Ladies and gentlemen, good day, and welcome to Mold-Tek Packaging Limited Earning Conference Call hosted by Emkay Global Financial Services Limited. As a reminder, all participants' 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 this 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 Nitin Gupta from Emkay Global Financial Services Limited. Thank you, and over to you.
Thanks, Hina. Good evening, everyone. I would like to welcome Mr. J. Lakshmana Rao, Chairman and Managing Director, and thank him for giving us the opportunity to host the call. I shall now hand over the call to him for his opening remarks. Over to you, sir.
Good afternoon, everybody. Thank you very much for participating in our Q2 and H1 results of Mold-Tek Packaging Limited. I am very glad to inform you we have a decent growth in volumes. As you all know, Q2 and Q3 are typically our low-volume season. A lot of rains in the last four, five months has impacted movement of goods and sale of some of the food products, like ice creams and yogurts, and also paints. But in spite of that, we have posted a decent 9.65% sales value up, and volume-wise, about 7%. EBITDA is also up by about 8.37% compared to last Q2. So in the overall H1, we have registered EBITDA margin of INR 40.6 per kg as against INR 36.73 last year, registering a healthy growth of 10.5% in EBITDA terms.
Most heartening and a very good indicator for me is the growth in pharma packaging sales up by a massive 45% compared to Q1. While it was INR 7- odd crore in Q1, it is gone up to INR 10 + crore in Q2, which is a 45% growth in pharma packaging sales. So we are on track to reach our target of INR 35 + crore in pharma, and with a much higher sale price and EBITDA margins. That is very heartening observation in this quarter, apart from other sector like Food & FMCG also registered a decent growth. Now I think through question answers, we can exchange more information. I leave it to the coordinator to start with the question answers.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press Star and One on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press Star and Two. Participants are requested to use handset while asking the questions. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Darshita from DSP. Please go ahead. Darshita has been disconnected. We will move on to the next question. The next question is from the line of Dipak Saha from Nirmal Bang Institutional Equities. Please go ahead.
Hi. Sir, am I audible?
Yes, yeah.
Sir, just a couple of questions now. You mentioned on your opening remarks that Goods and Services Tax impact would have positive things. Just wanted to understand, for the quarter gone by, that is Q2, did you have any adverse impact because of the announcement, any dispatches that got delayed and your volume number could have impacted or could have grown much more better than what you valued? Just some color on that.
Yeah, definitely. GST being announced a month ago, that is somewhere in August, I think, and made it effective from September. There was some lull in the pickup in the month of September, and orders started flowing only after the GST impact has been really affected. There was some lull due to that factor also.
Okay. Given that situation, sir, do you expect that to come back in Q3, Q4? Because if you look at your 42,000 tons kind of a guidance that you earlier alluded to, do you still maintain that because of this shortfall, whatever you have seen in Q2? Where do you stand now? Because then you have to deliver some extra miles in Q3 and Q4, right? Typically, Q3, Q4 lag Q1 numbers. On that numbers, in order to reach 42,000 tons, we have to do a bit better, slightly on the double- digit side for Q3, Q4. If you can give me some understanding that where do you stand on the volume side for full year?
Yeah. Always our Q2 and Q3 are typically low in a year, and Q4 picks up momentum. That is how it will be in this year also. With GST getting implemented now, I should wait and see. October is still like September. It is moving a little bit slow, but we are on the positive side. November indications are pretty strong. I hope November, December should be decent enough to pull us up for at least a double-digit growth. The fourth quarter, I am very confident because already our Food & FMCG production started in Panipat and some of the orders also been executed there. Fourth quarter definitely will pick up on these two counts. Some of the orders and molds which have been coming in for pharma in this third quarter will become productive in the fourth quarter.
We will be running in all these two, three segments. Paints, it still depends upon the rains and when the rains stop, because even now we have cyclone going on in Telangana and Andhra for last two days and extending another couple of days. Hoping that paint segment starts picking up. That is an indication given for November. Hopefully we will be back on track to achieve 10% volume growth. Here, another point I want you to observe. Maybe we were always talking about volume growth.
Here, the growth is coming in thin wall and Food & FMCG. Sorry, pharma. That is where the weight of the components and the tonnage sale is less in tons compared to heavy products like paints, that is paint and lubricant buckets. So it may look like the volume growth is less, but if you look at it closely, while the volume growth is 6.8%, sales revenue growth is 9.65%. That indicates better value addition or improved selling realization because of the product mix shifting towards food and pharma.
