therefore, while the general tariff backdrop has eased from last year, the quartz-specific safeguard has emerged as more immediate concern for the industry. In this environment, we focus on reduced concentration risk with reduced concentration risk through a broader geographic and product mix. We continue to serve customers across North America, Middle East, Europe and other export markets while building our domestic presence in India under the Global Surfaces brand. Our revenue mix remains export oriented, while export contributing to approximately 96% and domestic market around 4%. Alongside market diversification, we are placing great emphasis on customized and high-value engineered surface products, while design, quality, technology and service are important differentiators. Our manufacturing footprint in India and UAE together with our U.S. distribution entities provides flexibility as we respond to changing trade conditions and customer requirements. Turning to the operational and strategic development during this period, we provide we continue to focus on our engineered quartz product portfolio on and on value-ordered added offerings, mar-quartz developing using licensed technology enable us to manufacture premium engineered quartz surfaces that replicate the natural veining and appearance of marble and granite while retaining the practical benefits of engineered stone. The technology incorporates a proprietary vein patenting process and support the development of differentiation differentiated products of higher value applications. We also make progress on proposed conversion of a further portion of the unsecured loan extended to Global Surfaces FZE into equity. The Board on on the recommendation of the Audit Committee approved the conversion of on 10th August '26, AED 3 million and 10.86 USD, aggregating to approximately 110.44 crores. As on the reference date, 30th June, the conversion is based on value determined by the independent valuer. Pending completion of all the necessary ODI filing under the FEMA and regulatory formalities with Jebel Ali Free Zone Authority Dubai, 1 Dubai 111 crores has been reclassified as advanced towards equity share subscription under the noncurrent financial assets. The The transaction does not involve any cash outflow and represents a a reclassification of existing financial exposure into equity investment. The operational environment during the quarter was also impacted by geopolitical development and higher input cost and logistic cost. Prices of certain raw materials increased by 25% to 50%, translating into estimated average impact of around 10% on selling prices. In addition, the freight cost on imported raw
Mayank Shah (Global Surfaces Ltd): has increased nearly five folds. These external industry wide pressures as we continue to focus on cost discipline operational efficiencies and other mitigation measures to manage their impact. We are we have also strengthened domestic market presence in India through a expanded marketing team and and commencement of domestic dispatches from from November 2026. supporting customer diversification and reducing dependence on export market. I will now take through you I will now take you through the financial performance. In Q2 '27, revenue from operations stood at 60 crores registering a year on a year growth of 10.7%. Although it was lower than 8.7% substantially subsequently. EBITDA stood at 1.3 crores compared with an EBITDA loss of 3.6 crores in the corresponding quarter year. The EBITDA margin was 2.17 compared with a negative margin of 6.65 in Q2 '26 and 12.69 in Q1 '27. The substantial the subsequent moderation reflects the operating and cost pressure during the quarter. The profit and loss profit after tax stood at at a loss of 5.4 crores compared with a loss of 4.6 crores in Q2 and a near breakthrough performance in the previous quarter. For the first half of '27, revenue from operations stood at 125 crores marginally lower by 2.6% on year-on-year basis. EBITDA however more than doubled to 9.6% 9.6 crores from 4.4 crores in H1 and EBITDA margin improving by 424 basis points to 7.66% from 3.42%. This reflects an improvement in the underlying operation operational performance. At the same time, the other income declined to 1.4 crores from 9.4 crores while finance costs were lower at 7.1 crores compared to 7.3 crores. Consequently, the loss before tax stood at 4.9 crores against 2.6 crores in the corresponding half and the loss after tax was 5.3 crores compared with 5.1 crores in H1 '26. The reduction in other income was largely attributable to lower unrealized foreign exchange income. Accordingly, the movement is reported profit reported profitability should be viewed alongside the improvement in EBITDA and significant reduction in other income during the period. Looking ahead, the near-term operating environment is expected to remain challenging, particularly given the uncertainty around the US trade measures and and regional geopolitical situations related to inflated input and freight cost. Our priorities remain focused on strengthening our engineered quartz business, expanding our presence across geographic geographies, building the domestic market, increasing the share of differentiated and value-added products, and maintaining disciplined cost management. We will continue to evaluate the operational and financial implications of evolving trade conditions and take appropriate steps to protect customer relations and long-term competitiveness of the business. We remain committed to improving operational performance, strengthening the business fundamentals and creating sustainable value for our stakeholders. With that, I would like to open the floor for question and answers.
Moderator: Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question comes from the line of Shyam Naik, an individual investor. Please go ahead.
Shyam Naik: Good afternoon. I hope I'm audible.
Mayank Shah (Global Surfaces Ltd): Yes.
Shyam Naik: All right. So, my first question was, your Q2 EBITDA margin was 2.2% against 12.7% in the previous quarter. So, the my question was, what really caused the sharp drop? And is it likely to happen again in the third quarter?
Mayank Shah (Global Surfaces Ltd): So, there was a lot of spillover of inventories which was which was there for in the in the Q1 which was prior to prior to the pre-war situation. And this was the one of the reasons that have
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