Right. No, that's really helpful, sir. Thanks for this detailed answer, and it's visible on the numbers. Because of the mix change, the realization improvement on Y oY , clearly visible. So just one last question on the sweet pack side, the additional capacities that we're adding and we're expecting Q3 onwards, that should overall impact the F&F number of Food & FMCG number in a positive manner. So you have started seeing those traction on the sweet packs, how it Especially the sweet packs, if you can highlight, because the realizations and the margins would also be relatively better in that category. That would be my last question, sir. Thank you.
Yeah. Sweet packs have picked up in spite of Goods and Services Tax or otherwise. September and even in October, because it's a festive season, there was quite a big good demand, and we did fairly well. And even that production has started there in north, that's in Panipat. So sweet box has not impacted, not much. People didn't bother to buy sweets. So that way, there is not much of a drop or flattening of demand. That's doing good. And in north now we have signed a couple of decent contracts with diaries in Delhi NCR area, and that should add numbers from February onwards. As I said, our Food & FMCG growth will be sustained with the Panipat operations coming into production.
Yeah. That's helpful, sir. Thanks. And all the best for next quarter. Yeah.
Thank you.
Thank you. The next question comes from the line of Kaivalya Baing from IIFL Capital. Please go ahead.
Hello, sir. Thanks for taking my question. First of all, congrats on a good set of numbers. My question pertains to the weakness that we have observed in paints during this quarter. Like last quarter, in the first quarter, we posted near about 20%+ growth in terms of value in paints. This quarter, we posted around 3.36%. Could you just elaborate on that?
Paints, certainly when the rains are all around, I do not think anybody will paint their houses or offices or whatever. In the Q1, we have seen a decent growth. But in Q2, it is muted. In spite of good jump in ABG numbers, we ended with a 2.6% turnover growth or 3% volume growth. That is much less than our average, which is around 11% for the six months. This is where the numbers have impacted due to heavy rains in the last four, five months. The last quarter, it was 21% growth in paints. It is now hardly 3%. That is one of the major drawbacks, I would say, in bringing down the volume growth below 10%. But if the rains stop, there will be pent-up demand and activity picking up for summer and marriage season. I think the paint demand would go up from November, December onwards.
But sir, didn't we have any seasonal impact in Q1 as well? Despite that, we posted near about 20%+ . What exactly would be the possible reason for such a steep decline in growth?
Yeah, that's what I said. One of the main reasons for decline in growth compared to Q1 is seasonality. This time the monsoon was so heavy that the paint and lubricant sections, both of them have done Paint is at least 3% growth, but lubes is down by almost 13% compared to Q2 last year. Obviously, the movement of goods and materials will slow down in monsoon, affecting the lubricant demand. That is where we see our packaging also taking a beating. But Food & FMCG, if you look at it, I'm very happy to see the volume growth of 19%, and CupPak also up by 20%. Pharma, of course, 900%, that is on a small base.
But on pharma, you look at last quarter, where INR 7.42 crore were done, we have done INR 10.8 crore, which is almost 46% growth in value terms and about 35% growth in tonnage terms. That shows that we are able to even get better pricing in pharma products in this quarter compared to last quarter.
Understood. This is very helpful. Just one last thing I want to just add on that question. Are we seeing any decline in the terms of the demand from, let's say, players like Opus, like those which are driving the growth in the paint sector? Or is it balanced across all the players?
It is balanced across all the places other than Birla Opus, because Birla Opus is on a growth trajectory. In fact, we have a very positive growth even in this quarter. We grew by around 16% in value, 17%.
This is for Opus specifically, sir?
Only for Grasim, yeah.
Okay. Understood. So there is no specific slowdown as such?
There is a slowdown. The rest of the people are in the negative or flat.
Okay. But not for Opus, though.
Opus is the only, in terms of our sales to them, they've grown very handsomely.
Understood. Sir, this is very helpful. I'll rejoin the question queue for any further questions.
Okay.
Thank you. The next question comes from the line of Darshita from DSP Asset Managers. Please go ahead.
Yeah. Thank you, Lakshmana sir, for the opportunity. My first question was regarding the EBITDA per kg. Despite a better mix that we have seen from first quarter to second quarter, our EBITDA per kg has come down from INR 41 to INR 39. Are we seeing any reduction in our EBITDA per kg within the F&F space? Is there any pressure there, or is it largely because of lower volume growth?
It is due to a lower not only volume growth, reduction in the capacity utilization. In Q1, the capacity utilization was as high as 74%. It has dipped to 63% in Q2. Obviously all the overheads will go up, affecting the EBITDA.
Okay.
In Q2, typically, it wouldn't be that bad, but due to several areas where right now there are severe rains and Goods and Services Tax announcement, there was a lull in this quarter, which has impacted the capacity utilization. When the capacity utilization comes down, obviously, the costs go up, affecting the EBITDA. But I am very glad it is much better than what it was last year. Last year it was only INR 36.38, which is now gone to INR 39.4. That's almost INR 3 gain. That's mainly because of pharma and food products.
Right. Got it. Secondly, within our paints segment, would you be able to share how much contribution do we have from Asian Paints and ABG, versus how was it in the second quarter 2025?
Second quarter 2025 to second quarter of 2026, in Asian Paints, it's more flattish. Volumes are maybe 2%, 3% up or down, but there's a considerable jump of around 17%-20% in Grasim.
Mm. But how much do they contribute to our overall paints sales?
In the overall paints, I don't have the exact number.
No, just an idea is okay.
Asian Paints will continue to be more than 60%, and Grasim may be around 20%, 25%. And the rest-
Okay.
... is AkzoNobel, Berger and KNP.
Has the 25% number gone up on year-over-year basis?
Yeah, of course. Last year the sales were much lesser. So they have really gone up considerably. 24%.
Got it. I am sorry if this question was already asked, but are we still confident of meeting the INR 90 crore pharma revenue numbers that we were anticipating? I think earlier we had given a guidance around that number. Are we still in-
No, I think you heard it wrong. I never said INR 90 crore. Last year it was hardly INR 8 crore-INR 9 crore, and this year we said INR 35 crore-INR 40 crore.
No, for 2028. No, not 2026.
Oh, 2028. Yeah.
Yeah.
2028 INR 90 crore is not a big deal. This year itself, we may cross our INR 35 crore target.
Got it.
Because we are almost 10% + in this quarter. Even if you continue the same trend in the next two quarters, because the new product addition will be happening in Q1. Some of the molds are coming in Q4. Some of the molds are coming in this month and next month, and there will be trial supplies and commercial supplies will start in Q4. Even assuming we continue to do INR 10 crore for next two quarters, we will end up with INR 35 crore-INR 37 crore, which is above our target of INR 35 crore. Next year, our target is close to INR 55 crore-INR 60 crore. I think with the new molds coming in and becoming productive, we should be able to be there. 2027, 2028, yes. Again, we are looking at another 40% - 50% growth, taking us close to INR 80- INR 90 bracket.
Got it. Our EBITDA per kg in the pharma segment will continue to be at around INR 100- odd levels. I mean, somewhere between INR 100 -INR 120, conservatively INR 100.
Yeah, certainly.
Got it. Great. Thanks for answering all my questions. Good luck.
Thank you.
Thank you. The next question comes from the line of Shirish Pardeshi from Motilal Oswal. Please go ahead.
Hi, sir. Good afternoon. Thanks for the opportunity. Just in continuation on the pharma, the growth is tremendous and you are looking very strong convinced. Which particular product is driving? Is it canister is driving or the caps and bottles are driving this growth?
Our EV tubes, caps and bottles at present are driving the growth. Canister just started picking up a couple of orders from I don't want to name them. At least two, three clients. Some bulk supplies also are happening in this month. Once the canisters really take off, the profitability numbers, if not the top line, would still improve. But keeping that as a conservative level, still the growth is coming from EV tubes and bottles and caps.
Okay. Just to follow up on this, one of the large customer who was doing this stability test and pilot, has that customer started officially giving us order?
Yes. There are two of them actually, who are strategic and have the potential to become at least INR 10 + crore per annum revenues. They both started giving small, I wouldn't call them huge orders, but at least order worth around INR 70 lakh, INR 50 lakh -INR 80 lakh over the next two, three months. Those orders have been just received in the month of September and being executed in this quarter. That will slowly add. I think in the Q4 they will add, at least in my opinion, each will add at least INR 2 crore - INR 3 crore per quarter.
Okay.
Their potential will be realized in Q4.
My second question on the capacity enhancement at Grasim. Cheyyar and Panipat is now fully operational. Is there any further capacity addition which you are going to have, and what is the capacity utilization at the end of quarter two for these two plants?
Our total capacity creation for ABG would be around 10,000 tons in all three plants put together. This quarter, we have done 1,500 tons and sorry, how much we did? About 2,900 tons in H1. So we may end up around 6,000+ ton s utilization out of the 10,000 tons installed. So around 60% - 65% probably will be utilized.
That's really helpful. The other question I wanted to check, you mentioned in the press release that you have introduced the next-gen IML molding, which actually cuts the production cost. Is this project completely stabilized or there are some more likes to do it? What is the cost reduction on this, and what percentage of revenue you are targeting for FY 2026?
When I said in the IML integration is what I mentioned during my last call. We brought in all the IML operations under one roof at Sultanpur. Also in-house, we are manufacturing the HTL labels, and that is where we see benefits of integration, which might start from any time now. Last month, only in July, August, we closed our unit at Jeedimetla and shifted the machinery to Sultanpur, Hyderabad. Their operation started from August, September. Probably from Q3, Q4, you will see the benefits accruing in the cost reduction of IML manufacturing.
What percentage of cost reduction it will be? About 7%, 8%, 10%?
In the consumable cost, yes. Not in the overall revenue. It will be in the consumables which are around INR 22 per kg. Probably, you can see about a rupee benefit.
Okay. This will have a larger contribution in FY 2026?
Yes, obviously. Because FY 2027, you mean. This is FY 2026.
Yeah, FY 2027. Sorry.
Yeah. It will have better addition in FY 2027.
Okay. The last question. You mentioned that in a weak quarter, the volume is lower and that has reflected into the EBITDA per kg. You also mentioned that this is going to go away. I mean, I am not counting too much on the paint, but finally the Panipat has started rolling. Is this confidence that we will be able to maintain INR 40 + in second half per kg?
Yes, I am confident we will be able to maintain INR 40 + even in the second half. Q3 may be similar to Q2, but Q4 would again go up to somewhere close to Q1 levels. So we will end up INR 40 + -
Okay.
... in the full year. From INR 37.6 last year. That is almost a 6%, 7% improvement in EBITDA.
Okay. Thank you, sir, and all the best. I have few questions. I will come back in between.
Thank you.
Thank you. The next question comes from the line of Shubham Jhawar from Dexter Capital Advisors Private Limited. Please go ahead.
Am I audible?
Yes, sir, you are audible.
Hi. Thank you for the opportunity. I had primarily only a single question. If I look at our realizations per kilo in our Food & FMCG space, this quarter, it is somewhere around INR 295, right? And this used to be around INR 330, INR 340, and from FY 2022, it has been inching downwards, and it is now below INR 300 per kilo. Sir, going forward, how is this realization going to be for Food & FMCG? Any particular reason why it has dropped below INR 300 this quarter?
See, there is definitely some pressure in competition coming up in corners of Food & FMCG sector. Here and there, I told even during last quarter also. There is addition of a few small-time players in different corners of the country who are definitely causing some competition. And we being all centralized in Hyderabad and supplying all the products across the country only from Hyderabad have the disadvantage of both time delays and freight costs. Now that Panipat started, and we already captured a couple of big clients in that region, I am confident next season we will be able to come in and get back our numbers. But pricing-wise, yes, there is some drop per kg value in Food & FMCG. But still, it is much better than our other products.
Got it, sir. And my second question was, I do understand that ABG volumes have started increasing this FY 2026 onwards, but wanted to understand the demand forecast that they had given us in last FY. So is the demand in that range itself, or it is lower compared to what they had given us in the last fiscal year?
It started slow in the beginning of April, May, but it really picked up decently well. But for the month of October, everybody dipped a bit because the festival came early and lot of holidays in this month. So most of the paint companies are flattish in October, but their projections for November are pretty good. So I think their numbers will start improving.
Understood, sir. That was from my end. Thank you.
Thank you. The next question comes from the line of Jaiveer Shekhawat from Ambit Capital. Please go ahead.
Yeah, thanks for taking my question. Mr. Rao, you mentioned that for Grasim you did almost 900,000 tons in the first half. Is that right?
For Grasim? No. I said we have done about 2,900 tons in the first half, so we are expecting to do 6,000 tons-6,500 tons in this full year.
This is specifically for Grasim, 2,900 tons?
Yes.
Sir, if I were to, again, possibly for an annual basis, that will be roughly about 6,000 tons of volume that you are saying.
Yeah.
Last year you did almost about 18,000 tons of volume in the paint segment.
Are you suggesting that by the end of the year, if we end up doing about 20,500 tons, 21,000 tons of volume, the rest of the segment would have declined by almost 15%-20%, except Grasim. Is that a right understanding?
Not really. Asian Paints won't decline that much. It is hardly 2%, 3% drop for us, at least for us. In terms of Akzo also, it is not a big drop. Actually, it is a flattish zero. KNP also, it is just 4% growth. Not necessary that the numbers will come down in other peers. The dip in Asian Paints itself looks big because they contribute a very big number of our paint sale. That is the reason why you may see overall growth being tepid in this Q2. If you look at the H1, still the paint volumes are up by around 12%.
I am just trying to understand, in the last year base, FY 2025, what were the Grasim volumes? Except Grasim, what is the growth that is happening in the paint segment? I think that is where I am trying to get to.
I can answer the first one, that is Grasim's growth, and I cannot give you the details of all the rest.
Sure.
Grasim has grown from, let us say, 1,250 tons in the Q2 this year from 995 tons the previous year. That is a growth of 24% in the quarter. In the half year, it was 1,560 tons last year, is now 2,900 tons. That is a growth of about 86%.
Understood. As you rightly said, except Grasim, I think the growth has been quite tepid. With respect to the guidance that you had earlier said on volume growth, about 12%-15%, on the first half, you have managed to do around 12%. Do you sort of stick to that or is there going to be a revision downwards on that?
We are aiming to do that. I think we may at least stick to 12% because when I say probably the volume growth will come more in pharma and Food & FMCG. In terms of tons, we may still see a growth of close to 12%. But in terms of sale value, we are aiming to try to hit at least the 12%-15% bracket. Which is now currently at 13.88% for the first half. Sale value-wise, we will still be in 12%-15%. Volume growth-wise, we will be trying to maintain the 12%. I think it is possible.
Lastly, on the Panipat F&F expansion. Is that up and running? Over there as well, have you started receiving larger orders? What is the capacity utilization for that?
Yes. Now the capacity utilization is hardly anything because it is a very new plant. We have about INR 40 lakh sale in the month of October so far. That is hardly anything. But it is now picking up, and we have signed one major contract, I cannot divulge the details. That should add at least INR 4 crore-INR 5 crore turnover next financial year from one client. The molds are under manufacturing. They will be ready up and running from February. That will be one big addition for Food & FMCG from Panipat. There are several small and medium orders that are also coming in. I am sure the next season, that is Q1 of next year, we will see some decent addition from Panipat through F&F.
Overall on the F&F side, do you expect you will be able to maintain that 15%-20% growth? Again, something that you have already guided earlier to the market as well. Does that change in any way, or do you think you can maintain that?
No, we are still confident we will maintain 15%-20% growth.
Understood.
If you look at the six months, it is 17% so far.
No, I mean, even in the coming year as well, 2027 and 2028. Do you think your capacity will suffice in-
I can't say 2028, but at least in 2027 we can because Panipat will start contributing handsomely in 2027, and even 2028 also probably, but definitely in 2027.
Understood. Sure, sir. Thank you so much, and all the best.
Thanks.
Thank you. The next question comes from the line of Chirag from Keynote Capitals. Please go ahead.
Yeah, thank you for the opportunity. Lakshmana, sir, my first question is related to the volume value mix of IML and non-IML for Q2 FY 2026.
Yeah, I think they have now improved further again. From Q1, it hardly moved a little bit. It was 75.02% IML and other label HTL together, and it is now 75.11%. So it is just moved a bit.
This was from the perspective of volume terms?
Yeah, in volume terms.
What about value terms?
Value terms is more or less similar. It is 77% last year. It is now 76.2%.
Okay.
Last quarter one and Q4.
Got it. I missed one of the earlier participant answer, which was related to a drop in realization for FNS segments. Could you just repeat that once?
What he was saying is the drop was very marginal. It was INR 309 per kg in Q1, and it is around INR 300 in Q2. The product mix changes, and also there is some competition in the nuts and garnish is the reason what I have given. So it was INR 309 in Q1. It is now become INR 300, INR 301 or whatever in Q2. I think he was referring to that.
Got it, sir. My last question is related to the significant drop in lubes as a segment. You have mentioned that the major reason behind it was the rainfall. Can I expect that the earlier 2,000 + volumes as a run rate on quarterly basis to come back specifically for lubes and for paints that is expected to come back to 4,800 tons-5,000 tons per quarter level?
Paints, I am confident, but lubes is always I am skeptical because whether the movement of goods will pick up with the Goods and Services Tax reduction that might drive lubes growth. As I said, lubricants are coming out with more and more mileage per liter. Definitely, though the economy is increasing in terms of movement of goods, the lubricant consumption may not grow in tandem. Probably you will still have a lag in growth in lubricants. That is my view. Whereas paints, as the rains subside and people badly need it now because with rains washing away whatever paint is already there or not there. Definitely the movement of paint will pick up in the coming months once the rains subside.
Fair enough, sir. Any guidance on CapEx going forward?
Yeah, CapEx is again continue to be strong. We already completed INR 60 crore, and we have on annual another INR 30 crore, INR 35 crore. Probably we will end up with about INR 100 crore CapEx this year also, down from INR 140 crore, INR 130 crore levels in the last two years. Last three years, it was averaging around INR 140 crore. So probably it will end up around INR 105 crore in the current year.
Out of this, what is maintenance CapEx?
What is what?
What is maintenance CapEx?
Yeah, maintenance will be always close to the depreciation, which is around INR 35 crore- INR 40 crore per annum. Replacement of machinery, replacement of robots and molds will continue to be there, and the rest will be additional capacities, especially in pharma and balancing capacities in ABG plants.
That is it from my side. Thank you so much.
We already invested on land for pharma expansion in the first quarter, about INR 11 crore.
Yes.
We acquired two and a half acres of land adjacent to our Sultanpur unit. That is the only greenfield expansion. It might happen in the next year. For that, the rest all will be brownfield, wherein it will be addition of machinery to balance the demands.
Right. They're expecting it to increase the capacity from 1,500 tons to 3,000 tons, correct? For pharma.
Yeah, about 2,500 tons-
2,500 tons.
... in the next financial year. It's happening in progression. It's not that it will happen in one shot.
Right.
Probably in Q4, we will increase it from current level to one step ahead, and then probably by July, that is second quarter, we'll be adding another capacity in ophthalmic and other lines. So gradually it will be reaching that level.
Perfect. That's just from my side. Thank you.
Thank you. A reminder to all the participants, anyone who wishes to ask a question may press Star and One on their touchtone telephone. The next question comes from the line of Pratyush, an Individual Investor. Please go ahead.
Hello. Am I audible?
Yes, Pratyush.
Yeah. Hi, sir. Basically I had 3three questions. Firstly, regarding the pharma segment. I think last quarter you had given a guidance that around 12 or 15 clients were in the pipeline, and they were at different stages of approval. Can you please give an update on how many have been approved and how many clients will be onboarded in the current financial year?
I don't have ready answer for that. I think now the total clients who are actually participating in our sales are more than 20, 25 now. In this current quarter, I have not counted, probably there are at least five to six additions. Some of them we have been working with the last seven, eight months on different trials. So they started giving small commercial orders. Prominent among them is Laurus and MSN . So they started picking up small commercial orders. I won't call them huge, but they have huge potential, and they being local will have advantage to capture the demand.
When we gave the pharma guidance, then was the assumption based only on the fact that we'll receive orders from the current clients? Or what sort of vendor addition or client addition was assumed while arriving at the revenue guidance?
Yeah, it is based on marketing feedback that what they feel some of them who are in trials lots might become commercial. Some of them who just completed audit may start giving trial orders. It's an ongoing process, and they're cumulative in nature. Because once they generally adopt a supplier, they stick with the supplier. As I said last time, due to our innovation and able to develop quick solutions for our clients, they are adopting us as their supplier. Once they take us as a supplier for one particular product, they are free to give any other product also to us, as long as we match the price and quality. So addition to stepping into a supplier name in the list of supplier name in a pharma company is difficult. Once you enter there, it's your relations and your quality and timeliness is what makes you garner more and more orders.
Okay, sir. Also, the pharma guidance is based only on the Brownfield expansion as of now, right? There is no completely new CapEx, which is considered in this?
Not now. Not in for this year or even for next year also. The gradual growth, what we are initiating to reach the capacity by end of this financial year, that is March, April. We would be able to meet the next year demand of around 55% - 60%, what I projected. Going after that, we need to have additional facility for which we have acquired land, and probably that will go on stream by July, August next year. But I am not counting much to come from that capacity for the next financial year.
Okay. Regarding pharma only, there are mainly two streams, right? There was a bottle, and there was a cap. I just wanted to understand whether these two products are related, and we can expect the volume growth of both these products to always be in line with each other? Or are they unrelated products? If so, what is the expected share of each of these products in the pharma sales?
First of all, there is no one bottle and one cap. There are several varieties of bottles, more than 40. Now we already developed molds for more than 40 varieties of bottles, and there are at least eight to 10 varieties of caps. Not necessarily the simple caps, what you see on tablet packs, but are also on the eye droppers or on some cough drops. Like that, there are different applications of caps we have started making, and some of them are in trial stage, some of them are at testing stage.
What we are selling now currently is standard bottles and caps and child-resistant caps and EV tubes, which are contributing mainly to our sale as of today. The number of bottle variety is very high. It is more than 40, and it might become 50. We talk next time. That way we are able to quickly, rapidly expand our product range. But the majority of sale is still coming from EV tubes and bottles and caps. A little bit from canisters.
Okay, sir. Also, sir, is it possible to share the volume data of paints, goods applied to paints in the current and the previous quarter?
I don't have the paint alone number, but as a total paints. Paint alone, yes, I have. In this Q2, we have given 4,688. Is that correct? Sorry, 4,845. 4,845 tons is the paint sale, out of 10,000 tons.
Sir, previous quarter?
Previous quarter it was 5,593 tons.
Okay. Last question, sir. Is it possible to share the optimum capacity utilization for each business segment, pharma, paint, everything?
See, optimal is always 100%, but nobody can reach that because as I said last time, machines meant for bottles or jars will give you higher productivity compared to the caps. Because the caps are always lightweight, but they need similar machines because of the surface area. When you calculate capacity utilization in injection molding, if somebody crosses 75%-80%, that's really excellent. So we are somewhere around 74% last quarter, but this quarter it dipped to 63%. So overall for the six months it is 69%.
Okay, got it, sir. Thank you.
Thank you. The next question comes from the line of Pratham from Quantum AMC Private Limited . Please go ahead.
Yes, madam.
Pratham, please go ahead with your question.
Yeah. You just mentioned that some new products are being added.
Pratham, we are not able to hear you. Please increase your volume.
Yeah. I was talking about that you have added some new products in the pharma segment. This essentially expands the earlier discussed INR 5,000 crore TAM or are these products already included within that TAM estimate?
What is INR 5,000?
INR 5,000 crore TAM, which we have earlier mentioned in the previous calls.
You mean the overall market demand in the country?
Yeah. Pharma demand.
Yeah. The overall pharma packaging demand is around that, but what products we are making also are part of that universe. Some of them are innovative in nature. Some of them are just replicas or replacement of such products. With this, we are not going to change the overall size of the market, but certainly it will give us a part of the market share.
Okay. That's all from my side. Thank you.
Okay.
Thank you. The next question comes from the line of Sandeep Modi, an Individual Investor. Please go ahead.
Yeah. Am I audible?
Yes.
Yes, sir, you are audible.
Okay. Yes, sir. I wanted to just ask one question. Some case was going on regarding copying of certain products, patent right, et c. Did we get any compensation for that?
See, we don't get any compensation from courts or anybody. We can, at the most, make them stop their production and seize their molds. That we did for two or three erring companies. We don't get any compensation.
Okay. One more thing, sir. Total, how many pharma companies have visited our premises? How many are active and any good news for pharma, et c?
Yeah. There are more than 60, I think 50, at least. More than 50 visited, and at least 20, 25 started buying from us in small or medium quantities. None of them contribute 100% or 20% of the sale. Everybody is spread across, let's say, maximum sale, maybe 10%, my biggest client, maybe in EV tubes. Coming to bottles and caps, now we have started at least with seven or eight decent size clients, and those numbers for them will be somewhere around INR 25 lakh -INR 30 lakh per month per each. Those numbers will start accumulating as we go forward.
Okay.
The remaining 30 clients who have visited also approved our facilities, audited facilities, but the commercials and trial runs will take another few more quarters.
Okay. How is the pump business going on?
Pump is not great. We are not seeing many major traction, but still, it is in the plus side. We are able to sell about INR 30 lakh- INR 40 lakh worth of goods to both the pharma side and cosmetic side.
Okay. Any export orders canceled regarding the tariff, et c?
Not really. So far, anyway, we are not great exporters to U.S.A. Hardly we sell about INR 2 crore- INR 3 crore per annum.
Okay.
And that's continuing irrespective of the tariff. Maybe they were expecting us to dip a price a little bit by 4%, 5%, which we are also obliging. But it's a negligent factor as of now.
Okay. Sir, the land which we have acquired, when will that be fully ready with robots, et c, and start production for pharma?
Yeah, there won't be any robots in pharma. Only for EV tubes we have robo, and we are not planning to add any more robots in EV tubes for pharma. Whatever we have is sufficient. The new facility, we are now yet to get the plans approval because the land was just acquired three, four months ago. Now we have applied for plan approvals. Probably we'll get it in December, and hopefully we'll start in December, January, the construction activity. And during the next financial year, maybe second half or July, August, we'll be able to bring it to a shape. And as I already answered, those quantities and capacities are not counted for next year predictions.
Okay. And sir, how is the business for Birla Opus?
Birla Opus is doing good as far as we are concerned. From us, they are giving us a good growth.
Okay. Thank you very much, sir.
Thanks. Thank you.
Thank you. The next question comes from the line of Varun Singh from PMS. Please go ahead.
Hi. Thanks for the opportunity, sir. Just wanted to clarify that 12% volume growth which you talked about, so that was meant for only paint business or for overall volume?
No. Overall volume.
Overall volume. Okay. Secondly, in second half, is it fair to assume 4%-5% realization improvement?
Because in first half, sir, we have seen around 3%-4% kind of an improvement in the overall realization. But having said that, I think the base in 1Q FY 2025, it was more favorable because that time realization was INR 200 per kg.
It's not because of the INR 200 or INR 203. It again depends upon the raw material pricing.
Yeah.
It will be due to product mix. The product mix-
Product mix.
As Food & FMCG and pharma increases, per kg realization increases. So what you said is 8.3% is the growth in EBITDA margin in the H1. I think we will continue to see somewhere around that and deliver an EBITDA margin of INR 42, INR 41 even in H2.
Okay.
Which was INR 37.6 for the last full year. So there is a big jump of more than INR 3 or at least INR 3 in EBITDA per kg.
Right. So, in second half, maybe around INR 42 - INR 43 EBITDA per kg is a reasonable assumption. That will be correct, sir?
No.
Even our expectation for INR 41.
Last year second half, it was hardly INR 37, INR 38. So on that-
Yeah.
... assuming 5%, 6% growth, we may be in the range of INR 40 - INR 41 for the H2 also. So full year, we may come somewhere around INR 40.70 level, which is up by more than INR 3 compared to INR 37.6 for the last full year.
Right. But since, in that case, I think we would be cutting or reducing our guidance note from INR 42 to INR 40.75.
No, I said our guidance is INR 40 - INR 42, depending upon the growth. With the tepid growth in Q2, we feel that we will still do INR 40.7, maybe INR 41 at the best.
Understood. And sir, one last question regarding GST and the confusion regarding shipment. The benefits of that flowing into this quarter, which is Q3. So, given that, and of course, I think rain and the cyclone which is happening in Andhra, that will have a role to play, but still, you think that overall 12% volume growth in Q3 would be reasonable kind of an assumption, or you think that's too high?
I think in Q3, we may have growth similar to Q2, but in Q4, I will be confident we will be definitely in double-digit growth.
Double-digit volume growth overall.
Seasonally, Q3 is the least. Q2 and Q3 are the lower seasonal months. What helps is-
Yeah.
... our pharma growth and our growth in food sector in North. Hopefully, profitability might remain intact. Volume growth expectation in Q3, I would be close to Q2. In Q4, definitely, it will be back to double digit.
Understood. Okay, sir. Sure. Thank you very much, and wish you all the best.
Thank you.
Thank you. The next question comes from the line of Vishwa, from PL Capital. Please go ahead.
Yeah. Am I audible?
Yes, you are audible.
Yeah. I had the similar question for the second half EBITDA per kg, so it has been answered. Thank you.
Thank you. The next question comes from the line of Sanyam Shah from Solidarity Advisors. Please go ahead.
Hi, sir. Thank you for the opportunity. I just wanted to understand what is the steady-state EBITDA per kg that we can look for Food & FMCG segment. And does this number factor in the decreasing realizations that you are seeing?
Yeah, I answered that. There is small reduction in the realization per kg in Food & FMCG, with competition hotting up in corners of the markets. This can be effectively handled at least with a growth number, through our plant in the North, which will able to cut down the supply costs and supply time in the northern region. The growth of 19.54% for Q2 and 16.97%, that is almost 17% growth in H1, is very positive for us. We will able to maintain that momentum by our north plant starting operations. While, EBITDA per kg might take a dip in food, the overall growth rate of 17% is really heartening.
I just wanted to understand, sir, what is the steady-state number, normalized number for EBITDA per kg?
There is no-
For Food & FMCG.
Food and FMCG, as of now, the segment-wise data is not available, but that remain to be in the region of INR 70-INR 75 per kg. Probably, it was earlier INR 75-INR 80. So INR 3, INR 4 per kg EBITDA might have come down in Food and FMCG. But as I said, the volume growth will offset through better utilization and that can-
Okay.
... sustain the EBITDA.
Okay, sir. And sir, for the pharma segment, once we expand the capacity to 2,500 tons, what is the peak revenue that we can do at that capacity?
You can take about INR 350 -I NR 360 per kg as a sale value, so probably around-
Okay.
INR 85 crore-INR 90 crore.
Okay. Sir, if I take a slightly longer-term view, specifically for the pharma business, maybe four to five years out, FY 2030 or FY 2031, do you think pharma can be a INR 150 crore-INR 180 crore business in terms of revenue for us?
It is a long-term view to give, but certainly, it is possible.
Yeah.
We are definitely looking at such figures five years down the line.
Okay, sir. That's all from my side. Thank you.
Thank you.
Thank you. As there are no further questions from the participants, I now hand the conference over to management for closing comments.
I take this opportunity to thank everybody who has shown interest to participate in concall of our Q2 and H1 results. I am sure that as the company has plans to geographically expand and improve its segment-wise growth in Food & FMCG and pharma, the future looks bright. Better utilization as the rains subside and demand picks up due to Goods and Services Tax reduction should improve the numbers in going forward. I wish all of you a very happy evening and good future. Meet you later. Bye bye. Thanks.
On behalf of Emkay Global Financial Services Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.